TORONTO — The evolution of the commercial strategy space since the start of the pandemic has led to more collaboration and greater adoption of automation, including artificial and business intelligence. But as automation use grows, there’s a hesitancy to fully embrace it among system managers due to a lack of understanding and control.
In a roundtable discussion at HSMAI’s 2023 Revenue Optimization Conference Americas, Erica Lipscomb, senior vice president of revenue management at Crescent Hotels & Resorts, said it’s human nature to have doubts as most have done everything manually until now.
There’s still an “old-school philosophy” in the industry that leads to uncertainties creeping in whenever the automation system doesn’t yield optimal results, said Cassie Bond, vice president of commercial strategy at Lodging Dynamics Hospitality Group.
“If it burns them one time, they’ll forget about all the nights that it crushed, that it did great,” she said. “It just takes that one time and they forget everything that the system is doing for them on a daily basis.”
Bond said hoteliers need to be better educated on how the systems work so there can be an understanding of what they are doing.
There’s been a push to explain what isn’t working with the system instead of disregarding it all together, Lipscomb said.
“Let’s just not say the system doesn’t work. Tell me why the system isn’t working. Fix your system,” she said.
Part of the hesitancy to fully lean in comes from an accountability standpoint, said Chris Cheney, vice president of hotel performance and analytics at Stonebridge Companies. Hotel owners and general managers looking for answers on a poor night won’t be questioning the system; they’ll be asking the person in charge of running the system what went wrong.
If the person in charge doesn’t fully understand how the system works, they won’t be able to explain themselves.
“If a revenue manager or director of revenue can’t exactly answer that, because they’re not sure why the system made the decisions it made — that’s a really difficult position to put that person in,” Cheney said.
There remains a disconnect between revenue-management teams and outside decision-makers when it comes to adjusting pricing, said Christina Pedersen, vice president of commercial strategy at Aimbridge Hospitality.
“You also have a whole group of people, general managers and other people, part of our revenue calls, that are used to setting pricing,” Pedersen said. “It’s a whole culture shift as well — do we believe these recommendations? And if we don’t, we’re going to do what we need to in the system to correct it, not just continue to override.”
Despite all of the uncertainty and trust issues with the systems, those in charge of implementing automation daily have confidence in it and continue to expand its scope. Cheney said he leans on the system to inform him on how optimistic or pessimistic he should be for a certain time frame, and he has more faith in it than his own perceptions.
“I actually trust the system a little more, because I know — or I have some inkling — how many data points the system is looking at all the time,” Cheney said. “I may feel uncertain about what’s happening in the next seven days, 10 days, 30 days, 90 days, but the system is seeing actual activity and making judgments on it.”
Artificial Intelligence Implementation
Artificial intelligence is starting to be used in revenue-management strategies, but how it works and the potential breadth of its use is still largely unknown.
Libbi Carlson, vice president of revenue strategy at Remington Hospitality, said AI is a buzzword in the hotel industry right now. While it can be used as an aid for strategy, she said it won’t be able to replace a human analyzing the numbers.
“I don’t think truly we know what AI is going to do for the revenue strategist in the hotel,” she said. “There’s still a lot to be figured out about how it’s really going to implement our teams.”
Even with the uncertainties, there’s been some early adoption of AI in the commercial strategy space in the hopes that it can cover some blindspots.
“I don’t have a problem with embracing [AI]. I actually think we should embrace it,” Lipscomb said. “I actually look at it as an opportunity. We have so many shortfalls and challenges in our industry; what can [it] solve for me?”
Cheney said Stonebridge is using AI to make business intelligence more predictive and easier to digest. For example, instead of revenue managers and general managers spending hours sifting through data to come up with a forecast, AI can come up with one in seconds that can be used as a starting point.
It can’t be used as the end-all-be-all right now, though.
“There's still a lot of testing and vetting that has to be done to make sure you're using the right solution and you're using the data in a way that it's taking a process and not just making it more streamlined, but also making it more accurate and actionable,” Cheney said.
Stonebridge is growing its analytics team in part to figure out the best ways to use AI and how to make it better, he said.
“We don’t want 17 different people in the organization trying to go figure out what AI means for them and what it can do for them,” Cheney said. “We need a couple of people focused on solving this and finding the right path forward for our organization. It’s a blend of analytics and IT really finding the solution.”
Understanding the use of artificial intelligence needs to go beyond the revenue-management discipline, said Dana Cariss, vice president of revenue strategy and distribution at CoralTree Hospitality.
Given how accessible some forms of artificial intelligence such as ChatGPT, an AI chatbot, are to the public, there needs to be an understanding of how hotel company data and content is displayed in these systems, he said.
“[AI] changed consumer search. It’s changed the way people access our information,” he said. “Understanding … how that impacts search is important.”
Cariss said to fully grasp AI's impact and how it works almost requires “its own kind of forensics team” to ensure only content that the company has control over is shared.
“I mean, it is what it is: The cat is out of the bag, the genie’s out the bottle,” he said. “As it continues to evolve, I think it’s an important area of general governance and security, making sure that your hotel is displayed in a way that you feel appropriate.”