Hotel Revenue Management Today and into the Future with Klaus Kohlmayr of IDeaS

February 13, 2020
Hotel Revenue Management Today and into the Future with Klaus Kohlmayr of IDeaS
hotel revenue management

As the Chief Evangelist at IDeaS, Klaus Kohlmayr stimulates thought-provoking conversations about the future of hotel revenue management and pricing within the hospitality and travel industries.

He also spearheads the global consultation division at IDeaS, where he pioneered the industry’s first group-price optimization strategy.

IDeaS is a leading revenue management software provider that prices about 1.6 million hotel rooms around the world daily, in eleven thousand properties globally.

Our recent interview with him revolved around topics related to revenue management key aspects hotels need to focus on for growth.

One Key Corporate Account Or Many Organic Guests – Who To Choose?

Hotels often find themselves in situations where they have to choose either the relationship with a critical corporate account or their everyday transient guests. For instance, a company wants to book a block but in August, which is the prime time for temporary bookings – what’s a hotel manager to do?

Do they book the corporate account for a massive sale but at a significant discount, or do they hold out and wait for tourists to arrive?

Ultimately, it's all about the value it yields for the customer and the business.

Long-term relationships with key accounts look quite favorable for a budding hotel business – but you’d have to ask :

  • Is this the right account for my hotel to help me make the most money possible?
  • If this account only produces business on the nights when you don't need corporate business, then is it really valuable?

Therefore, the approach should be to get the optimal price and the optimal long-term revenue from all the demand that is out there.

What Should Sales Managers Do?

One of the leading roles of revenue managers is to control what the hotel sales manager can and cannot sell to the clients. After all, they have a bird’s eye view at all the pieces of the puzzle at a time – they can find the right fit more effectively than a hotel sales manager and create optimal revenue for the hotel.

So, it's really about creating a partnership between them and working together to find the right pieces of the business to catch.

The revenue managers give the sales managers a direction to follow, which makes their work more comfortable and focused on what needs to be done to build up the hotel business.

hotel sales guide

Common Mistakes In Revenue Management

According to Mr. Kohlmayr, when hotels rely too heavily on excel spreadsheets for revenue management, they have to make all the entries manually, which is a big mistake.

Add to that the fact that hotels have about millions of pricing decisions per year - working manually on a spreadsheet is a recipe for disaster.

Further, he mentioned that some hotels go digital with a proper revenue management system, but they do not trust the metrics and decisions that it makes for them.

Obviously, at times, the revenue manager will know better than an automated solution and they might be able to achieve a better outcome with their decision. But this only happens about 5% of the times, i.e., when you’re faced with an unusual situation that the system cannot handle.

Whereas 95% of the time, the system will make better decisions than a revenue manager and create optimal choices for the hotel.

Hence, hotels must implement these tools and work with them.

What Sets IdeaS Apart From Other Systems?

As its Chief Evangelist, Mr. Kohlmayr explained three points that set IdeaS apart from its competitors.

Firstly, IdeaS functions as a decision system rather than a recommendation system. Hotels need to automate their pricing decisions, which can be displayed across various channels with minimal human interference. This saves time and ensures accurate results based on the latest trends and market positions.

Secondly, the analytics and mathematics of that system are compelling because they have been used for the past thirty years by the company. It has a variety of forecast models to choose from and produce adequate results – all depending on what the company is trying to forecast.

Thirdly, IdeaS constantly evolves and incorporates innovations. For instance, the company realized that spaces for various functions are a core component of a hotel and eventually became the first one to build a function-space revenue management system about four years ago. It also acquired a company called “Smart Space” about two years ago that does event analytics.

The Future Of Revenue Management Systems

Players in the hospitality industry have realized that they cannot compete successfully without a revenue management system to handle their revenue streams, including event-space revenue management.

With the demand for effective rates as well as rising online reservations and group bookings, automation processes are necessary to help run your hotel business efficiently without much need for human intervention.

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