Hotel revenue management perspective on 2017 and 2018

Revenue management businesses are on the front line of many issues facing hoteliers today. As the hotel industry becomes subsumed into the wider “accommodation” industry, the demands on revenue management specialists widen accordingly.

Here’s a perspective on 2017 and some thoughts on 2018 from Klaus Kohlmayr, chief evangelist for IDeaS Revenue Solutions.

The battle for the guest has reached new heights. Hilton’s 2016 battle cry for consumers to book direct, “Stop Clicking Around”, set the tone for 2017 as hotel brands started to try and swing the pendulum of power in their favour and claw back some of the distribution territory lost to the OTAs. It is an uphill battle for sure but initial indicators are promising.

Brands and hotels argue customer loyalty will be won by who has the best guest experience and engagement. In the race to win over the guest, both OTAs and hotels claim they will create the best experience – OTAs through technology, hotels through service. The boundaries get blurred as OTAs invest in guest experience technology (Expedia’s investment in and commitment to ALICE) and morph into platform providers for the long tail of hotels.

Not quite a headwind but is AirBnB running into a “head breeze” perhaps. City councils are passing new regulations and some signs of saturation are emerging (as recently reported by Morgan Stanley). Hotel companies have not yet figured out if the alternative lodging providers are a threat (Marriot vs Airbnb public skirmish in November) or an opportunity (Onefinestay investment by Accor). Love or hate them, they are here to stay and providing a critical service to a growing population of travelers.

One positive impact the OTAs have had was to spur the industry to heavily invest in new technology. Out with the legacy systems developed decades ago and in with cloud based platforms and data lakes that finally make it easy and efficient to store and access data, providing a consolidated view. We won’t see a lot of dramatic change in 2018 but as these new platforms gain traction they will form the basis for a tidal wave of innovation in the industry.

Now, with data being housed in one place and easy to access, personalization will take hold. The movement from one-size-fits-all to what-size-fits-me will accelerate. Consumers want choice and the new platforms will allow the tailoring of offers according to what consumers want, when and where they want it.

AI is in 2017 what big data was in 2015 — Everyone wants to talk about it, but hardly anyone understands it, or finds it useful. Just like size does not matter in big data, more is not always best for AI. We need seamless intelligence – where the right amount of data uses the right amount of algorithm to provide the right amount of autonomy for the best possible outcome. Humans are not yet ready to let the machines take over, but seamless hand-off between human and machine must increasingly become the norm.