This article is part one of a three-part series on revenue management.
Business-intelligence platforms have lifted the lid off the black box of revenue-management systems, allowing savvy revenue managers to understand the data from RM systems. BI systems have changed revenue management by creating a highly flexible tool that allows users to slice and dice the data at whatever level is wanted or needed.
“BI enables revenue managers to pinpoint exactly what’s going right and wrong and take the appropriate remedial steps,” said Tom Ray, director of business intelligence for The Rainmaker Group. “Revenue managers have historically been firemen—business intelligence is more like fire prevention, enabling revenue managers to be far more proactive in managing demand.”
Business intelligence is changing more than just revenue management. It's also changing what hospitality industry roles can use the data.
“It is not just for revenue managers, it is about getting the right information to the right people and tailored for their role,” said Sanjay Nagalia, COO at IDeaS. “Many departments can consume dashboards and key performance indicators like average daily rate, revenue per available room and occupancy, and take action. Marketing professionals or members of the executive team can access the same key performance indicators rolled up to a region, brand or hotel classification, giving them estatewide dashboards and insights, which could lead to targeted marketing campaigns or even reflagging decisions.”
By collecting the right information in the appropriate, digestible format, business-intelligence systems allow the correct decisions to be made in real-time, said Jason Bryant, CEO of Nor1.
“BI platforms are collecting absorbable information directly from the guest and that level of intelligence is making a huge impact on a hotel’s conversion,” he said.
BI systems also allow revenue managers to be more remote since the platform is aggregating the data for them. This allows the revenue manager to have a broader span of control, which is particularly impactful in extended-stay properties. Since the lower daily room rates have typically meant that revenue-management technologies are out of reach for these types of properties, BI platforms are increasing the span of control for revenue management, Ray said.
Because the cost of out-of-the-box BI systems is becoming less expensive, independent and smaller chains have broadened their access to data. “Independent hotels have typically relied on PMS reports,” Ray said. “The problem with that is that PMS are predominately providing operational reporting—this is of limited use to revenue managers who are far more interested in the behavior of demand.”
BI systems are relating at a far lower level of granularity than any RM tool, allowing detailed analysis of the causes behind the trends. This also reveals the anomalies, like where the ADR drops. “We can figure out which rate codes ADRs are dropping, and drill into the individual rate codes to figure out why,” Nagalia said. “In each case, we get to see the trend before it happens, meaning you get to influence it."
BI has added a new layer of sophistication to “pacing” analysis—the analysis of how bookings are picking up for a given future arrival date, Nagalia explained. By performing this analysis at a far more granular level, the insights are actionable to a surgical level of precision.