Pricing strategy, revenue teams, and where AI actually helps

Speaker A: AI do my pricing and AI can supercharge things. It can do amazing stuff. But you need a strategy and if your strategy is bad, the AI is just going to make your strategy, your bad strategy enact much faster.

Speaker B: Rose, can you maybe tell me what kind of properties or which kind of industries you mainly look into? Is it only like hotels or are the different types or.

Speaker A: So as a team and a practice, we work across broader leisure and travel as well, but a big focus on all elements of hospitality, including that more traditional hotel, both bigger chains and brands. There might be big questions about alignment of revenue management processes, um, alongside broader strategic pricing, promotion, loyalty aspects being a super important topic that we have uh, touched upon where maybe even when you've got a more localized setup, uh, centralized approaches are really critical. And in that loyalty sphere we do also work more broadly in hospitality for areas such as holiday parks, um, cottage and villa rentals as well. So really seeing the vast span of the different approaches to pricing, revenue management and seeing the difference across those as well, which is always very interesting. As a broader team, we also see what happens in day leisure, theme parks, transportation. I think it's always great to find the best practices across those. Also some very specifics to each industry that we need to keep in mind.

Speaker B: Yeah. And is it like always have been that you focus on all those different aspects or where did it start with hotels first and then all the other things were added later or isn't particularly order of those kind of things?

Speaker A: It's not in such an order. As a company we've always grown organically where expertise and knowledge from the team has come. Um, uh, our leisure and travel team is quite heavily focused in both London and Paris. So you have me and Charles talking to you today. Um, with backgrounds in, across tour operating theme parks and um, particularly that resort and holiday parks has always been a really key theme and that's expanded into more traditional hotels over time. But it's not been sort of one pocket by one pocket. It has always been finding learnings and connections in different areas and being able to find that and bring that across. And I think that's really key. It's not about just looking and repeating the same thing for similar types of companies, but actually finding the best practice and the interesting sort of dynamics that are developing as we move through. And everything from data availability, computing power, customer perceptions, traveling patterns, etc. In the last 14 years. It feels like a world ago. When you go back to what we're looking at and approaching back in those times, um, and I'M sure most would not believe us who are just sort of entering the industry now. But always the change in the systems and the elements and how we can bring that best practice across has been a kind of key, um, opportunity in what we've been working with our clients with over the years.

Speaker B: Yeah, so this specific case is not like copy pasting something that worked there towards another thing. It's always starting from stretch and finding out, uh, and of course the knowledge helps from, from past experience, uh, will make things better to identify and to apply. Um, and Charles, when you first enter a new project, how does it look like? What do you focus on? Are there specific elements you go into first?

Speaker C: The first thing we do is really talk to people to understand where we are and very important to us. We talk to the management who always has a vision of how they believe things are going, um, where they want to bring the team, etc. And we spend time. I always spend at least one, two, three days on the ground with a revenue management team talking to them, looking at what they're doing to really understand, hey, how is this team working? And there's a couple of things, uh, that we look at. One of the key indicators I'm looking at is how many screens are the guys or the ladies operating the revenue management, uh, every morning, uh, and, uh, I really count that, uh, precisely. And very often I'm not surprised. But you might be surprised. You get to 8, 10 different systems that you need to get open to get a feeling on what happened to your hotels over the night over the last three days. And that's often an indicator that, well, uh, people in hobby management, you're talking to an audience that's smart guys and ladies. There's a lot of ladies as well in project management. So I have to be careful in English. A lot of smart people in project management, they often have a lot of ideas on how to tweak the system. So add layers to have the view on how they want to do it, et cetera. And what you see very often in a rogue management team is a lot of diversity in the same small team in what people are looking at. Uh, and that's something we're watching very closely because, uh, there are excellent ideas that are not replicated and it's a shame. And there are less good ideas, uh, that we try to identify.

Speaker A: Yeah.

Speaker B: And is it also the case, and I think I've seen this in the past, where if there are multiple different systems, there are multiple different outcomes, or maybe the outcome is the same, but is displayed in a different way. That is also uh, a thing you see there.

Speaker C: Yeah, it's a question of display, of granularity, of uh, ease and feeling. Uh, you even see companies, uh, where you have an RMS with a demand forecast which is very performance. Uh, and then the revenue analysts will do their own forecast on the side and not, uh, look at the revenue system because that's the kind of persons we're looking at. They are clever enough to do a forecast and sometimes it's great, sometimes it's not so great. And uh, we have to look at what is the single source of truth that the whole company can align on.

Speaker B: Yeah. And then in the amount of screens, how many would you say would be not perfect? Is a very difficult question. But how many would be workable?

Speaker C: Two. Um, one for your monitoring. And by monitoring we mean really looking at what is happening. What is my booking curve, what is my revenue curve, what is my yields, what kind of mix am I having? Uh, really looking directly at that and usually it's another one on the actions that you're taking. Uh, in the management system, a bit difficult to combine both. Some, uh, RMS do that, but it's not really the same thing to be looking at data and tweaking the pricing itself. So, uh, from an IT perspective that's

Speaker B: complex to mix and is it only from an IT perspective or is it also going to be misalignment? Is it due to have two sources of truth or does that not really makes. Doesn't really matter.

Speaker A: I would always say that gets to the ideal sort of layers when there's one source of truth. So that might be multiple screens within the same report, maybe the ability to drill down and link in between the two. But likely you're not going to get all of those into one place. I think the difficulty comes, and I think to your previous point, when it's eight screens and they're coming from three different sources and the numbers don't quite align. But actually normally the revenue manager knows that I have to take X amount off of that number with that report and put that one there. And the headspace and the brain power that's going into that calculation versus actually being able to deep dive into sort of some of the trends, etc. Is quite key. And to be honest, I have once done a project and one of the senior leaders said, can we do a side project for two weeks? Because we have three reports with the revenue management report, we have the management BI report and we have the finance report and they're all Saying three different things in terms of our performance right now. So every person thinks they're right and they are based on which metrics and what's got cancellations and what's versus last year and what's versus budget. But like what are we all trying to achieve at that point? So it's not even within the RM team but actually when other parts of the business have different reports and then they're trying to marry those back just so much time and headspace ends up going into that way. So we do find that quite a recurring theme. Um, but there's nothing more industrious than a revenue management team who wants to find the answer to the thing that they're trying to solve for they will go to the ends of the earth in normally in Excel, but it comes with some problems as well.

Speaker B: I mean that's also funny that you say Excel because uh, first of all I think the focus on the job you have to do can be increased by having all those blurry things away. But then it's very funny because uh, in all the properties I work for uh, everyone still falls back on Excel.

Speaker A: I mean it's your self serve uh, tool right. It shouldn't be the long term systematic tool. But when someone sat there saying I need to go and solve something, it's the kind of self serve analytical piece that goes on top of the more systematic pieces uh, in the business they're not against Excel but that tends to be the extra Excels which are not. They're good for the individual deep dives. That's not there for the kind of. It shouldn't be our main system but desperate times sometimes called the desperate measures and often that uses Excel.

Speaker B: Yeah, true, true. It's also very easy to make a mistake in Excel of course uh, when a formula is slightly off. We have seen this and um, Charles you mentioned that um, you speak to the management, then you go to the floor, you speak to the revenue management, you monitor what they do. Um, I can imagine especially when you. It's maybe a bigger property but maybe it doesn't even matter that there can be slight differences because between what they think they should do, what they actually do and where they focus on ah, within one company. Is that something you see very often?

Speaker C: Yes. Ah, what we try to look at is um, who is doing the thinking. Um because uh risk management is about ah, getting the insights, making the decisions, taking calculated risks to make reasonable um, bets and um, it's very granular knowledge. You have to know each property, each uh, market et Cetera. And the reason why you have A team of 2, 5, 20, 100 analysts is because you need their brains. What you see sometimes in some companies is. And uh, that happens especially when you have revenue managers that went up the chain and end up, uh, head of revenue management or head of commercial, uh, even, or even CEO. Sometimes, uh, they will look at those reports that Rose was mentioning and they will say, hey, m. The pace is too fast. Uh, we need to increase our prices. And so, uh, it will go down the chain and revenue management will increase the prices. And then a week after they will say, oh, the pace is not fast enough. We need to lower the prices. And then you sometimes get into a setup where. And that's really not the ideal setup. And it doesn't happen too often, but it happens where you get the feeling that you have one brain at the top of the company and all the rest of the company, uh, tells what are you doing this week? Well, I'm lowering the prices. Why? Well, because we were told to lower the prices, but we know that next week we'll have to increase it. And then you're really insulting that we need to get out of. Because each market is different. Uh, you cannot have a company that's going up and down like that with only one brain. You need the 100 or 20 brains of the company to look at things. The other reason is, of course it's extremely uh, uh, non motivating for the guys and ladies on the floor to be just doing that. When you talk to the teams, they're really not having fun at what they're doing because you destroy all the meaning that they have. Interestingly, it's also not fun for the guys at the top, um, because uh, they're saying, hey, the teams are so bad, I have to do everything for them. Uh, and nobody is uh, thinking in this company. And so we really try to get out of this paralysis, uh, where everybody just uh, relies uh, on one brain, uh, which is really not functioning.

Speaker A: And maybe uh, to add to that point, it is. And this is maybe there's one message you can land in an organization if people are seeing the same pattern is it is very easy after the event to see what the pricing should have been. And we do it and we could, we do our own assessments of people. Look back at the past year. But it's like also let's look at the information people have at that time. I always say, I've seen, I think I've seen it. Directors who are revenue management experts, they phone up every day, um, CEOs and chairmans of companies that will phone up normally the head of RM at weekends being like the competitors. This, we're. This. Why is that? And these individual things. Yes, but that's not a exposed. And also it's one instance. So let's look at how many times, how many prices, what patterns are we seeing, where is the position and I would say as people on board or become more senior in organizations, actually sitting and seeing that day in, day out, working through what the revenue management team are looking at and how you're looking at it before the, the outcome. Um, quite a different view kind of comes in and we do quite often end up explaining the complexity of what a revenue management team are dealing with and the decisions and the information they're doing with that versus the what is the outcome afterwards? Um, but it still seems to be. There's so much uncertainty in how customers react to price still, even with all of these tools and so many market forces at play, it's very easy afterwards. But I would say if you ever struggle that in a company, get some of the senior leadership to sit with revenue management for a few days, make some decisions, see how they play out, and generally the view gets a little bit different after that. It is a complex world.

Speaker B: Yeah. And I think even if you have all the information, all the bits of all the pieces of the puzzle after the event has been done, then still it's very hard to decide what the price should be. Um, and of course maybe people will say, oh, it can be, it should be higher, it should be lower. Or we could have gone higher. Um, which I think is a very easy thing to say afterwards. Uh, we have a saying in Dutch, but it's a bit rude, so I'm not going to put it here. Um, um, which actually explains this. Um, but do you see that management is struggling to understand that and is it easier for them if they have a revenue management background or not?

Speaker A: There's a big depend. Right, Charles?

Speaker C: Yeah.

Speaker A: I think you hear it in the instances where maybe people do feel themselves more of the expert. I, I still think some feedback comes from a broader group and I'll let Charles add his thought there. Um, I think if it comes with a what information did we have? What were the decisions? But also it's not so much the feedback, but it's like the how that's. Then is it like, oh, you should have done this, or like, let's go and trial and test this. These are very different reactions and pieces. One, because one's actually Very proactive. Let's try it. Versus a kind of like, oh, you should build now. Don't know. Charles, on your side?

Speaker C: Yeah, I'm not sure it's linked to the degree of understanding of revenue management in the top management. To me exactly with Rose, it's more about um, revenue management is a small team within a company, but they are a tremendously important team, uh, even from the CEO perspective because, uh, these people, this small team of people is managing the whole revenue of the company. So anything that happens in revenue management has a tremendous impact on the whole company. And so of course everyone at the chain is looking very closely at that. And it can be sometimes very scary for uh, top management to give the keys of the truck, uh, to a team of relatively young or uh, not so young revenue managers and let them place bets. So to me it's more about building the trust, uh, between the top management and the revenue management that uh, revenue management is not playing with your money. Uh, it's again placing calculated and reasonable bets with the information available and generating alignment on those bets together. Um, because Vermage would like to do everything without any steering from the top. But that's not possible. There's just too much money at stake. What you have to do is to convince that what you're planning could work, should work, and that if it doesn't work, you're not going to crush the company. And I think, uh, that's often where we come in. Uh, revenue engine wants to do something. Top engine says absolutely nowhere or the opposite. And we try to investigate whether it makes sense or not.

Speaker A: I think it's critical in how that revenue management team leadership interaction goes. Will really fundamentally lead the revenue management team to a couple of different directions. It is a pretty classic statement is no one ever gets, um, you know, never gets reprimanded for selling out too soon. Right. Rarely do you get the phone call saying, really great, let's driving that adr. Their pot overall was good. Like people still look at volumes, the unknowns. And so if there is constant commentary about when things aren't met in occupancy, and you see this when leadership's always looking at only occupancy as the final metric, which we shouldn't, but it becomes, it always becomes the easier default to be able to fall through, you will then see very, very safe and conservative revenue management teams. Because if constantly your feedback is that sort of messaging, all of us would do exactly the same. Why would I go and push for something which I know is going to raise it but then no one's going to go and recognize it and they're going to question me why my occupancy. Now hopefully once you're in those worlds of looking at ADR and RevPAR, but still, I think it's still very underplayed and it's a much harder thing to measure and recognize that, you know, well done to really pushing the ADR at that point and those bits and it is less clear. Right. We're not at like a sellout kind of picture and position, but some of those points and how do we feed that back and communicate that will then start to inform the revenue management team as people recognize this and they respect that we're making these. But still again it is obviously when things go badly, everyone responds much quickly than when we're trying to eke out and get that extra benefit. And it is natural. But also what can we do to. And we work a lot. What can we do to push on that positive side rather than just reacting to the negatives? Because sometimes I will say, yeah, you might have certain times when you are selling badly, there might not be a lot you can do about that. But what if you put all that time into the things where you're selling well and made more out of that? It would offset it. That's quite a different mindset when a company is very set the other way. But that's when you can really push and drive a revenue management team to um, grow the overall pie.

Speaker B: Yeah, and it's also, I mean how we explain it to our customers is also like how much risk are you willing to take in order to maximize your profit? And a lot of people are not willing to risk occupancy uh, because they see it really as a risk of occupancy. But some, some of the properties sell out 60 days before arrival when the average of the market sells out 14 days before arrival. And uh, then they still see it as a massive risk. Uh, which I can also understand that from a management perspective it can be a risk and that's why they, they betting on hey, we need to go full. And, and how would you build that bridge between a revenue management team and uh, like top management if that's not aligned on the strategy? I mean it can be part of the assessment. I would say.

Speaker A: Yeah, and I wouldn't say that the misalignment is just senior. Let's not even assume senior leadership is one entity and revenue management is another entity. We would start any projects doing different senior stakeholder interviews that might be quite Kind of broad ranging, not just in that commercial side in the leadership piece, but normally wider marketing, finance, sometimes even IT tech, etc. Um, understanding those goals. Even in senior leadership, when we start talking about the objectives and the strategy and how that translates, you often will get four or five different answers which already says, right. And there's every stereotype. You'll get the finance answer, you'll get the marketing answer, the commercial answer. The CEOs kind of saying, well, we need to trade these off. So even just starting with that, and um, we quite often will do workshops with that sort of steering team saying, look, what are the trade offs here? Because if you say, do you want to make revenue, do you want to make margin, do you want to make volume? And they're like, yeah, all of those, that's great. But we've got to, where's the trade off? And normally what's your minimum margin? Where are your targets around these pieces? So we can go. So that is not unheard of. And if that is multiple messages and views on strategy at the top, how is that filtering down into the teams? A, uh, revenue management team should be. It depends where they sit. Often sit in a commercial function or they might sit linked into finance if there's no direct commercial function, depending on the set setup. But you know, they're given a budget, they should have a role to own that budget and to be holding the company account or indicating when that budget is not viable and working with marketing, etc to go through. If they're talking to these three different teams and they've all got different objectives, they don't stand a chance in trying to be the owners of that kind of revenue realization, which is their goal. So it's not even just like revenue saying, okay, revenue versus leadership. Normally in the leadership we do find quite a few different views and quite often that comes from the fact people don't know the trade offs. So actually if we can build up some simulations, some ideas, like this is what revenue optimization, this is margin, etc. That can actually help because most people are just driven by the uncertainty and the unknowns. And um, we choose not to work in the world of cost consulting, but that's got a lot more certainties to it. This world is much more uncertain, right? We've got to work in trends and patterns. But bringing some of the trade offs to people, I think gives them that view and then they can have that discussion down to revenue as well. And to the revenue manager, these trade offs might be super obvious, right? They see it, they live it, they breathe it, but to the rest of the business it's actually not so much. So it's helping them also explain themselves to the senior team and the options that are there. And then you can actually use that engine, say for good rather than evil. Maybe not the right phrase, but you can use that engine more than you are today.

Speaker B: And maybe a question here. How well do you. Do most of the properties know their own property in terms of do they know the margins? Do they know what like all kinds sort of things, do they actually know their property? Because what I see with the properties we work with and it's mostly smaller ones, they don't know their property. I mean they know they now they know how the front door looks like and they know how like every little spot in the room looks like, but they don't know their financial householding how much a room actually cost them, what their margins are.

Speaker A: And it's a big. It depends. I would say you can find people with very limited information. I would say when you're in more the hotel business, the need to know that immediate cost, unless you're doing bundling and upselling to ancillaries, most of it's sunk. Um, more terrifyingly I do see very high variable cost businesses where people don't see the relevant costs and margins and that really is a much more terrifying piece. So I would say all of the financial and the linking and the marketing costs, sometimes I would say there's probably a bit more of a knowing the actual property itself and some of those bits too much to not take a step back and maybe see the overarching market, not so much just your wider market trends, but that really local dynamics and what's at play as well. Do they need more of the financial. It only really comes back to our initial point of sometimes you just have to pull data from lots of different places. Um, but yes, it's probably too much of a focus in some of those topics like the actually the carpet's not so great here. Maybe we should price it down. It's not what customers are looking at, but where should we be making those pricing decisions or not.

Speaker C: And to add to that maybe, um, sometimes when we discuss with smaller uh, hotels what we see is they know very well their product in terms of the facilities, the hotel, the beds, et cetera. They know or they have less of a conscience of the product in terms of dates. Um, it's sometimes a bit difficult for a hotelier to understand that what you're selling is not just a room. It's a room at a certain date. And that drives a difference uh, in the value of your product. Because a room uh, on the beach, uh, in south of France in February is not the same value as a room in uh, July. And sometimes that can be difficult. And we get arguments uh, when we have those discussions on hey look, you are full three months ahead in July, maybe that's an indicator that you could raise your prices. And we hear no, but you know, my product is not great, it's not a great hotel, I know customers will not be that happy, etc. And to which we argue, uh, yes, but having a room available, including quite last minute at a high price is also a service. And if there's a customer that's ready to pay for it, even though the room is not great, that's a service you're also offering. And you're on top of it making money on it, which is great. But nobody forces the customers to buy a room. So uh, if you can raise your price for a room that is not great quality because the, the period requires uh, it uh, then you should go for it and then you can manage uh, what happens on the day. If it's the Fashion week, uh, or the Cannes Festival or whatever, you can add extra stuff, you can manage that. We see a lot of resistance from smaller groups uh, to increase or it will be for example in the Caribbean to increase tremendously for Christmas. Why would they sell three times for Christmas what they sell the first week of January? Well, it's just not the same value even though it's the same room. And the service is probably even better in January because it's less crowded. So you could argue that uh, for the customers, uh, they get less value in terms of product, uh, in the peak. Uh, but uh, there is a value to that and it's difficult to capture. And we have that even with big groups. Guys, Christmas is not price perfect.

Speaker B: I mean at the end of the day the room never changes. I mean you can put something extra on the room, but the actual square meters, most likely the bath and everything else is going to stay the same. However, uh, the whole world around is going to change which determine the price at the end of the day. Uh, and of course I, I maybe I'm very curious here, look, but the room can determine the price level in terms of where do you sit in the market, but not necessarily the price itself, um, because it will be fluctuating based on, on your environment. And um, like is that a difficult conversation to have with people to get them over the line. And where does sit the most resistance? Is it with the revenue management team or is it management? Is it at other departments or a combination of

Speaker C: um. Well, it's coming primarily from operations because contrary to airlines, you have some guy who is facing the customer who will say, hey, uh, why am I paying this crazy price for this room? Uh, and that's fully understandable. It's also coming a lot from revenue management with yeah, our product is not worth it. And so we refuse to increase the price because it's not worth it. So you also see that on the floor a lot.

Speaker A: And I think that has become more front of mind over the last few years. Because you went back pre Covid it was like a long time ago. Now in our pricing, you know, you were only looking at year on year increases in most markets of a couple of percent at most. Right. You had um, low inflation, low costs. That was still quite nerve wracking actually in a very stable time putting in small average price increases, um, was still unknown. And you got a bit more opportunity for yielding up. And then we went for a couple of years of we really, really had to put fundamentally huge price increases in more than most of those revenue managers had seen in their career, let alone the management. Right. We really were working with that group. So you're already seeing and this mentality, the amount of times like well, that is already 25% more expensive than it was three years ago. And now you want me to put these other seasonality pieces on as well, the references. And these people are also living cost of living. They're seeing it in their worlds as well. There is that bit of like, oh, can I really be doing this again? Do I need to be doing this again? And sometimes we have seen companies overstep because they've seen IT work 1 year, 2 year, 3 year, they put the next one in. All their revenue management systems are going down. And why are they going down? Because actually no one could um, maintain these price points. So then that starts to make the revenue managers more nervous. Like well I've seen it have to go down as well. So I think it is even more of a conversation now because the references that still in their mind is we've increased the price a lot, which is true, but the whole market has had to move in that way. So I think even more so. But again, they do know you've seen the past reference prices have also in most cases seen instances where price increases haven't worked. And those are the ones that emotionally stick a lot more in people's mind. And still you have teams of people who want to get to the best outcome. Right. And they don't want to have that discussion when something goes wrong. So it's unnecessary caution. I think that's the right tension. But you will be also kind of. It's. That's the revenue management's tension against the finance team. And the finance team like well we have to go and do this for XYZ and. And the marketing team will fulfill all kind of um, stereotypes on the other side and be like no, let's lower it. Let's do that. Let's have low good promo prices to go and push out. And as long as everyone identifies they have a bit of a stereotype, they've got a bit of a role and a goal. And that tensions worked through. It works and it's very necessary. It's when one of them doesn't agree with the other, it can get a bit more tricky. But um, yes, if you need to go and raise prices more, you are more and more finding that it needs to be those peak times that you go and get it because the off peaks and that price sensitivity is just. It's not capturing it. And you've got more and more people who are price sensitive in the market now and can't afford those peak times who will fulfill those quiet periods. But uh, it's a lot of change and with any big changes. Yeah, we need to bring the teams on the journey as well.

Speaker B: Yeah. And do you think that happens already from itself very often or do the most of the properties actually need help and sitting together? Because I can imagine and the purpose I worked for is we uh, all had different offices. No one was speaking to each other around, around those topics or concerns they have. And at the end of the day that causes a lot of trouble.

Speaker A: I would say this is the one that probably I see the biggest variety in how much centralization of revenue management. So I've worked with all system organizations where it's very, very centralized um through to that very very localized piece. And the centralized is more about which teams talk with who. Um, I don't know Charles, I think you've come from seeing some of the worlds of the more um, disaggregated and more decentralized decision making in the past.

Speaker C: Uh, yes, Trying to think about the question.

Speaker B: I think here is like, like how is. Like how is the communication within the properties? Like do you see that they struggle a lot or do you see proper a lot of properties where they actually already on a good way and speaking to each other about the concerns they have around the pricing or is that something they really have to learn? In a certain sense

Speaker C: they are very diverse. You have companies where uh, it's extremely central and uh, you have to be careful not to duplicate too much, uh, as I said because there's one brain working for the whole company and there are companies where there is absolutely no communication uh, between uh two uh, hotels uh, which are in the same region and they would benefit from closer coordination.

Speaker B: Because I think what you saw, but at least I noticed in the last years and maybe it's changing now a bit, that this decentralization was a bit of a trend where also the smaller groups try to have one review manager for all uh, the properties where he was not really visiting the properties. Um, at least in the Netherlands you saw this very often. Um, or they, they have a consultant which have never visited the property but he does like 20 properties. Uh, and you see that the revenue management strategy is going to be duplicated. But the question here is do they actually speak to the hotels itself and do they know about the concerns of the properties?

Speaker C: I'm going to turn that on. Do they need to know the hotel? Uh, because if they're looking at the right KPIs, uh, the two can work without. However this discussion is always important to capture what your data cannot tell you and the trends and the events that are coming, etc. I've seen for example uh, in the case that you described revenue management that was uh, distant from the market. And um, I have a couple of examples that come to mind. One was someone from France managing a uh, hotel in Germany. And the uh, hotel picked up uh, extremely fast, uh, and it was too late to understand but there was actually an event uh, on that week, uh, and they lost a lot of revenue because that's really when you make revenue. And I've seen it the opposite. Uh, someone from the Netherlands managing something in France and something. It may happen that it got booked extremely fast because uh, France doesn't work in May. We have bank holidays uh nearly every week. And if you don't capture these you lose a lot on your property. So uh, there is value in discussing. Sorry, go ahead.

Speaker A: I say there's value. I would also say like I have seen very centralized teams but literally every revenue manager could tell you everything about the property. So I would say there's something m. A little bit more. You are over reliant on the revenue manager identifying events, etc, those processes are broken. If, if that's the Case like we should be able to identify these, we should have alerts reporting to get to those. So something's a little bit broken in that if you need, you've got geographical barriers, etc. Just kind of missing that. It's like, okay, well what are the trends? How do we capture this information? So I've seen really, really very knowledgeable, almost you might argue too knowledgeable, centralized team like oh, that's that, that's that. Well this one is that well, far down the road they may not have visited everyone, but they can tell you exactly the concept. They can tell you whether it's more localized versus big chain competition. So I wouldn't say centralization is the rule of that unless you have put just far, far too many hotels to one particular revenue manager and they haven't got the opportunity to go and do that. But I think the right assessment and deep dive, etc. It allows you to pick up those cross trends, look at those different pieces. But yes, if you're missing events inside so your processes are broken, it shouldn't be down for revenue managers to identify those um, in the first place. And I think it also comes down to how similar or different that hotel base is. So if you work for very um, similar, very, very consistent hotels serving very similar segments, that's a very different thing to actually if you have a selection of more bespoke, differentiated, very different. So there's some depends in those as well. But I would say centralized doesn't mean it like the knowledge is gone, but it will identify if those processes are broken as well.

Speaker B: Yeah, and I heard you say overknowledged again so. And what's the downside of being overknowledged?

Speaker A: I will use my carpet example, it's the more extreme one. But it gets to that point right. The amount of times. And I would say this is not just hospitality. I see this across tour operating as well. When people are designing and adapting bundles, it will be the. I uh, know that some element of quality has shifted in one of the hotels or like this one, you know, versus that it's got a different carpet, you know, it's not as good, so I'm going to not price it as high. But that um, may not be the customer perception and may not be the competition and pieces. So. And actually the competition can be the other element of over knowledge of just like, well, I saw this happen once before, so I'm not going to go change my prices in case this happens again. So it can be, it's too much of the detail and not allowing that to take a step back and say, well, yes, but if I look at the trends and I look at the demand, actually that says I can go and raise the price. And that particular case, um, and that's not always bad because you don't want to push things too far and then customers get upset. But you can't have the revenue managers adapting their pricing strategy too much for that. Real specifics, um, of the market. And there is a point to the wider business of saying at some point you shouldn't have those products where the revenue manager is like, oh, I'm a bit nervous to price that because it's going to be terrible. I've worked with a restaurant before and they're like, oh, well, we can't. We should. We know all the benchmarks for this product should mean it's higher, but it is terrible that you just shouldn't have something that's terrible. So if that's the reason, why are we doing it? Um, but yeah, a little bit too. More like, well, we know the car park's not as good and the carpet's a bit funny and there's that one down the road. So I'm gonna. If all the other data are saying this is good, let's go and try. And sometimes they're not wanting to push to the point something doesn't work, which is admirable, but it also means you don't push those times when actually it could work as well. So. And that's the cautiousness, right? That's the person that only gets the question of why did this not happen versus the well done for trying that. Let's go and explore this again. Isn't it great? We've learned that this pattern has occurred

Speaker C: and maybe to complement on that, um, there is what, uh, Rose said a bit earlier in the discussion. It's easy from a review management perspective to do like last year, uh, and to be, to be full. It's a lot more difficult, uh, to diverge from what was done previously or to make, uh, bets. Uh, because if you win that bet, the company is going to get a lot of money. If you lose that bet, uh, you might get on the line. Um, and that's where we try to help companies understand that. Um, it's really funny way when you look at, again, I go back to the start of the discussion. Very often you look at what revenue management is trying to do. They're trying to replicate the booking curve of last year, because last year was perfect. And, uh, this year I am two weeks ahead or two weeks behind in terms of bookings. And so I need to increase my price or low rates so that I get back to the curve of last year, which is really my reference and where I try to be. And you spend a lot of time matching the curve so that you adjust for the holidays, the events, etc. Uh, and you never perfectly match your curve because it's impossible. The market is always moving too much. Then you finish the year, you erase everything, and this is your new reference and you have to match it, uh, for the whole year and you start again the game. And everybody smiles when you say that. Uh, but when you think about it, most revenue management teams, that's actually what they're doing every day. And sometimes you hear someone saying, well, but you know, last year, that period was not so good. So we should look at two years ago, two years ago. It's perfect. Because if you match exactly last year, you will not get any questions asked. Or if you match with a couple of persons, uh, if you make a bet, then questions start coming and then you have to justify what you're doing. And if something goes wrong and things go wrong in revenue management, you have to be reasonable in the bets you're making. But sometimes you lose and then you get into trouble.

Speaker A: Um, I was going to say this comes to one of my favorite comments of like, probably the most talked about topic in revenue managers over the last two years is the impact of Taylor Swift on a booking curve. And I'm sure Taylor Swift is unaware and um, does not care about her impact on booking Curves globally. But still to this day. And then the Oasis equivalent of like, okay, well, do we, do we subdued on Taylor Swift to get to Oasis right now? Oasis, what are we going to do? You've got some other concerts going on and big money, Big Bunny is the next one, right? It's like, okay, well what's this? Like what percentage? What, what is this? The Taylor Swift curve. And it's these events and these elements, but the amount that, the chaos and the opportunity that Taylor Swift has brought revenue managers over these years, and it is for those big events and the football kind of equivalence when you get to those markets. But often it's, it's not the taking advantage. Quite often those might be over, uh, overinflated too soon and it's the backpedaling that then has to happen on those. But a lot of you end up with a lot. Those are very emotional. You get a lot of focus on those. But then these smaller opportunities get A bit lost as well. But yes, influential aspects on revenue management is Taylor Swift for the last couple years.

Speaker B: Yeah, no, I think so too. And, and we saw this in Amsterdam this year. I think it was in uh, Austin, June, beginning of June or the end of May. There was a, uh, there was a concert and I think they sold out the Amsterdam arena for like eight days or something. And everyone was saying, oh, this is going to be the next Taylor Swift. So they raised the price to €600. Everyone was thinking they go, they're gonna be rich. Uh, and at the end of the day they dropped back to even lower than, than last year on that, on the specific day because they just overbed it.

Speaker A: Uh, and I think this is a real initial pricing versus revenue management point that people have now gone to really put that bake, that price increase and that ADR expectation to the start. And the reality is those ADRs come through, through the revenue management systems dropping up. And we see time and time again now people start too high and then it's got to go back down. Um, example from one of my friends going to the Olympics, started the Winter Olympics, started out miles away, flexible rate every couple of weeks, found another location closer, ended up right in the center at the end. I can't remember which location because all those systems were just coming back and back and back. And I think the price increases as well. Over the last few years we have seen this as a really recurring theme is okay, we need to raise our prices by this much. Okay, let's start off that high. And actually you end up lower, uh, because you then have to go down. It's like, can we build in that price increase? And it's, it's far harder for the revenue management teams I think to communicate. It's like, well, let's start here. And then if we outperform those years, we'll go up, but it's not a guarantee. But it's actually the more risk averse approach. But from an initial pricing point of view, I don't think the business sees that. And that has become more, I would like to think companies have now learned about this and they're not doing it again. But let's see that the different, the Taylor Swift excitement has got too much.

Speaker C: And that's a difficult conversation to have with management. Uh, we've done that a couple of times to raise that uh, price point at the beginning of the curve so that to capture market share and they don't have to crush your price at the end of the curve. Uh, that's where I get back to the points I made earlier about. We're talking about a lot of money that can really, uh, push a company into the red. That's where you have to, uh, calculate reason, uh, and take a lot of time on what kind of bet am I making and is that going to work? Because lowering the price, uh, at the beginning of the booking curve is you have a certainty that you're going to lose money at the beginning, uh, for the hope that you're going to make more at the end. So that's a very difficult bet. Uh, but the companies we've worked on, especially in the holiday parks business recently, that have, in a very terrific way, because what happens mechanically when you do that with the right level is you capture a lot of market share at uh, the beginning when the prices are actually higher and your competitors are all pricing like crazy. And this is a great moment to capture market share and then you don't have to collapse your prices at the end of the week. But very, very difficult conversations.

Speaker B: Yeah. And especially when you go away from what you mentioned earlier, your booking curve from last year, if, if you go away from that curve so you go into uncertain waters, uh, then every, everyone starts to be tending to be scary or scared, uh, because you do something different. But my, my biggest surprise is always, hey, we should do this. We should do actually the same as last year, only 5% better. Um, so it's not the same as last year. We should do 5% better, but we should do exactly what we did last year, um, which is that with a

Speaker A: 20 price increase to start with. So then when we do that, and then that will go up. Right. And then the revenue manager like, no, that's not going to happen. But they don't often have the voice to say that. You build up a assumption and revenue management, no one's took most cases you end up having that. The revenue management system does not know your strategy, nor does it think it is the right strategy you right now. So either we turn this off and we, we hope or we do what the revenue manager and sometimes maybe the revenue man. If the revenue management system doesn't know that we are going to try and hold out on 20% higher, wait for everyone else to sell out and then sell it. Fine. But everything the revenue management system knows and we are basing our history on M says probably not going to happen. I mean the reality, uh, is that there might be something between those two where you could have got upside that starts so high and then, yes, suddenly occupancy's down. And if you. This is a world also building baseload and then yielding the opportunity afterwards. And sometimes I think that's a bit missed to the. And we had a couple of years where you could just raise your prices and everyone bought it and it kept through. And then it was the third year and some of my clients the second year that happens. And then they went no. And even when we've had those conversations and we talk about what that shape should look like, they then go into their budgeting meetings and come back and say well I went yeah, I've just been told I have to now raise up another 15% as initial prices. And I have to go back and have that conversation. So that's where quite a lot of our, that may be the core premise of our project. But quite a lot of the discussion and the uh, sort of alignment and that change management will come from is getting everyone really aware of how that works. And often it is just a not seeing how these things work. It's very easy to say let's go raise prices by 15%. We do not make careers as pricing revenue management by just saying go raise your prices. It's like the how and how do I make it ah is very hard versus the modeling out of what would happen or could happen.

Speaker B: Yeah, it's funny because uh, we see this very often as well that they say but this should at least be higher than last year. I mean the Netherlands is the perfect example. I think now with the VAT increase, um, we should increase by 12% because of the VAT. But also we want to do 5% more in net revenue than the year before. So we should increase with 17%. And then in Q1 they are similar like to last year, uh, gross, so they have a 5% increase in gross revenue but then they lost like 12% in net. Um, when they afterwards they understand during the process they don't before they totally don't agree. Um, and they are then willing to take the risk but at one point they drop out of committing towards the strategy they have implemented which often results I think in even worse scenarios.

Speaker A: Uh, I think if everyone panics at the same point, right, because most people's expectations are getting to a certain point and suddenly they get one. One jumps down. Everyone goes like have to go do it. And there is a simple fact of you have to look at the direct competition versus the overall market economics at this point. If yes, inflation is going up and customers price expectations are going up and we assume the rational thing for the market is everyone's going to price in this VAT increase. But fundamentally you are then going to a market of people who are actually taking hits in the cost of living in all places and then saying right now all of this is 17% more expensive. Well some people just choose not to do that. So you're, your demand shrinks. So they all got higher prices with a shrunk demand and you're all trying to now fill the same booking curves and yeah, everyone starts to go down. So it is, I see the different logics and for sure you need to look see where we can price that in. But also in these current macroeconomic environments also then assume we can grow above inflation and keep the same demand profile. Unless we know we've got loads of excess demand, which there will be times but the rest we're not getting there. And uh, it's just what you're seeing right now.

Speaker C: Right.

Speaker A: And we see this with a lot of different fees and VAT changes across different markets as well. So yes, yes, we do need to go raise prices and the CFO will be like we have to raise prices to counteract this. But we also need to sell the same volumes or something near. And that price elasticity discussion is very difficult. And leisure travel at least for hospitality, is very elastic. There is some business, but there's a lot of competition in that business space as well. And a lot of TMCs and travel programs etc pushing people to the cheapest um, hotel options. And you see TMCS advertising that as well in rewarding people, pushing them, nudging them to the cheapest options. So there's a lot of other factors at play. And what is legacy that the least elastic part of the program to push people to those prices. So yeah, it is similar tensions and trade offs I think are going on across hospitality businesses, at least across Europe. I would say more globally. There are obviously bigger problems and questions in some domains as well. But there's a lot of change and with those bigger changes we can't expect the same reactions as before.

Speaker B: Yeah, and in terms of competitors because you just said like total market versus uh, focus. Um, we see a lot of hotels spending a lot of energy on prices, uh, from competitors. How much are. I know it really depends on the, on the most likely the location you are. Uh, but how much time m and how much effort is it actually worth to, to look in those competitors and how well should you know this?

Speaker C: Uh, it goes back a bit to what I was saying earlier. It's easy to follow the Curve of last year. It's also easy to follow the competition, uh, because as long as you align with competition, nobody will ask questions. If you start to diverge, everybody starts to panic. Um, the first thing we look at when we look at a competition is what is the concept behind. And you probably know that, but we always have a lot of fun and surprises opening the concepts. Uh, because truth is there's never a perfect concept and that's okay, but you should be aware of it. And at some point people forget that what I have in my concert is not the same as my hotel. And maybe I am uh, whatever, a small family hotel and I'm comparing myself to monstrous 5001000 rooms hotel that is, yes, not too far from me. Yes, it makes sense to compare but you need to be careful. Uh, so one, looking at the concepts, two, having insights on what competition is doing is really key because exactly as Rose said, even corporate travelers now are becoming elastic and comparing prices and nudged uh, towards uh, lower uh, prices. But assuming that there's often the assumption that I as a revenue manager don't know and I am bad and I have a bad system and I uh, don't know enough the market, but my competition knows. So I will adjust to what the competition is doing because they know. Uh, and since that's a game where everyone is thinking the same thing, you end up uh, in a market that described that is making collective bets that don't work. And the uh, hotels that we see uh, performing the most uh, are the ones who take the time to look at competition and see when they should bet against the competition. Uh, which can take different forms depending on when you are and where you are. It can be lowering your prices at the beginning of the booking curve because you want to capture market cap share there. When your competitors are still in the belief that they can increase prices 15% year on year every year. It can be uh, the opposite. Um, we worked with a hotel in major cities uh, who um, not ah, very high end hotel, quite low hotels. They were making bets on the football matches, soccer matches, um, that um, city hotels usually are spilling uh, a lot. So impossible to find any hotel one week before anywhere in the city. So you keep your inventory and that's a strong beta. They would keep the inventory until one week uh, before the date of the match and then uh, they release all the inventory at a price that's crazy compared to the product they have because they're the only hotel with any inventory left.

Speaker A: Uh, and that works if the whole business, but it doesn't work if like that can't just be a revenue manager going and being entrepreneurial. Like you need everyone to be aligned. Sometimes someone's seeing a number somewhere and going that's not good. So there's a need like can we take this through identify those days and then that gets reinforced.

Speaker B: Yeah.

Speaker C: Uh, you need to accept the bets, you need to be aligned. Operations need to be involved because you get by guys in a three star hotel who are paying €1,000 per night. So. So you need to manage your operations. Ah. And you need to uh, share that money also with the frontline staff. It's also important that the whole team is on it. And it also works if the competition is not doing the same bet because if everyone releases the inventory last minute so you just lose. So uh, yes, looking at competition is very important. Doing the same as competition is the easy way. Is it the most profitable way? Not always.

Speaker A: And I think it is. I would still. If you're going to say do I look at what I've done last year in my strategy versus competition. Take your own internal performance before the competition. Use them as an explanatory factor. Uh and see when you're. And it's a way to systematically see if you're completely misaligned with everyone else. But at the same time don't just go follow it. Go and understand. And if you know they've got an event on and you don't and you've only got one in your concept then there's something very different that you've got to go and price for. I would say one of the other things is in the our story of the eight different reports and spreadsheets is that competitor information needs to be coming through in a systematic and automated way to the revenue management team. That is not Googling. And I say this because I have seen this many times Googling and finding and researching and checking and testing. That bit just has to like, has to be automated and come through. I would say the other piece is also know your role in that particular area and what I've seen that work really well is you will see the competition and then there may already be a kind of systematic summary for the revenue manager of like this should be the band that you play in I. E. We should be looking at a 10% premium over these brands. So giving them that visual cue. This would be a target. Things that start to say going away just from that number but building that into the reporting so someone's not kind of thinking that through you. So okay. You know, in these markets we need to be on par. These markets maybe we're below the market and in these ones actually we can demand a premium rather than having the revenue manager make those judgment calls and those guesses give them that clear information. See what we've done in that time before. This takes weeks. Otherwise you see a number and people just psychology as you start drifting towards those numbers. When you see it, every anchoring experiment you've ever seen, you ask someone a question about something, if they've seen a high number or a low number beforehand, they will psychology, they just will go towards those numbers. So if you can do things to anchor and adjust and guide the revenue management team systematically and then maybe to the more junior team members from the more senior team members to just say look, this isn't a, this isn't just to chase that number. Here's a reference. But also here's what we do with that reference and how we consider it and how we don't. But this doesn't work. In the example I gave where the CEO rang up every weekend saying why is the competition here? That also says I don't trust my revenue management team. That says I think they must be doing something better than us. Maybe they even know that might just like no one might have looked at that price for months. You don't know. But if that starts to come through, then of course if the only thing I get feedback on is my position versus that price point, at some point I go for my easier life, right? I just go and match that price point. That's all that people want me to do. Ideally you give your revenue management teams more leeway and freedom to uh, make the most.

Speaker B: Yeah, you see it also sometimes I think sometimes an RMS or revenue subscription can, can even provide too much in this but that if you work based on a ranking, you're always going to be placed second. That's literally what you do. Um, and then it's funny because uh, what I've seen in the past is that they trying to follow the market but they also try to follow their own uh, last year trend and then they end up exactly in the middle which is most likely even worse uh, than choosing one of the others because they are, they are down compared to last year so they want to lower but then they are still hiring because they market um, and, and sometimes we just see that they are comparing to a market which is not selling, which we know they are not selling a lot of OTA rates so they're not selling a um, lot online. Uh, they just have for example they have 200 rooms but they sell 150 rooms to corporates. I mean their public rate can be super high but they never sell the public rate. Uh, and that's, that's one of the, the things there. And a lot what they heard and it's like, but they have a price of €200 online and they have an occupancy of 80%. And then they start do the math and they're like oh, 200 rooms, 80% times 200. Oh, they should have a revenue like this. And uh, we are much lower than this which is like making up a story which has never existed because they just have partial information.

Speaker A: And um, uh, if you get to a world of really different room rates as well, uh and room mixes you can have some really different pieces and sometimes that can be the revenue management team defending the fact that their room mix is just different. So if everyone's doing best available and that's a really different setup, we need to go and explain that. Sometimes the explaining the RM to the broader group, the more extreme comes when you look at areas where the ancillary revenue is really key or you start bundling in those sorts of, of areas and working more in that Holiday park holiday resorts, um, your decisions and your judges have a whole other layer of you know and you might have a competitor that is purely trying to get on site spend and that from a room rate is very very difficult to go. And that's world where you do have more premium particularly against that leisure like park. There's some really interesting things you can get into and like what my premium should be versus different competitors. Yes, maybe we do need, we can never be 20% more but that should be the boundary we sit in and building up those strategies and understanding that is it's normally systematizing the things the revenue managers know but it's quite an interesting world and you get into water park qualities and all that kind of thing which yeah adds a bit of fun but even more complexity. Right. You really need that agreed and aligned with the businesses.

Speaker C: Uh and for instance when the price of the competition cannot be a guidance in certain instances the uh, big uh hotel groups um have hotels that are more destinations that are designed for the customers to burn points. And you have hotels where 70, 80% of the customers are just burning points. So to your point about the corporate, nobody is paying the public price and so that hotel has the incentive of the hotel group is to put that price extremely high. So that uh, when I go there As a customer and pay with my points I get the impression that I'm getting great value for my points. So then the price of that hotel room is designed not for the public but it's designed so that the people paying these points get the feeling that they're getting a great value. If you anchor your price as a hotel which is not in a hotel group and not in that dynamic on that kind of price pricing, it's not going to work because the market you're playing on is not the same one.

Speaker B: Yeah, true. And I think this is especially when there is what we see for the smaller properties when there is not 100% focus only on revenue management and they do this as a side job. I think there it goes mostly wrong. Um, because they work with partial information. Sometimes they look it up on Google, uh, or they Google online. Hey, how is the OR chip GPT which I think is the or cloth, depends what you prefer. How is the market performing? And then the first answer you get, I don't know how the market actually is performing but it looks like. And then that's the truth.

Speaker A: Yeah and that's an interesting one because actually we talk in all these cases of you know, the wider business thinking that the upper revenue managers know more than this person. In that case of it being kind of a part time role, that person may also have that view and perception of like you know they, they must have this central team, all this fancy machinery, all this stuff, doing this. So if they've got this, there's something I've missed but they also, they might be running a trial, they might have had no one look at it, they might have a system error and the amount of times we see errors or things happen. And that's when companies learn how they, how much they're being watched by their competitors because they make a mistake and everyone does the same thing and they're like okay, this uh, actually no one was paying attention after all. And so some interesting ones there. I think there's some really big mistakes people have made and found completely wrong magnitudes of prices which get fixed correctly but quickly but already get like followed as well by others. It's quite interesting. So I think in that one it is, there is almost like a checklist. Are they following the same strategy? Do they have the same mix as me? Do I see my own performance? Because I say at that point if you see everyone else with really high prices and you're like oh, am I missed something either? Like Taylor Swift is just about to turn around in a Corner or maybe they have something else or, you know, they've got an event on. I was traveling to Stockholm the other week and a big corporate was, and Charles was also trying to get there that the hotels we were staying in for a couple of hundred euros are suddenly 7,800euros. They had these huge company events going on. So they probably only had one or two rooms left, right? They were literally like just whoever I need to come in at those points. And we had to go and find ones further out. But those, you know, sort of very kind of touristy, kind of very nice, but not really a business travel hotel I stayed in was never in a million years going to get a rate near there. And they were the only ones that seemed to have noticed in Stockholm. So I stayed in this quite peculiar hotel. But, you know, lovely, but everyone else has gone up to these prices. I didn't actually check Charles on the day, but I imagine quite a few at the last minute may have gone quite a bit down because no one was. No one was able to get. Even the security guard at the airport when it went through passports on the way out, he said, are you part of that group? No one else. Because no one could afford a hotel room in this city. So I mean, that's the case of really everyone's systems were just following each other because it went absolutely mad. Nothing worse than like revenue and pricing consultants like us there trying to figure out what's going on. But yes, you need to know when that's your game and when it's not. Do they know more information? But, like, if they're all doing really well and you're much lower in price, like, also, let's think where pricing is the question because I think the other key bit is, is pricing my problem right now? Is the question. And if everyone else is much higher than me, I'm there and I'm still not got anywhere near my demand. Something else has gone wrong. So what, what is it? Is it a marketing thing? Liz? Is my key to booking broken? Like, why am I not getting these sales in? Is the marketing team? Is there something else? Something else must be wrong at this point. And that's why I think businesses also struggle, is sometimes this is a pricing problem and sometimes this is not. And if I'm getting like everything, I've converted 100 of people that come to my website, my competitors doing that. I'm really low in price. But still, actually, why is. Why are only four people coming to my website? There's a demand problem, there's a marketing Problem marketing might go to come back to revenue management, so you should lower your prices. Clearly we're not selling. The revenue management goes back and says, well actually I've sold every single person's bought this because we're such good value. We have another problem. So many managers I think also need to have the confidence to turn around sometimes and say this is not me, this is not my problem. Let's go and discuss it. But actually to go to the business when pricing, the pricing is right. If anything, the pricing might be too good. But still I'm not getting demand. Something else is out there because it's very easy to also just go back to pricing and something.

Speaker B: Yeah, we had this example I think like four months ago and we got a lot of emails and I spoke

Speaker C: to the guy and at the end

Speaker B: of the day we were looking it up and what turned out his booking.com account was still connected to his old PMS for like more than a month.

Speaker A: Wow.

Speaker B: Uh, so he had a lot of reservations, but he never knew, he never did know that he had reservations until he got a phone call of someone who said hey, I made a reservation but I didn't get a, like any code or whatever. I'm standing in front of the building. Uh, so those things happen. And on the other hand it also happens that, and I think this happens two years ago in the Netherlands where one property by accident put like a 0 a 1 as a, as their price on the beach. So they had €1 and I think 120 on city tax. But uh, the whole market collapses in price. Like everyone. Um, and literally there you saw that everyone was following the same person. And it happens. And I think it happens more often. Um, and especially with, with the smaller property stepping in, into revenue management, it happens more, uh, because exactly the same behavior where they think, oh, I don't know much and they know everything. It's like this calimero. I'm not sure if calimero is also in French and like the little guy with the eggshell on the hat, um, maybe Charles knows it. Um, it's like, oh, every, everyone is big and I am small and they know better. Um, and that happens pretty often. Um, in terms of maybe, maybe you can share, maybe not. Um, is there anything you are still surprised about which you find in the property when you entered it or when you started the project? Until today you're thinking, uh, how could this ever happen?

Speaker C: Um, yeah, I can try. What I'm always surprised at clients is how, um, some specificities or some bets that they've done because they do it every year, it becomes totally normal and nobody questions it anymore. That's always fascinating when you come outside into the company, uh, and you look at it and you question, uh, and the answer is a bit more complex than we've always done it like that. But, uh, it's not too far from that. And that's really fascinating.

Speaker A: I'd say. I see the. The opposite one as well is the, uh, myth and legends that can build up on just the most basic of things. So this comes in the. The underlying premise is usually, we tried this once, it didn't work. So then you probe and there'll be. Maybe it's a promotion or a price point. And, um, so at one point in one time, someone tried one version of something, it didn't work. And thus we will never try anything again in that world. And it's really. You really have to push through in the. Okay, but let's. Let's go and try and change this. And normally it'll be like. It'll be like one promotional depth and one particular design going up to one customer group. At one point in time, you're like, so you haven't really tested that whole, like, principle. You tested one very specific design in it, and it didn't work. Um, so you're repeating lots of past behaviours that have worked without questioning anything else that's ever had a slight tweak that didn't immediately work. Gets, uh, put into the bucket. Like, that doesn't work for us. Don't even try it. And. Yeah, and then people are trying to break out of that mould. And it's very easy as consultants, we can come in and question and push and get some of that change to occur. And quite often we will be able to do that more effectively than within the business. Because in the businesses, yeah, I still got to trade to bau. I need someone to explain if I want to deviate from that. And I need another voice to also say, can I go and trial something different and really go and push that piece there and question and probe and it gives it. It's very interesting for us because we really get to go in and, like, try new and exciting things. We've got to prove it out with a lot of granularity, which takes a lot of time, but, yeah, getting that kind of shift in movement. But it normally comes from. We talked a lot about the leadership discussions at the beginning when we sit there and align. I think the most enlightening is when we sit with the revenue management teams. And we'll often really sit at the desk. Let's really go through what you do day in, day out, the pains. And in that you start to hear, well, I don't do that because XYZ tells me this and I don't do that or this doesn't work and it's like, no, let's not try that. I've sat there with a revenue manager before who wrote every price change into the brochure and that was the entire price tracking. You find all these things going on normally different things going on in different ways, but really sitting there you get a real flavour of the challenges quite quickly. There may not be the answers of how to adjust for them, but you can get the themes of the challenges. And I always find that really interesting. If anyone does a project on your revenue management and doesn't sit with the team day in, day out and understand what they're doing, they've not got to the depth of it. Nothing is generally done in revenue management without a very good reason. We might be able to change that. You've got to unpick the very good reason why it's being done and then find a better solution because for sure they have analyzed it to the end for the earth.

Speaker C: I'll jump on that. Uh, it reminds me a story, uh, under the systems, as Rose was saying, ah, sitting with the rough management team once they had a very elaborate rough management system for one of the big providers, uh, with a big AI demand engine that works very well, extremely elaborate thing that would define for each category, depending on a lot of parameters, which demand to expect, etc. But for some reason, some myths that was built, they didn't trust the demand. So uh, one of the reasons being the didn't work in it. So of course there's not great. So we don't look at that. Uh, we have our own demand forecast which is, uh, we look at the bookings we've had so far. We add on that the bookings we had uh, in the rest of the period last year. And so this is our forecast without looking at price or piece or whatever. And the whole revenue management was a big company was built on that, uh, and not on the engine of the revenue management system. And surprisingly that happens actually more often than you would believe. Um, it's fascinating, uh, they were paying huge amount to their revenue management system to in the end draw a curve on hey, my revenue bookings is that much. I will just add it to the bookings I have right now and adjust My price, without even looking at the price of last year, to me, I was like, okay, it's really an interesting way to look at things.

Speaker B: But is it also coming down to the fact that they want to, uh, work with the booking curve from last year? Because it shows similar behavior, right?

Speaker C: Yeah, it comes to wanting to stick to the booking curve.

Speaker A: Ah, but you can build a lot, I think. And you must see this as well, right? It's. I think it's very easy for people to confuse technology and analytics to the strategy as well. And people think, right, let me plug it in. So people say, it's AI now can AI do my pricing? And AI can supercharge things. It can do amazing stuff. But you need a strategy. And if your strategy is bad, the AI is just going to make your strategy, your bad strategy enact much faster. What do you want to do? And if you can't put that into words, I think that kind of. I think that everyone assumes the systems and the tools will be the answer, but actually it's how you parameterize how you set up, how you get that to go and work. And otherwise you end up with a lot of systems around a very basic set of calculations. But everyone's like, oh, it's great because it's going through all these things. I'm sure you see this as well in your world.

Speaker B: It happens so often. Um, and I don't think that people realize that, uh, sometimes AI is just a multiplier of what you do. Um, and, and it really is. So if you put something, if you, your behavior is bad or your knowledge is not good enough on certain thing and you're just gonna multiply it, then a bad employee is going to be 10 times a bad employee, um, which is going to be even worse. But we see it a lot. Like yesterday I got an email from a client which, uh, did write like, I think 15 pages. No, he did not write it. AI did write it. Uh, he basically extracted the results, uh, from last year, and then he pasted it in AI and told it, okay, give me the best revenue management strategy you can think about. But it was only like, basically end result. So it was basically a P and L. He put it in there and he got like 15 pages of things he could do. And definitely there were some things which might make sense, but there was no analysis behind. There was no breaking down into certain things. There was no regional thinking about, okay, where are things coming from? It was just an overall summary of all the possibilities. And he was like, yeah, we should do this. And we should start now and then you start to ask questions and, and then he's like ah, it doesn't make sense. Does it make sense? But we see it, we see it so often that people try to use AI uh which I think is good that they stepping into to trying things. Uh, but it's not always the truth, especially not when you feed it yourself with already things you had in mind. Um, I think that that might happen the same in your mind.

Speaker A: I think there's the themes of like if you say okay, what are the global trends or the macro trends and it's not too niche and specific, you get great insights like the what do I strategically want to do for my business in response to that and maybe, maybe Claude will get to the point or whatever, whatever your uh, LLM of choice is. But right now, no, it's going to give you its probability. Right. It's the average of what it thinks is best of other outcomes. And that may work but we've already had our discussion about repeating last year and following the competition why it's there and the probability of that not being the right answer versus it being the right answer. Uh, but it gives something very confident sounding very soon. But yes, we see a lot of um, AI summaries of strategies and approaches and you say well okay, this gives you a good starting things of things to consider but let's go consider it. Do these work for me or not? And as I said, when you get to more the pricing and it gets a little bit more machine learning, let's be honest, once you're getting into elasticities and stuff, some of this is like you don't, I don't know many machines you want to go and leave making all your changes about some human oversight. Not every change but human oversight and insight and assessment and maybe in the future. I sound very outdated saying this but at the moment all I know is when I see people automating too many things not, and that's not necessarily not automating but not having the right checks and balances and overseeing that are uh, when things go quite well. And it's often where people say we've kind of left it to the machine and it's because they don't know how to interrogate it. And black box is as bad as no box from our perspective. And that's the discussion we see a lot.

Speaker B: Yeah, and I think what we see, what we see a lot is there is no consistency in the LLM at one point, uh, because they start a new chat, they start A new flow. They do the same exercise. Um, and then at one point there's no consistency in the machine anymore. Um, where, where it goes like up, down, left, uh, and whatever. And, and what I, what I still like the most. The most funny thing about this is that uh, every time I get an email like this, it says on top, they copy the whole chat. And the first thing is, oh, you did great last year. Uh, so first starts to please and then starts recommending. And I think that says already enough because it doesn't know if you did great last year or not. It doesn't know much then what you feed it to. Yeah, um, which, which at one point for some properties going to bring them into trouble as well if they don't start thinking themselves and only leave it to an AI.

Speaker A: Um, as I say, one interesting thing we do see is you can train the AI to sort of challenge you and provide useful questions. I think in that world where it's a support to the thinking and the working through things rather than a reinforcement or security blanket of where to go. Uh, because there's just so many options there. Whereas it's like, oh, can I ask this? Can I ask that? Yeah, that gives you the kind of outside input to spar against you versus being the solution. Big macro trends. Yeah, for sure. You can go and get some really interesting information or you can automate things. Yes. But like strategy setting and particular, uh, go and do your pricing strategy. And I come from a world where I get asked, many people come to me and say, you know, I've been asked by my senior team, etc. What can we do with AI? Can AI be my pricing? And there's so much. You can supercharge with it. But like you then need people. But it's great because people can then go and do the really smart stuff with the information and make the big decisions with the right information. Rather than the old school, let's go and make ourselves 10 different reports and spend all day pivoting stuff. And then at the end and one of my first ever projects the team took us aside and they would master pivot table. Is everything like sat there hand calculating margins. Like so much dedication to getting pricing right every day like painful amounts of dedication. So we went to look at some automated tooling. Not super fancy either, just really automating the decisions. Auto calculating. Coming to the revelation with the business of like we need to actually identify our price. They didn't capture price, they only presented price as capture price. Have that systematically reported the. The revenue management Team, when their boss left, got really nervous and then my boss left and then they sort of suddenly like, we're really worried once we build this that we'll be replaced. Because all their job was, was calculating these reports. So he talk to their bosses. Yeah, because now they can actually do their job. But they've got so used to doing this and building up this ecosystem and building reports, they only got an hour at the end of the day to actually do the pricing. Well, imagine if we could look. And they hadn't even contemplated a world where they could look at pricing all day. And I say this is just the next level up of actually because there's still so much revenue management teams and more the smaller opportunities that are harder to grasp today that I think will really can come to the fore because the other biggest changes can occur. Uh, but at the moment those are just left in the long tail of. It would be great. But we can't, we can't financially justify looking at these changes today. And I think in the longer term they will be able to. But yeah, it's the same thing, right? No, having a system is not replacing your revenue managers. It's just making them more powerful and it will be the next level up. But you.

Speaker B: Yeah, and it's um, going to take a bit, I think, because it's going to be disturbed a bit in the beginning and then we'll stabilize again over time. Uh, like it happens with all big changes in humanity, I would say, uh, it goes wrong first, then it stabilize afterwards, I think. One last thing. Um, when, when is a project for you guys? When is it, when is it success? Like you give the advisory report, you give the advice, uh, they might implement, they might not implement. Uh, when is, when is a project a success?

Speaker A: I would say it comes to that. Implement or not. And it is, it is the project coming into fruition and really getting, getting implemented, getting the focus. And within implementation it'll be learnings and adaptations. But we aim to get to the point where there are things that people can go and implement. This isn't a go raise your price or go change this. It's like you need to do the following steps to get there. By no means depending, uh, we can be super involved in implementation or not. A lot of companies like to uh, own that because that's the point. They know the business will really kind of take it into their DNA by doing that as well. But it's seeing things happen, coming live, being tested and trialed. Charles and I have a client with a promotion running Live each day just sitting there with the leadership team, like how's that working? How's that going? Let's interpret how that is. Seeing things actually go and change is kind of the fundamental goal. And within revenue management and revenue management projects that's generally the case. Right. Because we're coming out with like, let's go and change this strategy. Go and work with the system provider on how we go and adjust that. Let's go and like next year's initial pricing. Let's go with this with these like booking curve adaption. So they are things we're working with pricing teams that are really keen to go and see change. I've never sat with a revenue management team except for the first ones who are nervous about their jobs. Who ever not wanted like they're desperate for these things to happen and the change in the movement, like they're just often quite stuck without doing that. Um, so yeah, I think the success is in that it comes to life and it goes into place along the way. All flavours of different discussions and stakeholder groups. I would say even what you think is the same business when you get into the, into the nitty gritty can be completely different. That's ah, part of the, it keeps us entertained sometimes. It can be stressful but it, it's part of the, the joy of seeing how these things kind of unroll and unravel as well. But I think first getting everyone, you know, step one, ending the engagement, having everyone really aligned and on board. I don't like leaving somewhere where someone's like oh, I'm just not sure this is going to work. Maybe fine, like I need to go test this to believe before we do it. Yeah, fine. But like that. And then they're really seeing that that plan happens and acts and goes into real life. There's m. No, there's no joy in making a PowerPoint on pricing for the sake of making a PowerPoint on pricing. It's got to be real and, and be lived and yeah, revenue managers do that if they're desperate to go and go make more money for their companies. In most cases.

Speaker B: Yeah, indeed. For you Charles, anything different, anything to

Speaker C: add fully aligned for us it's really the implementation and when it starts to get real, uh, and happening. And I'm really curious how this is going to be impacted by AI tomorrow. Overall, uh, we talked a lot about AI in the revenue management world but also on the consumer side, the agentic uh, AI in terms of uh, price shopping. My intuition, uh, is that the changes that we are implementing will get captured by the market much faster. Because if, uh, most customers have their own agents, then anything you tweak will, uh, I would expect the, the shift to be stronger and faster. So for us, it would be even, uh, more rewarding, uh, because the results would go faster.