2020 Blog

The golden age of revenue management is upon us. Are you ready for it?

As this decade quickly comes to an end, the entire hotel industry is bracing for disruption. What is needed now is vision, strategy, and guts. With the industry in the midst of transformation, the most successful hoteliers are the ones who foresee long-term trends, understand their impact, and invest in their infrastructure of today for the benefit of tomorrow, even if it means going against conventional wisdom.

Like it or not, the ubiquity of technology continues to infiltrate every decision we make, from smart cars and apps to AI, while the intelligence being collected is something we are only just beginning to understand. We are quickly becoming one with technology, driven by the gigantic amounts of data being collected.

Over the past year, in all my travels and conversations with hoteliers, revenue leaders, technologists, data scientists and more, I’ve arrived at two important conclusions about 2020: one, the ongoing acceleration of innovation is unstoppable, and two, we are entering the golden age of revenue management.

Sameness Will Not Result in Success

While it may seem the acceleration of innovation is nothing new, it’s important to consider how it’s increasingly becoming part of our everyday lives, even when we don’t notice. Perhaps especially because we don’t notice.

For over a decade, I have listened to industry experts say the hospitality industry lags behind other industries in innovation, investment, and adoption of new technologies. Is this really the case? What we are seeing is that the space has become incredibly diverse and dynamic over the last few years. When I look at other industries, I feel everyone struggles with the same issues—data silos, outdated technology, data not flowing freely, etc. Many people complain about the lack of innovation in the industry; however, I feel the hotel technology space is buzzing.

Research continues to show consumers have a desire to be sold to in ways more relevant to them. If they can relate an upcoming trip to their own past experience, or read about someone else’s experience, they are more likely to choose the one that speaks to that experience, whether good or bad. A recent Google/Bain/Dynata study revealed online, unmet needs deter travelers from booking twice as much as price, and travelers spend up to 35% more if their needs are met. In essence, their experiences continue to trump product sales pitches.

The continuation of enabling a better, more seamless customer experience through technology, and the collection and smart use of data to anticipate guest needs while avoiding failures in service, is a definitive trend we’re seeing come to light quickly.

What this means to the industry is it’s time to think with a multimodal mentality. Travelers don’t use just one form of accommodation when planning trips today. Most choose the right accommodation type according to their needs at the time. For instance, I took a 10-day trip to Austria and Slovenia this past summer. Throughout my journey I stayed in hotels, tented camps, Airbnbs and private accommodations, a mix fully dependent on what was most convenient at each location.

This multimodality trend in lodging has been enabled through technology. In the past we selected a hotel recommended by a travel agent or a friend. Today, the convergence of technology in the cloud and the emergence of platforms that enable customers to select multiple accommodation avenues and view others’ experiences is fast becoming the norm. Through this convergence, hotels that can turn data into decisions will come out the strong winners.

Over the long term, hotels are becoming prime targets in the race to satisfy these instant gratification demands. A great example is the expansion of the Internet of Things. Hotels will become connected hubs with all devices starting to communicate with each other. The end result, if done properly and safely, will reduce waste and increase productivity over time.

Yes, the acceleration of innovation seems to be moving at light speed. Without a crystal ball, the best we can do is keep up on the trends with a watchful eye toward companies delivering ever closer to the ultimate guest experience.

Welcome to the Golden Age of Revenue Management

“With great data comes great responsibility.”

Nothing is truer today. Of course, the phrase means different things to different people, and it has been the theme of reports from large data and security firms in healthcare, finance and insurance companies for more than 10 years.

In the hospitality industry, we are beginning to see huge amounts of data being accumulated, digested and managed. Hilton recently commented they collect one billion data points every single day. Today’s revenue leaders must manage the increased responsibility to direct business decisions. In turn, revenue management system providers have a responsibility to deliver automated pricing decisions users can trust.

Essentially, any company is now first and foremost a data company, leveraging technology to convert the data into decisions. Strategically any company not investing into the right technology components to allow for close-to-real-time decision-making will eventually be disrupted and become irrelevant.

Recent multiple investments in group and meeting online distribution have indicated the acceleration of revenue management for group bookings as well as meetings & events space. With that movement, we can see revenue leaders will increasingly shift their attention to managing all revenue streams of a hotel, not just guest rooms.

Focusing on profitable revenues will be increasingly critical, especially in times of increased economic uncertainty. As technology moves into the cloud, barriers to data sharing are being removed and while it has been talked about for decades, it’s finally becoming possible to look at the optimization of an entire organization.

This means traditional revenue management KPIs such as RevPAR will lose dominance. Additional KPIs include factoring in cost of channel/sales, revenue per available customer, and profit customer contribution. Taking into account not only room revenue, but ancillary spend across the hotel, the management and optimization of existing channels and finally, taking a hard look at servicing costs and optimizing other inventory, will be key to ongoing, long-term success.

The golden age of revenue management is upon us, and the new breed of revenue manager—and the advanced technology they use—will be increasingly critical to delivering total profit optimization. It’s time for revenue leaders to step up their game and focus on the overall commercial success of the business for which they are responsible. Optimizing all revenue streams, while balancing profitability, will be the key to revenue success in 2020 and beyond.

Klaus Kohlmayr

Klaus Kohlmayr challenges strategic processes, stimulates thought-provoking conversations and reinvigorates the future of revenue management and pricing within the hospitality and travel industries.

A natural contrarian, Klaus has challenged the status quo for over 20 years. He re-joined IDeaS from TSA, where he led the company’s global commercial, operations and strategic partnership initiatives. During his previous stint with IDeaS, he started the company’s global consulting division -- leading a team that partnered with top hotel companies. Together they pioneered the industry’s first group price optimization and function space revenue management proof-of-concepts in a real-world environment.

Klaus developed his passion for the hotel industry at the Hotel Management and Catering School in Villach, Austria, where he received a Bachelor of Science in Hotel Management. An advocate of lifelong learning, he has since studied business at Henley Management College, real estate investment and asset management at Cornell University’s School of Hotel Administration; and finance and strategy at the Singapore Management University.

Klaus has been an active participant in various advisory boards, including HSMAI in Asia Pacific and the Americas, and the Cornell-Nanyang Institute of Hospitality Management, Singapore. He not only loves to challenge the status quo, but wholly welcomes being challenged in new ways of thinking.
Klaus Kohlmayr
Chief Evangelist

Klaus Kohlmayr challenges strategic processes, stimulates thought-provoking conversations and reinvigorates the future of revenue management and pricing within the hospitality and travel industries.

A natural contrarian, Klaus has challenged the status quo for over 20 years. He re-joined IDeaS from TSA, where he led the company’s global commercial, operations and strategic partnership initiatives. During his previous stint with IDeaS, he started the company’s global consulting division -- leading a team that partnered with top hotel companies. Together they pioneered the industry’s first group price optimization and function space revenue management proof-of-concepts in a real-world environment.

Klaus developed his passion for the hotel industry at the Hotel Management and Catering School in Villach, Austria, where he received a Bachelor of Science in Hotel Management. An advocate of lifelong learning, he has since studied business at Henley Management College, real estate investment and asset management at Cornell University’s School of Hotel Administration; and finance and strategy at the Singapore Management University.

Klaus has been an active participant in various advisory boards, including HSMAI in Asia Pacific and the Americas, and the Cornell-Nanyang Institute of Hospitality Management, Singapore. He not only loves to challenge the status quo, but wholly welcomes being challenged in new ways of thinking.