See how resorts are tapping into personalized pricing without using all your personal data
My work on the IDeaS Advisory Services team took me to a lot of resorts this past year. Part of it may have been my eagerness to escape the harsh winter we’ve had in Minnesota, but what I think is really happening is resorts are stepping up their revenue game. I’ve had the great opportunity to help several resorts advance their revenue management capabilities and culture. What I have found is they are achieving personalized pricing at unprecedented levels.
Personalized pricing has been buzzing around our industry for a few years, but it’s been romanticized a bit. I often challenge the idea that someone’s shopping behavior, social media activity and history as a customer can be married together to arrive at the optimal room rate for just that consumer. With rising concerns over personally identifiable information, algorithmic biases and more and more technology entering our industry, is that level of encroachment feasible or even desirable anymore?
What I have come across in my professional interactions this year is that resorts are achieving personalized pricing without the need for such personal data from the consumer, and they are doing this at very granular levels thanks to some revenue science and strategy. I’ve seen this in resort markets in Southeast Asia, the Mediterranean, the Caribbean, Mexico and the US. This is not to say other hotel types aren’t already doing this—with the right technology and strategic mindset, many can achieve this—but resort business models provide unique opportunities to test all the different permutations of personalization.
For starters, resorts often have many room types and drive a longer length of stay. They also tend to have very well-defined patterns by day of week and season. Many resorts also rely on occupancy-based pricing to drive revenues, and packages or amenity add-ons can be a large revenue stream as well. All of this means greater opportunity to maximize revenue, and when you start to strategically yield business based on these factors, you get very personal very quickly.
Let’s use an example of Resort X, a destination resort with ample meetings & events space located an hour from a major international airport. In this case we have a resort that drives both strong leisure weekend business and strong mid-week group business. Resort X has 15 room types, charges an additional rate for third- and fourth-person occupancy and historically captures a 3+ night length of stay from their guests. In terms of number of pricing decisions for a given year, we’re talking about 15 room types multiplied by 365 days in the year times 3 occupancy price points times 7 length-of-stay price points, which works out to 114,975 pricing decisions in the year—for just BAR! This is not even taking into account fluctuations in pricing as demand shifts or additional rate plans yet.
Looking at this optimized pricing at the room type level by length of stay results in very personalized price points. Think about the difference in price points if you had a family of four looking for a junior suite for a Thursday to Sunday stay pattern versus a single business traveler looking for an executive king for a Tuesday to Wednesday stay pattern. Even if these two guests were looking for the same room type, we’d see very personalized price points for each of them. Layer this level of pricing optimization on top of the diverse set of products, rate plans and chargeable amenities a resort offers, and all of a sudden we have something for everyone, without ever having to ask for personally identifiable information.
Don’t let my perception of personalization cause you to push pause on your strategy. Pricing will continue to evolve. Buyer expectations are on the rise because technology provides more transparency and immediacy to our consumers, as well as our own business. The guest’s ability to tailor their experience will only continue to grow, and customer choice will be the next pricing opportunity.
But, I can tell you in today’s environment, hotels, especially resorts, are discovering ways to leverage the data they have now and cutting-edge technology to optimize and deploy those hundreds of thousands of pricing decisions every day. Each of those is becoming more hyper-personalized and delivering results that lead to greater revenue opportunity and profit potential.
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."
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