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Let's talk performance

Jens Munch, CEO
Apr 18, 2020 - 2 minute read

Imagine you’re a race-car driver. You’re at the height of you career and the price money you’re hoping to win this year is over £1,000,000. When you’re racing every second counts and competition is fierce.

Now also imagine that you’re in conversations with a few different brands on what car you will be driving. The engines have very different performance and some should frankly not even be allowed on a racing track. They are also different in costs, some will be £1,000s more expensive than others.

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How will you make your decision?

It is well recognised today that the activity of yielding a hotel is a task for automation. We can also easily agree that if your room revenues are £10 million then the prize for amazing revenue management is more than £1 million. So we are all in the same position as the race-car driver above.

But many buying decisions are taken without looking seriously at the performance of the engine.

When choosing a revenue managemewnt solution many buyers focus on functionality, old RFIs, integrations and price. But what about the performance of the solution? How important is that?

Let’s take a step back and think about these questions. If you compare three automated RMS with different approaches, and very different investment in product/science, do you think they will generate the same results for you? Hopefully your answer is no, because it’s statistically impossible for different approaches to generate the same result.

So how big will the difference be between them? Less than 1%? Or more?

If you are responsible for £10 million in revenue then missing out on 1% performance uplift will cost you £100,000. That’s every year, not just this one. It’s important to think of the difference between solutions and approaches in this way because even small uplifts far exceeds any difference in costs between solutions, exceeds most individual salaries, and any other revenue management activitity.

Over the last 12 months s many as a fifth of the customers who chose Pace ran an side by side comparison of multiuple RMS (obviously including Pace) before making their choice. Based on these results I will confidently state that in most cases the difference in revenue performance between different is higher than 5%.

Helping hotels evaluate the performance of their revenue solutions and processes is a strategic area Pace. You will find more information here. It is not easy to compare different revenue approaches in a statistically meaningful way. But we have developed very powerful approachess and our science team are continuing to invest heavily into this area.

Conclusion: The single most impactful activity any revenue manager can engage in today is to evaluate the performance of RMSs and Pace can help you with the evaluation.

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