Hyatt to Use More Automation When Setting Hotel Room Rates

Hyatt to Use More Automation When Setting Hotel Room Rates

Skift Take

Hyatt’s move to change its revenue management software foreshadows a broader trend. Expect more hotel companies to embrace automation while looking at a bigger picture than just the supply and demand of rooms.

Hyatt will replace its proprietary revenue management system — used to help set room rates — with a suite of commercial revenue tools from IDeaS, a tech firm, Skift learned. The Chicago-based company will roll out the software to more than 1,150 owned and franchised hotels worldwide.

In the last two years, Hyatt has changed how it analyzes its business, such as by testing new data sources to forecast trends, said Michael Klein, vice president, global revenue management. The company is looking for “increased automation in all areas of the business,” Klein said.

The decision appeared to be the first by a big-six global hotel group to adopt a full commercial system from IDeaS, based in Bloomington, Minnesota, or its peer companies, which include Duetto and Infor.

“It’s a five-year deal for our comprehensive suite of products,” said Sanjay Nagalia, co-founder and chief operating officer, IDeaS.

The backdrop for the decision is that ancillary revenue is increasingly critical for hotels. For example, Hyatt reported on Tuesday that banqueting represented 46 percent of its total revenue base in the second quarter at the U.S. hotels it manages.

Hyatt is one of many major hotel groups that increasingly aim to copy relevant casino resort practices, according to a recent Skift Research Hotel Tech Benchmark report on revenue management. Specifically, hoteliers are interested in how to estimate the total spending a guest might make during a stay at a property.

Strategically, Hyatt’s management hopes the software will make its teams savvier at setting rates by asking questions about factors beyond the supply and demand of rooms.

“We need our revenue management systems to make yielding decisions across all segments and channels of our business to optimize for profit, not just RevPAR [revenue-per-available room],” Klein said.

Operationally, Hyatt adopted the new software to make its staff more efficient. The new commercial software will be used at both the corporate headquarters and by revenue managers at individual properties.

“We will be able to free colleagues up from some of the day-to-day administrative tasks that can get in the way of caring for guests directly,” Klein said. “So much of what we still do today — the repetitive task-driven items — can be better achieved through science-based automation, machine learning, and better ways of providing insights through AI-driven natural language processing.”

Besides optimizing rates based on supply and demand, the software suite also aims to help hotels optimize prices for their meetings and function spaces, match revenue forecasts with operational forecasts, and provide business intelligence for managing multiple properties at the same time.

While automation is the name of the game, the new suite won’t rule out the human touch.

“By creating efficiencies here, our commercial services colleagues will be able to dedicate more time to the ‘art’ of revenue management,” Klein said.

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