REVENUE MANAGEMENT
ENHANCING HOTEL PROFITABILITY BY TIMOTHY (TIM) WIERSMA, PRESIDENT AND CEO, REVENUE GENERATION
Leveraging AI and business intelligence for commercial decision support in 2025 and beyond Hoteliers who harness the potential of AI and BI to shape effective strategies will be the ones who succeed in the years ahead. With margins increasingly tightening, simply following market pricing and trends risks falling into the trap of trying to recover profitability in the wrong areas. Recently I was engaged with an independent hotel located in a major urban market in eastern Canada. This hotel is relatively new and boasts spacious rooms and suites with a small meeting space platform, and food and beverage. Service levels are excellent, and their reputation is growing as they ramp up their presence in the city. When we first came on board to assist with the overall revenue optimization strategy, we noticed that the data they were using was often incomplete, the RM system was not fully optimized, and they were basing their strategy on a partial picture from one or two vendors that gave biased data to support the idea of using more of their channels. More often than not they based their decisions on feelings rather than utilizing analytics to guide their decisions. Or they are making broad decisions based on partial data perspectives. The various departments inside the hotel were very siloed in their approach and did not fully understand the goal of the enterprise. This was in part because they didn’t have the tools or resources available to gain the situational awareness needed to prescribe the variables of demand and implement decisions based on the goal of capturing the more profitable side of the demand picture. This was also a situation where the goals inside the organization were not aligned and sometimes in conflict with each other. As a result, this hotel was not profitable and was not meeting proforma expectations. Furthermore, management was finding themselves explaining why they were seeing negative profit margins in a market that was growing at a steady pace. 54
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