As new booking windows and travel patterns reshape the hotel industry, artificial intelligence works most efficiently when it’s assisted by the knowledge of experienced revenue managers. “Controlled automation” is the answer to a successful dynamic pricing strategy that gives independent hotels an advantage in a competitive landscape filled with big brands.
Setting room rates for the future used to be fairly simple: A revenue manager would start by looking at the data from the past. In today’s new environment, though, that recipe is no longer a blueprint for success.
“Demand patterns have changed dramatically,” said Austin Segal, vice president of Curator Hotel & Resort Collection. “Everything is different than it was [before the pandemic], and it continues to evolve as businesses adjust return-to-office plans, remote work creates more flexibility, and international borders close and reopen. Hotels and revenue managers can no longer look to history to forecast what will happen.”
For hotels that have bet on the promise of artificial intelligence and machine learning, that can spell big trouble. After all, if the inputs in the machine are irrelevant, how can the output — the pricing decision — be accurate? As hotel leaders look ahead, it’s crucial to find the right technology partners that can pave the way toward a more nimble revenue management strategy.
Balancing Technology With Human Touch
To empower Curator’s portfolio — which includes independent properties like Paradise Point Resort & Spa in San Diego, Pelican Grand Beach Resort in Fort Lauderdale, and The Edgewater in Seattle — with the tools to keep up with real-time changes in demand, the company recently chose Duetto as a preferred revenue partner. While Segal said that other revenue systems are “black boxes” with rigid — and often questionable — algorithmic pricing recommendations, Duetto’s SaaS cloud-based system provides a key ingredient for independent hotels: flexibility.
“The ‘art’ that revenue managers bring to the equation is increasingly important,” Segal said. “Duetto is unique in its ability to not just deploy rate recommendations, but truly arm revenue managers with tools to support the execution of their ever-evolving strategies.”
David Woolenberg, CEO of Duetto, calls it “controlled automation”: a process where specific elements of a revenue management strategy can be placed on autopilot, while others can be easily adjusted with new rules. This could mean charging minimum rates based on the length of a stay or expanding the pricing gap between OTA and direct bookings during periods of high demand, for example.
“Revenue managers are highly experienced and may see nuances within their particular market that even the most advanced algorithm may not identify,” Woolenberg said. “They want to be able to turn the knobs and dials to truly reflect the uniqueness of their market strategy and put their stamp on it.”
Doing More With Less
Still, that stamp requires something a bit elusive in today’s industry: people. As hotels deal with a labor shortage that has left plenty of critical roles unfilled, Duetto’s offering is designed to help teams at independent hotels do more with less. The platform’s GameChanger tool ingests competitor data, web shopping data, social media reviews, reservation data, and more to help continually refine pricing models.
“Revenue cannot be managed 24/7, but with automation, it can be optimized 24/7,” Woolenberg said. “Teams can set strategy and rules to ensure the system takes over on the days, segments, or room types where less human interaction is needed or available, freeing up time to focus attention where it can be most profitable.”
For example, Woolenberg said a hotel might opt to fully automate pricing on all bookings 90 days or more from a stay date to make sure that revenue managers and operations staff members are solely focused on tweaking offers for short-term demand. It’s all about helping independent hotels make the best use of their time — another limited resource. A recent survey conducted by OTA Insight revealed that 25 percent of independent hoteliers spend at least two hours each day on adjusting pricing, marketing, and distribution strategies. Duetto aims to give those hours back so team members can focus on analyzing data, exploring new sales and marketing strategy, and developing a view of the big-picture.
Creating Upselling Opportunities
Determining what to charge for different room categories isn’t the only challenge standing in the way. In an ancillary-driven world, it’s equally important for independent hotels to figure out the right way to curate and charge for extra guest amenities. Segal highlighted that Duetto’s recent partnership with upselling software solution Oaky gives Curator properties a competitive edge in the battle against big brands.
“Duetto recognized that it makes perfect sense that your revenue management system should provide pricing guidance to a dynamic upsell solution,” Segal said. “Independent hotels are best positioned to take advantage of these types of innovations and developments as they do not have the layers of systems integrations or lead-time considerations that many of the brands require.”
That ability to pivot quickly is a superpower for independent hotels since today’s business environment will likely look quite different by tomorrow. The pace of change will continue to accelerate, which serves as a reminder that the pathway to innovating and improving pricing decisions is never complete. “Digital transformation is not about a single moment in time or a single initiative,” Woolenberg said. “In the new digital economy, it must instead become an always-on strategy.”