Pace has launched automated price updates for all its properties on our new product tier: Pace | Autopilot.
This means automated and intelligent pricing for 365 days, across all your inventory types, and with little to no setup required - something which has been unheard of in the revenue management industry so far.
Automation has been a feature at the top of our list from day one. A feature which had been requested lots of times by users. And a feature which, for a young company like us, was both incredibly exhilarating as well as hugely ambitious.
Well…funnily enough, automation is actually the simplest feature we will likely ever add to Pace.
In technical terms, automation simply describes a layer on top of Pace that immediately executes all price recommendations in the name of the user - without any further interaction.
However, the important part sits within the second part of this sentence: “in the name of the user”. Automation means Pace is running without any further vetting of these price recommendations by the user, who by this point has given absolute authority to our system to execute all actions on its own.
Digesting this, you’ll hopefully realise what a giant leap this is for us.
Up to now, we empowered our users with all of the relevant information at hand to make accurate pricing decisions. Now, the tables have turned and it is the users who are enabling Pace to live up to its full potential. And it is a responsibility we take very seriously.
Achieving the milestone of making automation available to all of our customers was more than just providing a convenience feature. For us, it was always a sign of confidence. Confidence that users trust in our approach to pricing.
Confidence that we can create real value for our customers.
Making automation available to all of our customers was always more than just providing a simple feature. To us, it was always a statement of trust.
Three Guiding Principles
Back in early 2017 when we launched our first version, we were very new to the hospitality, and even Revenue Management, world. So to make sure that we would eventually achieve our goal of solving the problem of pricing the hospitality industry in an automated way, we defined three guiding principles.
These guiding principles were intended to keep us close to our vision of the product, while keeping us aligned with: our scientific approach, building a product that customers love, and ultimately creating confidence in our solution amongst our customers - motivating them to use Pace in on autopilot.
1. Revenue Management is a science - not an art.
Every room night is unique - and with 365 days in a year, and often more than 5 categories in a property: one can quickly end up with over 1,800 pricing decisions per day - multiple times.
This vast amount of decisions cannot be systemised through a set of rules across any type of property. It can also not be driven by gut feeling and human experience.
An algorithm that can adapt to every unique room night, and analyse demand and price independently, is the only true solution to this problem.
2. Trust in our pricing engine will come through collaboration - not through dictation.
Many systems in the market that actually provide price recommendations dictate them to the user, thereby making it difficult or even impossible for the user to understand, evaluate and accept those recommendations.
Our focus instead had always to be on providing users with clear price recommendations whilst still giving them the flexibility to manage their rates independently from us.
Through this we aimed to learn how users interact with price recommendations, measure their confidence in Pace, and thereby improve our pricing engine collaboratively.
3. Update frequency matters - a lot!
We believe that primary data can hold all of the relevant data points, and so we have to ensure full visibility on this as frequently as possible.
Otherwise we will always be playing catch-up, and responding to market signals which are already outdated.
Therefore, we wanted to focus a lot of our efforts in building full data integrations with PMSs that provide us with near real-time updates, and evolved our model to adapt to changes in demand immediately.
Fast forward 2 years
So, looking at our three guiding principles - how have they manifested themselves at Pace? How did they help us to maximise our learnings while building out a product which is in-line with our product vision back then?
We have achieved a stage with our algorithm that in our eyes is: breathtaking.
Outside influences kept trying to push us towards adding underlying rules to “protect” our algorithm, but we have stayed true to our mantra:
For successful revenue management, we require an unbiased pricing engine that can learn from the past and present as well as real-time changes in demand and price.
To this day, the only input we require from a user for each room-night is a minimum price - and even that we will make easier (and unnecessary) soon. Through this approach we have been able to onboard properties with as little as 30 completed nights, and are still able to provide recommendations that our users can trust.
We measure each and every one of our customers’ confidence in our product.
Where highly confident essentially means that a customer will manually log in with a high frequency and accept all price recommendations in bulk. No overrides, no further price changes next to our recommendations.
I’m thrilled to share that we have now exceeded 70% of properties bucketed as highly confident in Pace. (As someone working in Product Management, this is music to my ears.)
It confirms that we have not only identified a really critical problem in the industry that needed solving, but also that we were able to provide a solution that is meeting our users’ expectations.
And it works so well, that despite the (at times) cumbersome user experience of launching the Pace app, logging in, navigating to the right page, selecting all room nights and updating all prices in bulk - users are doing this multiple times per day as it creates so much value for them. They are essentially automating this process through constant and manual repetition.
Now, with automation we have finally eliminated these extra steps, making it easier for the user to focus on more strategic tasks, and notifying them if there are unusual nights which require extra attention.
Update frequency is something we were very concerned about initially. Would PMS providers be able to provide data in short-enough frequencies? Would we be able to update our model frequently enough to deal with those updates, or would we run into data sampling issues?
Well, without going into the details, I think we can claim victory on this one by now.
Not only were we able to build integrations with our partners which essentially enable real-time data exchange, but we were able to make this part of our model. By now we update every hour, for 365 days, across all inventory types. That’s an insane amount of data analysis if you think about it (remember the example of 1,800 pricing decisions earlier).
At the beginning of 2019, our founder and CEO, Jens gave a presentation at Hotel Market Seminars in Stockholm stating that we believe Revenue Management is changing in three fundamental ways. Encapsulated above in #RevenueScience, #IntelligentAutomation, and #ContinuousPricing, he said that if we are wrong about these three, that we will probably disappear just as quickly as we have appeared in the Revenue Management space.
Halfway through the year (already!), it is great to look back at Jens’ presentation, and see the incredible progress that Pace has made.
We built this company around these fundamental beliefs, and we are extremely pleased by the enthusiastic reaction of our customers to Pace | Autopilot.
With this launch done and dusted, we can now start tackling revenue management problems that we had to ignore up to this point for the sake of focus (think group displacement analysis, restriction recommendations, optimising cancellations and more…)
When we entered the world of hospitality, we never aimed at creating a solution which would be 10% better than what was available already.
We wanted to shift mindsets, and create a product which is 10x better than what has been available.
Have we achieved this? Probably not - yet. But the trust our customers place in us, gives us renewed energy each day to achieve this goal! July has truly been an incredible month for the entire team, and we cannot wait to reveal what we have coming up soon.
To dare is to lose one’s footing momentarily. Not to dare is to lose oneself. - Soren Kierkegaard