From Tech Start-Up to Industry Leading Revenue Solutions Provider

When Ravi Mehrotra and Sanjay Nagalia launched IDeaS Revenue Solutions in 1989, the concept (and viability) of a start-up tech company wasn’t typically associated with the same dazzling, Silicon Valley-type startups we have come to know today.

In fact, while Ravi and Sanjay held big dreams for transforming the hospitality industry with their ground-breaking, scientific approach to revenue optimization, they knew that pioneering sustainable technology would be the critical component to the long term success of their business. From the very beginning, they focused on developing innovative solutions that would analytically evolve with a forthcoming rush of industry change and data sources.

Always eager to chat with his team, I had a recent conversation with Ravi about the 27 year journey he’s embarked on – which saw IDeaS emerge from a small start-up company into today’s industry leader in innovative revenue technology.

When you set out to change the way hotels price their inventory, what was your ultimate vision for revenue management within the industry? Has that vision changed over the course of IDeaS’ lifetime? 

At IDeaS, we define revenue management as a rational and disciplined decision-making process for maximizing company-wide profits, while managing risk under current and anticipated market conditions.  Our ultimate vision was to deliver practical revenue management solutions that were capable of making optimal decisions in real-time, keeping the overall global business perspective of our clients in view.

In the IDeaS approach to yield management, the uncertainties which exist in the business world are addressed explicitly, and all decisions are made on the basis of the statistically expected marginal costs and revenues that are relevant to that particular decision.  Our vision remains unchanged as we continue to innovate upon our solutions to match the evolving needs of the market.

What is your commitment to keeping IDeaS evolving and at the forefront of innovation for the hospitality industry? 

As the industry has evolved, our solutions have also evolved to help businesses cope with moving from the traditional inventory management and price optimization techniques deployed in the past to Best Available Rate, and now to providing real time dynamic pricing capable of changing prices after each transaction as needed.

We are continually developing tractable and efficient real time price optimization models and techniques that enable our clients to effectively and optimally use the rich and vast amount of information that is (or becomes) available to use for decision optimization.

Price personalization is widely accepted as an integral part of electronic commerce; however, the most ideal form of this practice is still yet to be implemented in any hotel or resort. A guest’s or buyer’s willingness to pay (WTP) is the ultimate discriminatory variable. Finding out the WTP is not trivial – and IDeaS is developing innovative ways to address this in a practical manner.

Besides IDeaS’ 27 years of leading industry expertise, what do you feel sets it apart from its competitors?

What sets IDeaS apart in the market is our innovation and unique modelling and problem solving ability that acknowledges and quantifies uncertainty in decision optimization.  We have developed proprietary methodology, models, and solution techniques that captures domain characteristics and decomposes a problem without sacrificing the global optimality – as opposed to relying on “general purpose” techniques and heuristics.

That sounds very scientific. Can you translate that for those of us that aren’t quite as savvy in the world of high performance analytics?

Of course. IDeaS’ current research in this area focuses on originating increasingly sophisticated methods for dynamic pricing that optimize expected profits over longer time horizons.  We are actively researching models and solution techniques that provide efficient dynamic pricing strategies correctly capturing the real world modelling of markets, buying behavior, seller behavior, price optimization strategies etc. – all over multi-year time horizons. The future behavior of guests is not independent of what they’ve experienced in the past – a fact that is often ignored by those focused in optimizing revenues today. It is very important to understand how such revenue optimization will impact guests in future.

What excites you the most about all of the future innovations IDeaS is developing for our clients?

What excites me the most is total revenue optimization, a 360-degree approach to managing all sources of hotel revenue to maximize revenue generation and manage every revenue source, at every guest touch point, to its maximum profitability for the entire organization.  The innovations we are developing will allow our clients to refine their organizational structures and fully align marketing, sales, business intelligence and demand to maximize total profit from all resources. This will virtually eliminate any current silo-based, territorial business decisions.

Another aspect that excites me is the dependence of the global economy on the Internet.  The global economy will continue to be even more impacted by, and dependent on, the Internet.  The volume and low cost of up-to-date information will enable guests to be better informed about products and prices. Likewise, providers will be better informed about – and more responsive to – their guests’ needs.  It is exciting to work on innovating the tools of modeling, analysis and simulation to solve for the future revenue management challenges our clients may face.

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