The future of hotel revenue management: A conversation with Dr. Ravi Mehrotra

This week I finally had a chance to catch up with Dr. Ravi Mehrotra, President & Founder of IDeaS – A SAS Company.   As most of you remember, SAS acquired IDeaS, a leading provider of pricing and revenue management Software, Services, and Consulting to the hospitality industry, in 2008.  Since that time, Ravi and his team have been working closely with SAS's revenue management and price optimization researchers, sharing their domain expertise in hotel pricing and revenue management.

Since we've been talking about the future of revenue management for the last couple of weeks, I was interested to hear from Ravi about what excites him most about revenue management and his vision for the future, as well  to get his perspective on the work that IDeaS has been doing with SAS. 

How do you think that your current customers have benefitted/continue to benefit from the SAS acquisition of IDeaS?

IDeaS was founded more than 20 years ago on a mission to help hoteliers make better pricing decisions to optimize revenue.  Our unique approach to solving problems with our industry-leading solution – adopted by both major hotel chains and independent properties alike –has been underscored by our commitment to superior client service and innovation.  Since the SAS acquisition a few years ago, we strive to leverage the strengths of both organizations. IDeaS now has greater access to analytics research that has been created and tested for the global marketplace – research that is now being combined with IDeaS’ domain expertise of the hospitality sector, to move beyond managing revenues and more toward optimizing profits with forecasting and predictive technologies.

With these resources, we are more focused and committed to our founding mission that gives our clients greater control over their destiny.

As you think about the work you’ve been doing with SAS, what are you most excited about?  What do you think will have the most impact on your current and future customers?

Both SAS and IDeaS place a high value on the power of predictive analytics, and I think the most exciting work that we have been doing together comes from the combination of SAS’ analytics horsepower with IDeaS’ expertise in revenue management and price optimization in the hospitality domain. The marriage of SAS' advanced analytics and platform technologies with IDeaS' revenue management and Software-as-a-Service (SaaS) delivery model will offer an unmatched capability set for quickly driving value for the hospitality industry and beyond.

The result is an entirely new IDeaS revenue management solution that embeds SAS’ Revenue Management and Price Optimization Analytics. Our new solution, which will be commercially available in 2013, will bring hoteliers the ability to better manage, price and optimize all revenue sources. Because we work so closely with our clients, we know their needs and idiosyncrasies, and can configure our SaaS solution and decision support to specifically meet those needs. That’s always been our approach. Now more than ever, by delivering powerful new analytics in multiple ways, we enable hotels to transform their profitability and address their biggest revenue management challenges.

What are some of the biggest challenges revenue mangers face in today’s volatile market, and how do analytics help them address these challenges?

Today, the breadth and scope of the revenue management function is far reaching.  Hotel revenue management professionals face increasing pressure to maximize overall profits from the entire asset while navigating the complexities of highly uncertain and rapidly changing markets. Essentially, revenue management has evolved from a focus on rooms to optimizing revenues and profits from all revenue streams (rooms, function space, food and beverage, parking, spa, golf, retail, other activities). The challenge is to find the most profitable mix of business for the entire hotel asset while accounting for the lifetime value of all guests

And the biggest barrier to meeting this challenge is a lack of qualified manpower with respect to analytics skills, geographically remote work environments and the slow adoption of new technology.  In addition, there is a lack of integration between systems that control different revenue streams.  In order to advance the cause of optimizing revenue streams across the entire hotel asset, hotels will need to hire and empower qualified RM professionals with a suite of advanced models and hotel analytics, invest in new technology and advances in analytics software for forecasting and optimizing decisions, and provide the necessary training to harness the power of a revenue management solution.

What is your view of the future of analytics in revenue management?

Today’s revenue management problems are simply too complex, with too many variables, and require real-time decisions. Traditional, known general purpose optimization techniques are not going to allow us to find optimal solutions to such complex total revenue management problems.

Together, IDeaS and SAS have developed proprietary methodology, models, and solution techniques that enable us to capture the domain characteristics of total revenue management problems and allow us to find an optimal dissection of the problem for making decisions in real time.  We have created a new optimization approach that breaks down the complexities and variables, yet still delivers automated, self-adjusting revenue management decisions – all with real time efficiency. This means that revenue managers will be able to focus more on strategic, high impact decisions for their businesses and trust that their revenue management solution is accounting for the highly dynamic and competitive market forces.

It's pretty clear from our conversation that just looking at a bunch of reports is not going to keep hotels competitive and make revenue managers proactive instead of reactive.  In today's complex market, the only way to stay ahead is to know what's coming.  It's critical for today's hotel revenue managers to have access to advanced, predictive analytics, delivered in a format that supports fast, dynamic decisions.  Definitely stay tuned for more from Ravi and IDeaS, as they continue to innovate in this space!

tags: Revenue Management and Price Optimization

2 Comments

  1. Belkis del Carmen Romero Zola
    Posted November 2, 2012 at 12:45 pm | Permalink

    Interesante articulo

  2. Posted November 9, 2012 at 4:19 am | Permalink

    Interesting blog....Thanks for posting.

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