In the hotel industry, there’s a common misconception that Revenue Management Systems (RMS) become ineffective when demand decreases. This perception was amplified during the COVID-19 pandemic, when many hoteliers froze their pricing and abandoned their RMS, considering it an expensive luxury in low-demand scenarios. However, the past few years have proven that an RMS can be a valuable asset, regardless of market conditions or seasons.
The Root of Negative Perceptions
To understand the negative perceptions surrounding RMS applications, we need to examine some legacy practices in hotel operations. Many hoteliers believe that accepting bookings at any rate is the best strategy to combat low demand. However, this approach is flawed, and data proves it: Siim Karu’s research on a&o Hotels and Hostels, one of Europe’s largest hotel chains, revealed a surprising finding.
During the lock-downs, the hotel chain generated 7% more revenue by leveraging their RMS compared to their previous static pricing approach. This finding challenged the industry’s assumptions and demonstrated the potential of RMS in increasing revenue, even during challenging times.
Turning Uncertainty into Opportunity with Artificial Intelligence
In the hotel business, accurately predicting low demand is nearly impossible. Therefore, an efficient system that can react to uncertainty without delay and adjust pricing accordingly is crucial. Intelligent machines, powered by Artificial Intelligence (AI), can calculate the best prices within a short period, 24/7.
The best hotel RMS systems excel at identifying spikes in demand. For instance, Pricepoint can easily recognize an upcoming sales glut and suggest an optimal price. This capability reduces the need for manual price adjustments, saving time and minimizing operational burdens. Additionally, prices calculated by an RMS are likely to be more efficient than human calculations, as they leverage the power of AI-driven dynamic pricing for ideal outcomes.
Boosting Revenue and Occupancy with Pricepoint
Modern revenue management strategies should move away from the traditional Best Available Rate (BAR) pricing mechanism, which determines the lowest price for specific hotel rooms and sets other rates accordingly. In low-demand cycles, fixing BARs is no longer helpful, as they have become irrelevant.
Pricepoint, a comprehensive revenue management solution, can help hoteliers break free from outdated habits. Pricepoint is a highly efficient RMS designed to solve pricing problems for hoteliers. Its fully automated AI-based technology optimizes and recommends the best price every time, ensuring that users never miss an opportunity to boost revenue and improve their bottom line.
Conclusion
The perception that Revenue Management Systems become ineffective during low-demand periods is a myth. The past few years have demonstrated that an RMS can be a valuable asset, regardless of market conditions or seasons. By leveraging the power of machine intelligence and AI-driven dynamic pricing, hoteliers can turn uncertainty into opportunity and maximize revenue.
Pricepoint, a cutting-edge RMS solution, offers hoteliers the chance to experience the benefits of an AI-powered pricing system firsthand. Request a 30-day free trial today and witness the difference it can make in your revenue and occupancy rates.