Excerpt from CoStar
Automated systems were unprepared for the pandemic, so hoteliers adapted
As hotels became increasingly reliant on automated revenue management, a global pandemic brought unprecedented shifts in demand, forcing revenue managers to adapt on the fly.
The modern hospitality industry had never faced a demand shock at the level of the COVID-19 pandemic, nor did the automated revenue management systems increasingly deployed in the industry. framework.
That’s why, according to experts speaking at the 2022 International Hospitality Investment Forum, revenue managers have had to go back to basics and evolve their thinking throughout the pandemic.
Speaking at the ‘Evolution of Revenue Management’ session, Konstantinos Santikos, Managing Director of Santikos Collection, said such automated systems had become “completely irrelevant at the onset of the pandemic”.
“We had to go back to Excel, basically, which is sad,” he said.
Joe Pettigrew, commercial director of hotel asset management at Starwood Capital, said revenue management systems are “built with a stable environment in mind.”
“The system has to look at the past to predict the future. That’s the whole purpose of their existence,” he said.
When past patterns are completely decoupled from future demand, revenue managers have had to relearn how to be entrepreneurial, he added.
Pettigrew said that in the depths of the crisis, revenue management systems, which are designed to forecast demand and set prices based on that demand, have been relegated to being primarily a reporting tool that managers of human incomes then used to manually analyze and forecast.
“We’ve developed some really good Excel templates over the last two years,” he said.
Judith Cartwright, founder and managing director of Black Coral Consulting, said that much like how systems lost reliability during the recession, they could not accurately measure and predict the recovery.
“With the last minute demand that happened initially when the markets opened up, no revenue management system can keep up with that,” she said. “When you look at destinations like the Maldives, 70% of the month’s total occupancy was booked within five days.”
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