Help me understand this pricing strategy
Jun 14, 2017, 12:02 pm
#16
Join Date: Mar 2008
Location: Fort Lauderdale, FL
Posts: 3,360
I forgot to mention one aspect of hotel revenue management. Although this doesn't appear to be the case, sometimes systems will knowingly take a loss on a single booking if it means future bookings are more profitable. So, individual reservation quotes don't always have to make sense.
I totally understand where you were coming from. I would have felt the same way if I were in your shoes.
In the late 90s, I was Revenue Manager at a corporate owned and operated Radisson hotel. We were the beta-test site for the revenue management system now used in all Carlson Company hotels across the globe. It was a pretty unique experience.
I knew my Excel spreadsheets couldn't come close to what the system could do. As such, I was on-board from the beginning. I think that fact annoyed the programmers and Project Manager. They had a whole presentation to convince me. (That presentation eventually got used to convince franchisees why automated revenue management was a good thing.)
I recall one of the first things we did was a challenge between me and the computer. We alternated who controlled decisions for string of weekends. I held my own, but that was only because the system was still learning patterns and adding data. Once we officially went live, I was happy to let the computer be smarter than me.
I certainly don't expect Hilton's revenue management system to account for third parties. I mentioned Citi only because it affected my overall total, after accounting for the 4th night free. Without that benefit from Citi, I'd pay the extra $4, just to avoid the possibility of my key not working for the entire stay.
If I remember correctly, Hilton corporation was the first hotel companies to acquire revenue management software from American Airlines and used the software to control and manage their room rates. The software uses data from previous years reservation trends and predict demand for specific dates and specific room types.
I knew my Excel spreadsheets couldn't come close to what the system could do. As such, I was on-board from the beginning. I think that fact annoyed the programmers and Project Manager. They had a whole presentation to convince me. (That presentation eventually got used to convince franchisees why automated revenue management was a good thing.)
I recall one of the first things we did was a challenge between me and the computer. We alternated who controlled decisions for string of weekends. I held my own, but that was only because the system was still learning patterns and adding data. Once we officially went live, I was happy to let the computer be smarter than me.
Jun 14, 2017, 7:37 pm
#17
FlyerTalk Evangelist
Join Date: Jul 2001
Location: Phoenix, AZ
Programs: HH Gold, AA Gold
Posts: 10,458
1. Prices that are filed (by the hotel or airline)
2. Inventory that is available on any night/flight.
Either one or both of these can and do influence available rates. Add in some human intervention by the Revenue Manager and things can get really complicated.
A high fare or rate can be simply that higher prices are files (e.g. it's peak season) or it could be that inventory is not available at the lower rates or some combination of the above. And, of course, these factors can change from day to day, as customers continue to book reservations and the revenue management algorithms are running and pricing changes due to competition.