Hyatt will use more automation when setting hotel room rates

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Hyatt’s decision to change its revenue management software heralds a broader trend. Expect more hotel companies to embrace automation as they look at a bigger picture than just room supply and demand.

Sean O’Neill

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

In the past two years, Hyatt has changed the way it analyzes its business, for example testing new data sources to forecast trends, said Michael Klein, vice president of global revenue management. The company is seeking “greater automation in all areas of the business,” Klein said.

The move appeared to be the first by a Big Six global hotel group to adopt a full business system from Bloomington, Minn.-based IDeaS or its peers, which include Duetto and Infor.

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

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

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

Strategically, Hyatt management hopes the software will make its teams smarter in setting rates by asking questions about factors beyond room supply and demand.

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

From an operational standpoint, Hyatt adopted the new software to make its staff more efficient. The new business software will be used both at corporate headquarters and by revenue managers at individual properties.

“We will be able to relieve colleagues of some of the daily administrative tasks that can get in the way of direct guest care,” Klein said. “A lot of what we still do today, the repetitive task-driven elements, can be better achieved through science-based automation, machine learning, and better ways of providing insights through natural language processing.” powered by AI.

In addition to optimizing rates based on supply and demand, the software suite also aims to help hotels optimize prices for their meeting and event spaces, match revenue forecasts with operational forecasts, and provide business intelligence to manage 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 business services colleagues will be able to spend more time on the ‘art’ of revenue management,” Klein said.

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