We’ve all seen those apocalyptic movies where robots and AI take over the world—pandemics, apes ruling over humanity, robots taking control—it’s all been imagined in the movies.
Technology and AI stimulate our imaginations, and maybe that’s why it’s hard to trust them fully. We’ve seen too many films where tech takes over the world, and things go horribly wrong.
But not to be pessimistic…
In reality, technology in hospitality has already helped thousands of hoteliers, revolutionized their work, saved hours a day, and improved customer service. But with continuous technological developments, you might ask: What will happen to my job? Will robots replace me? And if you implement a Revenue Management System (RMS) in your hotel, what will happen to your revenue manager?
That’s what we’ll explore in this article. RMS vs. Revenue Manager… who wins in this epic showdown?
What is a revenue management system?
First, let’s explore what an RMS is. Imagine having a super-smart assistant who never sleeps, constantly analyzes vast amounts of data, and adjusts prices in real-time based on market conditions. That’s your RMS! It takes care of the nitty-gritty details so you can focus on what you do best—providing excellent guest experiences.
In other words, a revenue management system automatically updates your prices a few times a day based on local demand, market insights, and hotel data, ensuring you are always charging the right amount.
Traditional responsibilities of revenue managers
Now, let’s talk about your revenue manager. Traditionally, revenue managers have been the masterminds behind pricing strategies, manually collecting and analyzing data, forecasting demand, and monitoring market trends and competitors. They’ve been the Sherlock Holmes of hotel revenue, piecing together clues to maximize profits.
Revenue managers are good with numbers, super organized, strategic thinkers, and effective communicators who can motivate the hotel team to support revenue strategies.
“Revenue management is super important; all experts agree on this. If there is disagreement, it is over who should do it, human or machine. On the one hand, we speak to revenue managers, who say that a machine can’t do what they do because the machine won’t understand certain subtleties that come with experience. On the other hand, you’d have algorithm enthusiasts saying that computers make better decisions than humans.” – Ari Andricopoulos, CEO, RoomPriceGenie.
So who is right? Let’s find out.
The duel: revenue management system vs revenue manager
Round 1: The data duel
Revenue Management System: Analyzes vast amounts of data 24/7, forecasts demand, segments customers, and adjusts prices in real-time based on market conditions.
Revenue Manager: They are the masterminds behind effective pricing strategies. Without a revenue management system, they manually collect and analyze data, constantly monitoring market trends and competitors. They keep a vigilant eye on the hotel’s internal data to ensure that goals are met. While they are meticulous in their work, it’s nearly impossible to track every change in real time without the aid of a machine. After all, they are (super)humans who need a day off too!
The market can change rapidly, and demand can spike or drop at the last minute. This means it might be too late to adjust pricing when they notice and react. As a result, rooms may be sold at lower prices or remain unsold, leading to missed revenue opportunities. An RMS can alleviate these challenges by providing real-time data analysis and dynamic pricing adjustments, ensuring revenue managers can focus on strategic decisions without getting bogged down by the daily grind.
As Ari Andricopoulos, CEO of RoomPriceGenie, said in one of the video courses in our Revenue Management Academy:
“We consistently hear from clients who are good at pricing that they used to spend an hour a day consistently and would still get it wrong. Either from a financial point of view or from a ‘time-wasted ’ point of view. There is a huge advantage to getting the calculations done for you by the expert, which is the computer. This is where a revenue management system comes in.”
Score for this round: RMS 1 – Revenue Manager 0
Round 2: Strategic thinking
RMS: An RMS provides real-time data and insights, but can it think creatively and strategically? Not quite. It’s brilliant at automating routine tasks and giving accurate pricing recommendations but lacks the human touch.
Revenue Manager: Here’s where the Revenue Manager shines. With routine tasks automated by an RMS, they can focus on higher-level analysis and strategic decision-making. They can spot new revenue opportunities and adjust strategies on the fly. Additionally, they ensure that the price recommendations provided by the RMS align with the hotel’s goals.
Revenue managers are also responsible for setting clear guidelines and criteria for when overrides are permissible in the RMS, as revenue management professors Basak Denizci Guillet and Ibrahim Mohammed highlighted in their article on the “Do’s and Don’ts of Hotel Revenue Management Systems.” This strategic oversight allows revenue managers to leverage an RMS’s full potential while maintaining control over pricing strategies.
Score for this round: RMS 0 – Revenue Manager 1
Round 3: Efficiency and productivity
RMS: Automating routine tasks with a revenue management system means there’s more time to tackle other essential hotel duties. The system works efficiently: prices are adjusted in real-time, and hotel inventory management becomes easy. It’s a hands-off process that frees up a lot of time.
Revenue Manager: With less time spent on manual data tasks, revenue managers can spend more time on what truly matters—making your hotel shine and creating mouth-watering offers that will make your guests say, “I loved everything about my stay here” (let’s be honest: this is music to hoteliers’ ears).
Score for this round: RMS 1 – Revenue Manager 1
Round 4: Collaboration and synergy
RMS: Think of the system as a trusty sidekick. It provides valuable data and insights, helping to streamline operations and enhance decision-making processes.
Revenue Manager: they use their expertise to interpret and apply the RMS data. Together, they form an unbeatable team, ensuring your hotel stays ahead of the competition.
Score for this round: RMS 1 – Revenue Manager 1
The final score: Collaboration wins!
So, who wins in this battle? The answer is both. The human brain is incredible at recognizing complex situations, understanding context, and making strategic decisions. Computers, on the other hand, excel at performing fast, accurate calculations and handling repetitive tasks.
This split is typically called strategy versus tactics. The strategy involves examining the overall picture of your hotel’s position in the market and how that affects price. It includes deciding what packages and rate types to offer, what length of stay you want to encourage, and whether you should follow a competitor with their price reduction or decide not to enter a price war. These decisions come from human experience and often involve data outside the computer’s scope.
Tactics involve the day-to-day grind of implementing this strategy. They consist of doing the calculations and implementing the data’s recommendations following your strategy. Remember, this is the area where all the humans in the world can’t beat the processing power of your iWatch.
Which option is best for your hotel?
If you want to make the most out of your hotel and increase your revenue, you should use some form of revenue management. That’s clear. But exactly what to do may not be so easy. You have four options available to you:
- Doing it yourself
- Hiring a full-time revenue manager
- Using fully automated revenue-management software
- Using a combination of human and machine (both!)
But which option is best for your hotel? We think the best option is both: human and machine!
Let’s save the humans for the strategy and let the machines handle the work
The true winner is collaboration. An RMS empowers revenue managers, enhancing their abilities and allowing them to focus on strategic, high-level tasks. Together, they form a powerful partnership that drives your hotel’s success.
As the Senior Vice President of Sales, Marketing, and Revenue Management at Wurzak Hotel Group, Scott Dahl, said in this video interview:
“I think that revenue management software should make jobs easier for the revenue manager and yet not take away their decision-making abilities.
So, I think computers can do multiple math very quickly. Computers can also scrape information off the Internet much quicker than a person could pull up websites and look at them.
So I think revenue management software, when there’s a revenue manager in place, should enable the revenue manager to spend the vast majority of their time making important decisions, and it should do the majority of the leg work for them – all the math, all the collecting information.”
So if you know finding the revenue management system is your next step, check our cheatsheet “10 tips to choose the right Revenue Management System for your hotel”.
Embrace the future with confidence. Your revenue manager isn’t being replaced; they’re being empowered.
To learn how RoomPriceGenie can help your property increase your property’s profitability, start your free trial of our automated pricing solution today!
