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IDeaS wants to be the AirAsia of revenue management

Posted on 10 Nov 2011 at 10:55 am by Yeoh Siew Hoon
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If everyone can fly with AirAsia, then every hotel can revenue manage, according to Brian Sterrett (left), vice president global sales and marketing of IDeaS, who is looking to the region to drive the company’s growth in the next few years.

Sterrett, who attended the WIT Conference, said that IDeaS wanted to be the AirAsia of hotel revenue management. “We want to make the idea and execution accessible to everyone,” he said.

Based in Minneapolis, Sterrett joined IDeaS in January this year from iMANY, a revenue management software company, which provides solutions for the life sciences industry among others. He is responsible for all sales and marketing worldwide for IDeaS.

Sterrett observed that in terms of using data to optimize channels for profitability, the life sciences industry was ahead of the hospitality business.

“Both revenue management problems require analysis of large volumes of transactions and making good decisions using the data. This is very important in life sciences – when to close out channels that are more expensive.

“Hotels do it in a very unscientific way currently.”

However he said the democratization of pricing science was happening. “We are getting better pricing decision-making processes into the hands of more hotel operators, regardless of how sophisticated they are.

“The data quality and analytics is also getting better and “more is less”. You don’t have to be an advanced revenue management professional to successfully drive pricing decisions.

“We want to put the science ahead of the technology and make it simpler for everyone to use.”

With Asia accounting for 25% of the company’s total business now, Sterrett sees this growing to 30% in the next three years. “It is increasing as part of our total mix and we will be investing in a few areas.”

In Asia, about 80% of all employees are located in the development centre in India, with 20% in client facing services across the region. The latter group will double in the next 12 months, he said.

“We are also adding products to our mix, tailored to chains and hotels which are less sophisticated in revenue management. The prices will also be more affordable – for example, independent hotels can access our solutions on a timeshare basis – we think this is a good starting point for us to grow our business across the region.”

Currently, the company counts 2,200 hotels as customers worldwide. “This is only a small slice of the market so there is tremendous opportunity for growth,” he said.

Business, he added, was growing by 25% a year. His goal is to double revenues in three years and have five times the number of customers it has now.

He said that, like airlines, hotels are looking for solutions in ancillary revenues and one nut to crack is the meetings business. “There’s always been demand for revenue management related to function space and it’s a difficult problem to solve.

“It’s not the same kind of decision making that’s involved in room revenues and there are lots of little complexities – room configuration, etc – but we are developing partnerships to analyse the data.

“We are also seeing more conference centres attached to hotels now so there is definitely a need for hotels to have the right data to make the right revenue decisions in this segment.”

On his first trip to Asia, Sterrett said attending WIT helped him solidify his belief that the region is very diverse. “Singapore is a great centre for revenue management today but there are very diverse levels of sophistication across the region in using science to drive pricing and revenue.

“Clearly, from a travel standpoint, Asia is the region of growth. The US, for the near term, and Europe are challenged. The development is here, lots of new buildings coming up.

“There are more flights coming into the market – the numbers in China are pretty overwhelming. I heard someone said there are nine new airports opening a year in China.”

He said the distribution channel mix hasn’t changed that dramatically with the exception of mobile which has emerged as a new channel.

As for which is the most expensive channel, Sterrett said it varies by hotel and market “but it seems major OTAs show up as an expensive booking channel, this is what we hear from hotels we deal with.

“The important thing is to make good decisions about the use of your channels and the most cost effective is direct.”

As for social media, he said personally he sees it as “more of an influence channel to inform booking activity”.


 

Tags: IDeaS , revenue management , hotel pricing , channel distribution
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