September 11, 2018

Is RMS technology actually holding hotels back?


An overwhelming theme in 2018 is that hotel pricing power seems to be a thing of the past. Hotels than ever before, but hotel operators are facing shrinking profitability margins because rates and revenue are not growing at the same clip as costs

Ask why hotels can’t drive ADR, and you’ll get blame pointed in several directions, from online price transparency, increased hotel supply and new competition from home-sharing services like Airbnb. But in hallways and breakout rooms this year, I heard a new challenge: technology systems that rely too heavily on competitor rate-shopping and thus recommend severe discounting as day-of-arrival approaches.

After some candid conversations, it’s evident that some revenue managers and revenue management systems are relying too heavily on competitor prices and rate-shopping tools to make pricing decisions.

Honestly, this caught me off guard. How could systems meant to aggregate and analyze data, build an accurate forecast and make profit-driven pricing decisions be in fact suppressing ADR growth?

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