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Technology & Innovation

Calculating the True ROI of Your RMS Just Got Automated

By , Product Manager

IDeaS’ latest innovation helps clients visualize the direct value of their RMS investment with accurate gain estimates.

As a left-brained person, numbers have always fascinated me. Numbers help inform decisions, solve problems and solidify arguments. On the flip side, numbers can also give the wrong guidance when context isn’t considered. Let me give you a classic example of some misguided, out-of-context trust in numbers.

Imagine Hotel X got a brand-new RMS in 2019. At the six-month evaluation, they were very pleased with their investment since they saw a 20% month-over-month increase in revenue. But these six months included their high seasonal demand, a music festival coming to town, and even a mention of their hotel in an Oscar-winning movie.

Hotel X was already set for success. The RMS certainly aided that success but didn’t deserve full credit for it. This was their first mistake.

One year in, COVID-19 hit and travel ground to a halt. Unfortunately, Hotel X’s growth stalled, and they saw the worst numbers possible in over three years of running their business. The RMS was the first thing to go. This was their second mistake, and the revenue numbers never looked the same.

How to Evaluate True ROI?

When thinking about revenue management technology, hospitality organizations have traditionally relied on the year-over-year increase in RevPAR as a credible metric to determine the success of a system. But year-over-year RevPAR increase will only take you so far, particularly when changing economy or other conditions can make this an inaccurate measure of success.

The most reliable measurement of ROI from the use of an RMS is conducted by comparing the results between a non-revenue management environment and an environment where an RMS was at play, under the same business conditions, looking at forecasts, optimization and controls.

This is popularly known as statistical testing, and you’ve likely come across it in the context of clinical trials. However, since you cannot duplicate your property and run one with an RMS and the other with no revenue management practices, it’s not so easy to achieve. How do you solve the problem of accounting for variables outside of the control of the RMS, like market conditions and competitors?

Out with the Old. In with the Benefits.

IDeaS’ new automated Benefit Measurement dashboard for G3 RMS solves these challenges by using a statistical measurement process that compares the same data over the same period, under the same business conditions and puts the results at the user’s fingertips.

The Benefit Measurement dashboard in G3 RMS gives you a reliable way to estimate gains in your occupancy, ADR, RevPAR and Room Revenue resulting from G3 RMS using sophisticated machine-learning algorithms that neutralize the effects of external factors.

Whether you own a single hotel or multiple properties, the Benefit Measurement dashboard gives you a view of each property’s performance over a rolling quarter with the ability to drill down to an individual month. New benefits are generated each month and can be downloaded in an Excel format to be shared with the wider organization. This helps you understand the continued value G3 RMS provides.

My love of numbers got me to IDeaS, and at IDeaS we are constantly running the numbers and solving complex problems—so you don’t have to.

Product Manager

Before joining IDeaS in 2007, Jason began his career in hotel revenue management as a client relationship manager and product manager. He understands the challenges revenue managers face on a day-to-day basis and uses his industry knowledge to create products that help clients work smarter, not harder. Jason is an IDeaS President’s Award winner and has supported clients through three different versions of revenue management solutions.

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