Scandic Renews Focus on Revenue Management Resulting in 7% RGI Gains

The Story

Scandic’s first hotel opened in 1963. Today, it is an internationally renowned group of over 160 hotels, located throughout Northern Europe. Throughout their history, Scandic has been a frontrunner in developing services and new solutions to meet their evolving needs. With revenue management a cornerstone of Scandic’s success, and having benefited from the use of IDeaS solutions in key hotels, the group has gone through an extensive process to ensure all hotels across the estate are set to fully optimise revenue.

Optimizing revenue across Scandic

Scandic has long understood the importance of revenue management to a hotel group’s success—40 Scandic properties have been using IDeaS revenue management solutions since 2003.

However, while there was great focus and momentum in using sophisticated revenue management tools in many of the group’s top-performing, geographically-strategic hotels, there was an opportunity for all other hotels in Scandic’s estate to benefit from the same level of revenue management focus and tools

We wanted all of our properties to benefit from the best, market-leading, technology, and were confident that in the long run IDeaS RMS would deliver a greater return on investment.

“We quickly realised that we needed enhanced processes and an automated revenue management system in place across all of our hotels to execute a successful revenue management strategy,” said Tom Blomquist, revenue development & analysis manager at Scandic Hotels. “Following an exhaustive evaluation of the market we remained convinced that IDeaS is the ideal partner for our revenue management journey.”

Initially, Scandic had planned to implement IDeaS Revenue Management System (RMS) across a large portion of their portfolio, while the rest of the properties were to implement IDeaS Forecast Management System. “We questioned whether those hotels which had traditionally shown relatively static business really needed the full revenue optimisation system,” explained Blomquist. “However, we came to the conclusion that these hotels had the potential to increase their revenue. They would be able to greatly benefit from IDeaS RMS’ forecasting and pricing analytics, and in particular enhance their decision making processes with Daily Best Available Rate (BAR) and Last Room Value (LRV),” he said.

An ambitious & strategic transformation

In addition to the IDeaS RMS roll-out across all Scandic properties, the group had begun an extensive update of their other technology systems including a change to their property management system.

With such an ambitious undertaking, the comprehensive support from the IDeaS team was vital. “It was not a small task to roll out IDeaS RMS in 83 of our hotels, in under a year, but IDeaS was committed to the project and provided all the help and resources we needed,” said Blomquist.

Blomquist expanded, “While revenue management is a cog in a larger wheel of technology solutions at Scandic, it is an incredibly important one—the IDeaS RMS showed the same level of integration by seamlessly assimilating into our legacy systems, which could not be said for some other systems on the market. IDeaS RMS was the perfect match for Scandic, fitting into our wider structure with ease.”

Another crucial aspect to Scandic’s transformation stemmed from the awareness that a truly effective revenue management strategy needs not only technology, but people and processes too. In the vast majority of Scandic’s smaller regional hotels, revenue management was being handled by employees with other primary duties, such as the front office manager, meaning revenue management did not benefit from 100 percent focus needed to truly optimise revenue and maximise profits.

“Only with a focused, data-driven revenue management culture can all our hotels make the right strategic decisions to optimise revenue and profits,” explained Blomquist. As a solution, Scandic decided to take a clustered approach to revenue management to provide particular benefit to the smaller properties, with dedicated revenue managers managing two to four hotels each.

Taking advantage of revenue opportunities, every day

Scandic has seen the benefits of IDeaS RMS across the group’s portfolio. “With our clustered environment, IDeaS RMS is ideal, as it enables our revenue managers to manage on a multi-property level reviewing a number of hotels, all on one screen,” said Blomquist. “Furthermore, IDeaS’ state-of-the-art analytics provides our revenue managers with a system that gives accurate forecasts, ensuring more effective decisions and thus long-term revenue optimisation.”

Blomquist highlighted the advantages of the IDeaS’ Daily BAR pricing module. “With this module, we have been able to take advantage of revenue opportunities each and every day, that would have been impossible to handle on a manual basis,” he said. The Daily BAR pricing module has delivered tangible positive results for Scandic, with Blomquist citing Oslo—a market where Scandic traditionally had a smaller market share—as an example. “A number of our Oslo hotels made use of IDeaS RMS BAR Pricing Module in May 2011,” explained Blomquist. “Since following the IDeaS Daily BAR recommendations, we have recorded a significant increase in our Oslo RGI—a yearon-year growth of seven percent.”

Blomquist was also keen to stress that the success of the project could not have been achieved without the tremendous commitment of the IDeaS team. “IDeaS got things moving quickly—the scale of the roll-out was such that we were worried about missing scheduled completion dates, expecting small problems to keep pushing us back. However,” he added, “everything went extremely smoothly—despite having to schedule some major changes—and we know that this was all because of IDeaS’ tremendous support and dedication to seeing the job done, and done well.”

The feedback from the staff at Scandic has been overwhelmingly positive. “As IDeaS RMS is so accessible, it is not only the revenue management departments that benefit from the system. Many of our general managers, along with our country presidents, are making use of the IDeaS’ applications on a daily basis, and there has been a real buy-in into Scandic’s revenue management culture. In fact, the first thing Scandic’s Norwegian President does every morning is he logs into IDeaS RMS!” said Blomquist.

Achieving an advanced revenue management vision

Looking to the future, Blomquist confirmed that Scandic is committed to their relationship with IDeaS for the long term. “The results reported in the Transient Benefits module alone has completely validated our investment in IDeaS RMS,” he stated. “And we know that this is just a portion of the full benefit, with further indirect benefits being achieved on top.” Scandic is driven by a strong revenue management vision. With the IDeaS RMS and a great workingrelationship with IDeaS team, we have been able to achieve this. We continue to partner with IDeaS, and closely work with IDeaS’ outstanding Client Relationship Management team to see that our vision is realised. And, of course, as we have new hotels opening, we will continue to implement IDeaS RMS—given the revenue potential—it’s paramount to us to implement the solution from the outset.”

Since following the IDeaS Daily BAR recommendations, we have recorded a significant increase in our Oslo RGI—a year on year growth of 7%