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(Tech)over in Revenue Management

In this blog, we look at how artificial intelligence (AI) and machine learning (ML) evolved and impacted revenue management in the hospitality industry.

We see AI-powered software and machine learning taken by the storm from chatbots to virtual reality and augmented reality within the hospitality industry. As revenue managers, we are aware of the three strategic pillars of revenue management. Marketing automation, sales effectiveness, and analytics are tools companies combine to implement their revenue management strategies to help maximize a hotel's revenue. AI in revenue management has driven revenue, enhanced reputations, and taking customer engagement to the next level.


AI automatically generates more than 100 million decisions in data analytics platforms that help hotels create better marketing strategies, increase net revenue, pricing, recommendations, automation of inventory and channel management, and rates update across distribution platforms. Hoteliers are embracing AI and ML in revenue management. Having these tools will allow revenue managers to focus their time on tactics and figuring out strategies rather than crunching numbers and punching them into spreadsheets.


AI in revenue management has positively impacted the hospitality industry by the concept of intelligent pricing. Demand drivers through forecasts, competitors' rates, special events, seasonality, type of room, and day of week popularity allow the marketing department to use this as a guide to figure out promotional strategies to maximize room occupancy at the best price possible. Total revenue management offers a more comprehensive picture approach to revenue optimization in other ancillary departments like F&B, spa, and event rooms.


Aside from the marketing and revenue team, the operations team can also improve efficiency based on human resources planning anchored on projected occupancy. Several progressive revenue management software enables businesses to increase revenue and automate hotel rates from occupancy, demand, competition, seasonality, and historical data to ensure hotels can get optimum results. It's an all-in-one integrated system with serval add-ons. Companies that have adopted such technology enablers have observed an incremental revenue increase of up to 25%. Business intelligence tools such as HotelIQ by Intelligent-Hospitality help hotels analyze data and derive insights that support strategic and tactical decision-making. It's an intuitive, user-friendly platform with great dashboards and visualization that allows hoteliers to create and validate strategies. Companies that have adopted such platforms have benefited from a similar incremental revenue.


The airline industry already uses AI for competitive marketing, targeting, building its brand, and driving revenue. In the past, Airlines only needed to predict how many people might travel from one place to another in a single cabin. Now, there are more variables to consider. Airlines can maximize their revenue, such as the different cabin classes, number of suitcases, priority seating, charging weight of bags, extra legroom, etc. Amadeus' AI-powered revenue management system started focusing on capacity utilization by forecasting the number of passengers, no-shows, and cancellation of each flight. Now, the tool predicts the traveler's price sensitivity and understanding customer choices between different options. Singapore Airlines uses Amadus' AI-powered system to better understand customers' demand by adjusting availability and pricing. It helped the airline significantly improved revenue and staff productivity. Airlines such as ANA, Lufthansa, and Qantas have already optimizing through RPOS science.


Revenue management principles remain the same, though everything is run through automation, sales effectiveness, and analytics nowadays. Hotel legacy systems are old school; they are complex and technically outdated. Empowering hotels to make intelligent pricing decisions in an automated fashion makes the business case for investing in AI-powered revenue management and data analytics solutions. ML and AI utilize past data to predict the future hold of the business by producing an abundance of 100 million decisions from pricing strategies, increase in ROI, and inventory demand for the future, every day across numerous properties. This emerging trend has hotels experience benefits and a significant impact on their business.


Rev-Mantra management consulting services focus on our clients' most critical issues and opportunities: strategy, marketing (offline/online), distribution, sales representation, and analytics across the service industry and geographies. We bring deep, functional expertise but are known for our holistic perspective: we capture value across boundaries and between the silos of any organization. We have proven a multiplier effect from optimizing the sum of the parts, not just the individual pieces.

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