Can you trust AI?

So you are a Revenue Manager and are wondering which RMS is for you. You come across different RMSs that tell you that they use Artificial Intelligence and Big Data to give you the best price recommendations.

Should you trust their AI or fall back to business rules that you understand well? If you decide to surf the AI wave, how do you know which of all those RMSs to go with?

The short answer

If your data is very noisy, or just not very good, AI will not do much for you (or even worse, give you garbage price recommendations!)

Weather patterns or airport landings, just to name a couple, are rather noisy. It’s not hard to understand why. If your hotel mostly has domestic bookings at a particular time of the year, then it is hard to see how people landing at the airport will affect your demand.

This is just an example, but the key point is that you need to provide your RMS with a lot of data about who comes to your hotel, why and who exactly is getting into the airport to be able to use this type of data successfully.

Don’t despair

Every single hotel has a high quality dataset: the booking curves! Those are a clear history of the demand for your hotel at any given time and how much people have paid.

These data remain complex, demand being dependent on many variables (day of the week, rate of bookings, price, other rooms available in your hotel, market segmentation etc.)

But it is clean, and abundant. This is a good candidate for the use of AI.

There are other good candidates and we will discuss those in our next blog post, which discusses in more details the different types of AI and where in Revenue Management they can be applied.

The thing to remember

When someone tells you that they are using AI, ask them why, ask them how they know that the data they are using is not noisy and ask them how much they are helping your bottom line by using those data.

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