October 05, 2017

Kim Van Haalen, Guest Writer

What do self-driving cars have to do with revenue management?


Staying up to date with trends is one of the key responsibilities of hoteliers and revenue managers. Emerging technologies impact business, no matter the size of the hotel. Chances are that you have come across the term ‘Artificial Intelligence’. This technology domain is currently climbing the peak of hype. But what is AI exactly and why should you care?

Self-driving cars

Artificial Intelligence, or AI, is simply a collection of methods for building software and hardware that can do (some of the) things that humans can do. So how is that different from automation, you ask? Well, something is only considered ‘intelligent’ when it learns. Continuously.

An easy example is a self-driving car. These are not simply controlled by a predefined rule-based autopilot. Instead, the system continuously learns from new sensor data. Not only in that specific vehicle, but in all that run on the same software. Hence, we are already at a point where the car can make better judgement calls than a human driver can. The result? Safer traffic, powered by AI.

Brake or accelerate

So how is this relevant to hoteliers, other than those who drive a Tesla to work every day? Let’s apply the car example to revenue management. By definition, hotel revenue management is a discipline that optimizes revenue by strategically managing room inventory and pricing based on predictions about consumer demand. Just like a driver, a revenue manager must consider many factors before deciding whether to “brake” or “accelerate” their prices. Not once, but continuously. Digital systems (machines) can work through large amounts of data a lot quicker than humans ever could. This is one of the key underlying reasons why AI in driverless cars improves road safety. And the same concept applies when understanding consumer demand.

Continuous feedback loop

A second key concept is the continuous feedback loop. A self driving car is constantly making small adjustments based on new information (sounds familiar, CFOs?). AI can do this faster and more frequent than a human can. Likewise, AI-driven revenue management tools can suggest small changes, then monitor the impact of these changes and respond accordingly.

And that brings us to the reason hoteliers should understand AI: AI-powered software can directly help you stimulate demand in low demand periods and maximise revenue in high demand periods. In other words: improve YOY profitability.

At Prix, our view on embedding AI in your hotel’s operations is to let AI do the groundwork. This allows hoteliers and revenue managers to utilize their full potential through formulating a revenue strategy and making the final judgement calls.



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