Much like in the 1990s, we’re now seeing third-party sites using innovative tactics to bypass hotel revenue management strategies, such as access to rates designed for wholesale segments.
Customers and third parties are not only accessing rates but also learning to take advantage of loopholes in hotel revenue management algorithms to find rates lower than those set by hotels.
However, what may seem as a new threat can also be seen as an outstanding opportunity.
Through collaboration with technology companies, particularly new startups eager to launch their products, hotels can proactively use knowledge and technology to update revenue management practices and software.
Services such as RoomNinja, Pruvo, Betterhotel, Hotelmize and Arbitrip look into the details of existing confirmed reservations in order to rebook them in the event of rate drops in the same hotel, or at a better hotel that is cheaper or has a similar (or higher) price.
This obviously causes a much higher cancellation rate for each hotel.
More generally speaking, besides needing more sophisticated and smarter shopping tools, hotels will need to re-examine and improve particular revenue management practices.
Revenue Management Solution algorithms should strive to make less rate adjustments, have a more accurate forecast and change rates mostly upwards rather than fluctuate the price up and down to match demand.
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