I’ll See Your ROI and Raise You an ROU

By , Sr. Industry Advisor

ROU is the new ROI

  • IDeaS calculates a hotel’s ROU with a refined, two-step process to measure the benefits of a fully automated revenue strategy
  • What hotels discover is additional revenue opportunity hiding in each of those automated decisions
  • The Revenue Opportunity Uplift Calculator lets hotels without IDeaS take advantage of this data to understand how hotels like them are performing

“What’s my ROI?” We’ve all heard it. We’ve probably all been guilty of asking it. Anytime you ask for money, advocating for a purchase, it inevitably comes up. Return on Investment (ROI) has been a measurement long used in the hotel industry whether for property investment, advertising spend or capital expenditures. And when it comes to new or improved technology, potential buyers consider ROI measurement to determine when the technology will pay for itself.

To ascertain ROI, many often look to their performance over the previous year. But that number always has an asterisk next to it, or if it doesn’t, it should. The skepticism with this practice is that it attributes any and all positive growth back to the new technology. Market conditions, changes in business practice, economic climates, convention calendars and more have an impact on revenue, despite any new technology put in place.

This is where Revenue Opportunity Uplift (ROU) provides a more authentic picture. ROU is a bit more “science-y” than year-over-year revenue growth, but much like our technology, IDeaS does all that math for you. IDeaS calculates a hotel’s ROU with a refined, two-step process to measure the benefits of a fully automated revenue strategy.

The first step involves monitoring a hotel’s performance over a typical 90-day window, once their IDeaS technology has been implemented. Simultaneously, over this same 90-day period, a carbon copy of the hotel is made, except this clone does not have IDeaS’ system. When you remove automated pricing, inventory controls and overbooking strategies, a comparative analysis measures the hotel’s actual performance against the simulated performance of the hotel working in a manual environment. This means, on days of high demand, the manual-environment property is more inclined to accept business on a first come, first served basis, lacking the flexibility of automated controls to manage demand.

What hotels discover is additional revenue opportunity hiding in each of those automated decisions, both in pricing and inventory controls. It also illuminates how pricing controls, built from rules that dictate rate increases in lockstep with occupancy growth, miss significant revenue opportunity because they are reacting to demand, not anticipating it.

ROU also removes the year-over-year increase that is experienced from improved market conditions because that’s now represented in both scenarios, providing the true incremental benefit of the technology.

Fortunately, since IDeaS powers the most widely-adopted revenue technology platform in the industry, these results are aggregated and anonymized from all over the world, for all different types of properties. Our handy new Revenue Opportunity Uplift Calculator lets hotels without IDeaS take advantage of this data to understand how hotels like them are performing, by simply answering six easy questions.

Don’t be kept in the dark when it comes to incremental revenue. Calculate your ROU today to see what opportunity awaits.Click to Tweet | IDeaS Twitter
Blake Madril
Sr. Industry Advisor

Blake Madril joined IDeaS in 2014 with over 10 years of experience in hospitality operations, marketing, sales, distribution and revenue management. Currently, in his most recent role of Sr. Industry Advisor, Blake is responsible for global initiatives that enable IDeaS’ clients to implement, adopt and maximize their return on revenue technology and services ultimately aimed at helping hospitality, and new industries pioneering revenue management, develop the tools and processes to optimize profitability. He is a strong advocate for the discipline of revenue management and the convergence of data solutions and job functions to bring the best possible experiences to businesses and their customers.

Prior to IDeaS Blake worked both for individual hotel properties and as part of a corporate management team. His job roles ranged from operations manager to convention services director to corporate director of revenue management. He has worked with global hotel brands and affiliations such as Hilton Worldwide, Intercontinental Hotels Group, Wyndham Hotels & Resorts, Marriott International, Preferred Hotels & Resorts and Global Hotel Alliance, as well as luxury independent properties.

An avid enthusiast of all things '90s and sitcoms, Blake recently took home second place in a Saved by the Bell trivia contest. Words spoken right after accepting his trophy: "I'm so excited."

Related Resources

Hungry for more?

At IDeaS, we’ve always got an ear to the ground and our fingers on the keyboard, ever-ready to share our latest learnings, data, trends, and happenings with you, dear reader.

See all blogs
×
×