Key takeaways from HSMAI’s Revenue Optimization Conference 2012

July 05, 2012 | Hotel Marketing

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This year's HSMAI Revenue Optimization Conference focused on the practicalities of applying the science of hotel revenue management, rather than the science itself. And the concept of making revenue management part of a hotel's DNA was central throughout the conference.

It can't be easy to plan the program for the HSMAI Revenue Optimization Conference (ROC). Its attendees – and more broadly the membership of the HSMAI RM group – are mostly the individuals charged with delivering RM benefits to their organizations. They are the nexus in hotel organizations between analytical tools and financial results, and this creates a dilemma for conference organizers.

The history of Revenue Management (RM) technology in the hotel industry is a curious one. The systems and technologies that are now commonplace in the hotel business all had their origins in the airline industry. Before RM came along, airlines already had deep analytical resources. An airline could not exist without many engineers to figure out how to plan flight schedules, etc. In this cultural environment RM was a natural extension of what the companies already did.

When the early trailblazers of hotel RM began to adopt airline-style systems, it created a cultural frisson that has existed ever since. Hotels had none of the engineering heritage of airlines, and "Hotel guys" and "math guys" have had to find ways to work together to deliver financial results. Some companies do it well, some not so well. A great many don't do it at all. And in the meantime, conferences like the HSMAI ROC have tried to toe the line between the math and those charged with putting the math to work.The major accomplishment of this year's conference – held in Baltimore on Monday – was that it delivered a program that focused on the practicalities of applying the science of RM, rather than the science itself. The theme emerged during one of the early panel sessions. The session began with an engaging talk about "Using Analytics to Unleash the Power of Pricing" given by Ravi Mehrotra of IDeaS. Some audience questions diverted the session into a discussion of game theory. An academically interesting subject, to be sure, but as the academic discussion progressed, attention waned in the room.

It came back in the second half of the presentation, as the focus switched to a real-life group optimization case study. It was a great example of how pricing science (here provided by the Rainmaker Group) can be applied to a business problem. The problem was that of equipping a sales force with the optimal group rates. And the solution was described by Omni's Jamie Pena, who drew heavily on her first-hand experience of introducing of the tool to its users. The discussion of the impact of the tool on the people that work with it seemed to resonate with the audience.

The people theme was developed in an excellent lunchtime keynote session, delivered by Scott Deaver, the EVP of Strategy for Avis Budget Group. The talk majored on organizational culture and change – too often under-represented in industry RM conferences. Examples ranging from folk hero John Henry to Gary Kasparov were used to bring the talk to its clear conclusion: the best possible results are always achieved when we succeed in combining smart humans with powerful tools. And that this is particularly true of analytical tools. It was wise of the organizers to choose a non-RM specialist deliver this talk: the cultural challenges of bringing analytics into a company's DNA are – after all – not peculiar to RM.

The concept of making RM part of a firm's DNA was central to an engaging closing keynote given by Craig Eister, IHG's VP of Revenue Management. This talk broke with tradition by devoting no time at all to RM strategy, policy, systems or processes. Instead it focused on the "brand" that RM has created for itself over many years at IHG. Those who know hospitality RM will be aware that IHG can boast more RM system and analytical capabilities than most companies. But the focus here was on the cultural progress that they have made to drive adoption and understanding of those systems, processes, etc., throughout the organization.

It was an imaginative way to describe a pragmatic and visionary process that has achieved impressive results – much in the manner advocated earlier by Scott Deaver. It was a fitting and well-received end to a program that had clearly been well though-through by the conference's organizers.

Related Link: HSMAI