Who doesn’t love the concept of a “do over”? You get the opportunity to do [insert any activity here] over without the first effort counting against you. In golf, it’s referred to as a “mulligan” – if your first shot is terrible, put down a second ball and forget about that first hit (wait, what first hit?)
This approach works well in situations where there is no real impact caused by a first attempt. But what about revenue managers who need to verify a gut feeling or hunch they have? What happens if their hunch misses the mark? Well, real money might be left on the table.
What if there was a way to know the impact of your hunch before it is set into motion? What if you were able to see firsthand the changes that your gut feeling might impact?
Let’s take a closer look at some real scenarios that revenue managers could use this type of ‘Magic 8 Ball’:
“I’m coming up on a week with little base business on the books and the pacing is average to soft. How much additional demand could I capture if I reduce the BAR rate below my normal strategic price limit? What effect will doing this have on my occupancy forecast and other key performance measures?”
“I have a very busy city-wide event date coming up and the hotel is nearly sold out. My RMS suggests an overbooking recommendation of 20 rooms. This is a first time event, though, so without history, I’m unsure whether I should expect normal wash behaviors. With most of the city expected to be sold out, my hunch is to take a more conservative overbooking approach; specifically with my double room types since they’re in greatest demand. How will reducing my overbooking strategy impact the decisions and key performance measures?”
“I’m considering running a qualified promotion that I believe will drive 10 additional room nights of demand every Thursday through Sunday in August. I’d like to see how this promotion might impact my decisions and key performance measures if I decide to participate.”
Scenario analysis capabilities in automated revenue management systems allow you to explore performance outcomes if events like above do occur. IDeaS has applied this scenario concept so that users can understand what will happen if a decision is changed or if guest behavior (demand or wash, for example) differs from the current expectations.
Revenue managers can use this type of capability to learn how sensitive a system is to changes in particular inputs. Utilizing this type of scenario feature is quick and easy, allowing revenue managers to experiment more – really understanding how and why pricing and availability recommendations are made in a very intuitive way.
To learn more about IDeaS’ What-If functionality, watch our video and download our white paper, “Simulations, Scenarios, and What-If Analysis: Advanced Tools for Revenue Management.”