Latest / The Modern Hotelier / #337: How Revenue Management Is Changing & Giving Independent Hotels An Advantage | with Steve Taft & Tim Kolman
Transcript
- The Modern Hotelier #337: How Revenue Management Is Changing & Giving Independent Hotels An Advantage | with Steve Taft & Tim Kolman === David Millili: Welcome to a special Independent Hotel Show Miami episode of The Modern Hotelier, the most engaged podcast in hospitality. Please make sure to follow, like, subscribe, and let us know in the comments what you think about today's episode. Gentlemen, please introduce yourselves. Steve Taft: Steve Taft, VP of Partnerships at ampliphi RMS. Tim Kolman: Hi, Tim Kolman, VP of Sales at ampliphi RMS. David Millili: So you've both spent your careers at larger vendors serving larger hotels. What made the independent segment worth betting on? Steve Taft: The majority of my time in the space, I've worked with independent hotels, and I have a passion for what the independents actually bring to the table. And I think there's a lot to be said for sticking to your core competency. Tim Kolman: I would say I love a good underdog story. And you know, this small independent property segment has been underserved in hospitality technology for a very long time. So being able to support that owner-operator in a way that makes their lives easier is what I'm in it for. David Millili: All right, guys. So most of the revenue management conversation in the industry assumes that there's a revenue manager on staff, and you're building for the hotels that don't have one. What does pricing actually look like today for a 40-room independent hotel? Tim Kolman: Excellent question because there is no one answer to that question. What I would say is the majority of independent 40-room properties, revenue management is done at the end of the day after they have done check-ins, check-outs, laundry, breakfast, everything else, maintenance, everything else to keep the property running. And then at the end of the day, they have just enough time to touch on maybe the two to three high-need dates that they have identified already that they know of. Often missing a lot there. There's also a lot of set it and forget it. They set the price once every month for the next three or four months and then maybe revisit that price once or twice again before that date comes. And that's really what it looks like. David Millili: So the first objection from the independent operator is usually, "I don't have the manpower to run a system like that." Is that a real constraint or just a hangover from what RMS used to require? Tim Kolman: I would say it's definitely more of a bit of a hangover from legacy RMS technology. RMS technologies have been around for 30 years. And if you think back 30 years ago, it was a transition from a reservations manager into a revenue manager who all of a sudden had to take all of their spreadsheets that they've put together over the years and start creating a forecast. And that forecast was the basis of how pricing came about back 30 years ago. Some systems are still like that, but in today's modern RMS technology, it's less about the spreadsheets, the data, and the forecasting, and more about using new data points that are utilized in finding the right optimized price on a daily basis. And the algorithms are more sophisticated to be able to look at the data and identify how certain data sets correlate into identifying stronger demand versus weaker demand. David Millili: So Steve, where does the pricing intelligence actually come from, and how do you get the owners who've been setting rates on instinct, as you said, for 15 years to trust a number a machine hands them? Steve Taft: Sure. I'll take the first part of that, and then I'll have Tim handle the second part. So during the onboarding, obviously what we want to get is as much historical data as we possibly can. We typically require a minimum of two years. But hey, if we can get three years of historicals, four years of historicals, that certainly helps paint a more complete picture. Other than that, obviously there's comp set information, comp set data, and rate shopping of that comp set. And then in addition to that, we actually partner with a third party that actually is used by Uber for demand forecasting events at citywides, concerts, what have you. Tim Kolman: A slight correction, Steve. I apologize. You mentioned historical data two or three years. That was true for more legacy systems. Historical data, and then they had to run for 12 months in a row to be able to kind of collect the recent trends versus historical data. That's less important today because of the ability to test rates, learn from what happened because of that rate change. I increased my rate $10. I expect to pick up three rooms in the next 24 hours, but all of a sudden I picked up five. You can learn from that. You don't need years of historical data to be able to throw that back into the algorithm and say, "This is what I identified on a Tuesday, this coming Tuesday. Is that also applicable for Wednesday? Is that also applicable for next Tuesday and Wednesday?" So while historical data paints a picture, real-time data then tells the story. And then I would also say competitive set data is interesting. A lot of hoteliers, the very first question if you ask who their competitors are, especially in the independent space, the answer is, "Well, we don't really have competitors." And that's very true, but then when we say, "All right, who do you look at for their pricing?" they give me a list of five. And so what I like to do when we take in... The real value of competitive rate data is being able to help look at other data sets and say, "All right, these two or three data sets tell the real story." So for example, just because my competitors are starting to raise their rates by $30, let me say, okay, do we raise our rate by $30? That's not necessarily the right answer. But if you look at your reservation data and say, "All right, competitors are raising their rates by $30. We're ahead of pace, and we're going to run the risk of selling out too quickly. Okay, yeah, let's raise the rate." And then we look at events data and say, "Oh, and by the way, Taylor Swift is in town." So all three of those say, "Well, maybe we shouldn't raise it just by $30. Maybe we should actually raise it by $50." So competitive rates are valuable to tell the story, paint the picture, and kind of contextualize it with what else data is telling us. David Millili: Yeah, would you say that's one of the biggest mistakes hotels make, from hotels I've spoken to, that they rely too heavily and almost assume that their comp set knows how to price better than they know how to price? Tim Kolman: Well, yeah, completely. I don't even trust competitors to price their hotel rates. I'm not going to trust competitors to price my hotel. But I want to watch what they're doing, right? That gives me an idea. Maybe they're raising a rate just because they have compressed their hotel because of a group. That doesn't mean that market demand is strong, right? So yes, watch the competitor's pricing. Don't follow your competitor's rates, especially when it's down. David Millili: For a hotel already running on an RMS, should they be letting it run or should they still be hands-on pricing? Where's the line between oversight and interference? Tim Kolman: Okay. Yeah, that's another really good question in which there's a lot of answers to and a lot of pieces that go into those answers. But what I would say is it's very hotel-specific, market-specific, and automation is very valuable, especially when you don't have a full-time person eight hours a day sitting in front of a computer. That being said, there are ways to be able to automate it to a specific property or a specific property person who's pricing that property to their needs. Meaning, like, yeah, I'm not going to want to look at 365 days every day. Let's automate it for everything outside of 14 days. But because my property and my market's booking window is 14 days, that's when I want to really kind of pay attention to what the system is telling me. So I think automation is great, but rarely do we see full-on, like, fully automated, just let the system run. Which is okay. Systems are built for the comfort of the user and the property. David Millili: Yeah, it seems like people are ready for a co-pilot, not an autopilot right now in RMS. Tim Kolman: Yep, exactly right. Absolutely. David Millili: So Steve, there are RMS vendors who've been at this for 20 years and do it well. What's structurally different about building this now in 2026 that wasn't possible when they built theirs? Steve Taft: I mean, obviously AI has made a lot of things possible and made it possible at a cheaper price. That said, a lot has changed in the last 20, if not even 30 years. And one thing that we really lean into, I think, is the machine learning, the algorithms, being able to set things up as far as weightings, what matters more than something else based on the property, based on the comp set, based on the market. And I'm sure Tim can probably add some more as far as the background of where revenue management was 20 years ago, 25 years ago, and how we're leaning into things machine learning-wise, AI-wise today. Tim Kolman: A history lesson, and I've been doing this a long time, right? Revenue management came about essentially with the start of a hotel having to forecast and identifying, all right, on what days is my unconstrained demand going to be above 100%? So that started the need to then generate what's called a last room value or hurdle rate. So anybody who's been doing this forever identifies those terms. Then that would push to the PMS. This is how it started. And again, this was kind of the most important data at that point was a forecast. And as you can imagine, if you don't have a day of a forecast above 100%, you don't have a hurdle rate, which doesn't generate... And that often is why you would see years ago really low pricing, like cost of the room. So anyways, fast-forward, we are in a position today where the industry is changing from the revenue management mindset to bringing into revenue strategy or commercial strategy, meaning there used to be silos in hotel technology across departments, and the technology didn't talk to each other, and the departments didn't talk to each other. All of that is broken down now to the point where we can start to bring in API integrations with many different commercial strategy systems. So thinking sales and catering, they're working in like a Delphi or a sales and catering system in which their room blocks, their tentative blocks, that's where that lives. This never talked to revenue management systems in the past. You move to marketing, right? Marketing lives in Google Analytics and all of their different marketing dashboards looking at different KPIs. Again, never really integrated with revenue management. We're in the AI age, we have the very unique opportunity to start to bring in these different data sets and then use AI in a way where we can ask it questions to tell a story. Say, "All right, what are the dates, what are the groups in which we are fearing that they're going to have significant group wash or even potentially cancel in the next 30 days that could impact our transient strategy?" And in that case, marketing GA4, what are the campaigns that have been successful in the past that we can immediately turn on to target the lower part of the funnel and high conversion for three weeks from now? And then revenue management, what is the price in which those campaigns driving those travelers to our booking engine, what's the price where it's going to be optimized, where they're going to book so that we can backfill that lost group revenue? So that commercial strategy conversation is where the future's going. David Millili: Got it. I don't know if it's true, but I was told revenue management started when a motel owner would drive past his competitor's motel and count the cars in the parking lot. Tim Kolman: Cars in the parking lot, the rate that's on top on the billboard on the highway. Early on in my revenue management technology, talking to some of those chains, they're like, "Can you update my rate on the sign outside of my hotel?" We'll try. We'll try. Just tell us what system we have to integrate with. But yeah, that's how it was. David Millili: That's funny. So independents are being pulled towards all-in-one stacks, so PMS, channel manager, booking engine, RMS from one vendor. You've gone the partnership route instead. Why was that your choice? Steve Taft: I mean, the one neck to choke, as I like to call it, approach is very appealing, right? You know, a lot of folks want one partner that can do it all. I think the issue that I have with that, although there are a couple companies that are doing it pretty well, checking most of the boxes... But I think the issue that I have there is, me personally, I believe in best in breed. If anything, what is that company's core competency? And I think if you look around in the landscape of technology providers, I think sometimes it's really hard to answer that question. What is this company's core competency? And where should I, if anything, be in bed with them as a partner? And I think if anything, leaning into core competency, best in breed, is what I respect. David Millili: Yeah. That makes sense. Tim Kolman: There's some cool technology out there. And I encourage everyone, from the revenue management space to being able to use AI to help you respond to group leads quickly to win more group business in a hotel—everything, there's technology existing that didn't exist two years ago. And if you're not paying attention to that and building your tech stack along with that best-in-breed idea, you're going to miss out on not just revenue, but opportunity and really being able to position yourself above your competitors. David Millili: So Tim, you started to touch on it, but commercial strategy is the phrase that everyone's using right now. Even rock changed to the commercial strategy event. So the phrase everyone's using is revenue, sales, marketing, and distribution under one roof. At a large brand, that means employing specialists. So what are your thoughts on what this actually means for smaller independent properties without a professional revenue manager? Tim Kolman: Yeah, I touched on that a lot earlier, right? And it's only going to get more important. Small independent properties are never going to... A big property, big brand, big management companies, they have the luxury of still being able to have a specialist in each one of those under that roll up to the same department role leader. They're still working in silo technology to an extent, especially at the specialist level on each one of those levels. Technology, the ability to use AI, the ability to have that chat that I went through in not just a scenario about a group canceling, but think of it in every single scenario that a hotelier lives through on a daily basis. That's what really is going to allow the independent hotelier to compete against the brands and even win against the brands, not just compete. Because they have the ability to have the technology answer the questions that they have in a one-man show that doesn't take the back-and-forth communication and the delays and lag time. So it really allows for independent hoteliers to have the ability to have the data, ask the questions, and then act on the responses quickly, oftentimes beating the branded properties. But again, the important thing is having the right technology and the ability to ask the right questions. David Millili: All right, so an owner signs up. Six months later, how do they know it worked? And what would honestly tell them the platform didn't work? Tim Kolman: That is a tough one. So I think the important thing is understanding the reason that they signed up for implementing the technology because there are many different KPIs that are important to that owner. But there may not be any KPIs, and it may just be, "I don't want to price." So the answer to the question, I guess, would be understanding what important KPIs there are, what they want to accomplish, what their strategy is, allowing the owner to be able to have the confidence that strategy is the backbone of the pricing recommendations that are coming out of a technology. For example, we know that there are certain owners that may just want a pure occupancy play, and they want to run 95% every single day. Is that the right answer? I can't tell you. But having technology have the ability to be able to say, "All right, what is your strategy? What do you want to accomplish with this?" If it's occupancy, sure, we won't push on rate. We'll make sure that we're priced at a price point that's going to drive the most occupancy for any given day. Obviously, the big one is RevPAR. I would be remiss to not say RevPAR, RevPAR index. That being said, when it comes to RevPAR index, and we talked about comp set, we also need to make sure that owners understand that the idea of who the right comp set to them is may not be the idea of who the right comp set is in reality. So having that honest conversation with owners about if that is the case, look, you have this competitor in your comp set, they're not going to be a real competitor for you, and if this is going to be your metric on what is successful with this technology, we may not be able to accomplish that for you. So I think that's getting to the second part of the question, is just being honest about what is impacting potentially that metric that's important to them, because it can be far more than just pricing. Like, all right, I can price if they're pushing rate. I can price higher all day long, but at the end of the day, if your reviews don't say that and you're number 15 on TripAdvisor compared to your comp set, then the reality is that the two realities aren't coming together and meeting in the middle. So it's a balance of what really is driving those metrics and just an honest conversation. Steve Taft: And if I may add, I believe that this is all stuff that should be uncovered during the discovery process. Obviously incorporated into the onboarding process, and then beyond that, customer success team's job doing whether it be MBRs, QBRs, is to make sure that you're actually looking at those metrics and having a conversation about maybe even tempering expectations as you move forward. So it's not set it and forget it. It's more like a moving target and what's happening in reality over time and how you manage that. Tim Kolman: I actually have a story of sales process discovery. I went through the process of putting together an ROI expectation for them, literally down to, "I expect you to make this much money." Five, six months later, they came to me and said, "All right, we want to cancel." I'm like, "Okay." I said, "When we went through the sales process, this is what I expected you to get in a return, and you liked that number. And today that's actually the number within less than 1% of what we were delivering them." And then they're like, "Oh, well, we want to cancel because you gave us the confidence in being able to do that." And I said, "Oh, that's interesting. We were able to do that because we have thousands of data points that we are able to look through every single day, and in turn, turn you into getting that optimized price point that gave you that increase in revenue that you wanted during the sales process and are enjoying now." And they're like... And I said, "Do you have that time to go through and do all of that data analysis like the technology does?" "Well, no, we don't." "Then don't expect to continue to get the revenue increases." And so of course they stayed. But it's the due diligence at the beginning that gives you the ability to come back after, as they're a customer, and have that conversation with them. David Millili: So before we wrap up, when I was involved in revenue management, what I used to always tell people is I'd always ask the question, "Did you drive to this event, or did you drive to work or drive anywhere?" And they always would say, "Yeah." And I'd say, "Well, did you use a paper map?" And they would say, "No." I said, "You used your navigation system, right?" And they said, "Yeah, because that can take in construction, traffic, accidents, all these different points." So piggybacking maybe with each of you a little bit, that fear that's kind of out there about the systems and not really understanding the efficiencies, what would you say to that hotelier who still just doesn't get the fact that they need help? Steve Taft: I mean, trust is huge. Trust is huge in anything that has to do with AI. And if anything, what we ensure is that we set up guardrails first and foremost so that things can't just spiral out of control. And it just depends on who's at the wheel, right? Is it somebody that wants true autopilot? Which obviously requires a lot of trust, a lot of hand-holding, a lot of proof is in the pudding, right? Or are you somebody that wants to drive? Are you somebody that wears the revenue management hat, knows the discipline? It's not a one-size-fits-all approach. And if anything, this is where I love our platform, because you can be in drive mode, autopilot mode, or you can have it be somewhat hybridized. And I think that's really what establishes that trust is being able to appeal to different types of operators. David Millili: Got it. Tim Kolman: First of all, I'm going to say, David, thank you for that analogy and you no longer being in revenue management technology. So may I borrow? I'll ask for permission before I use it, but I'll use it anyways. David Millili: No, it's a great one. Especially if you're speaking and you ask people to raise their hand. And you go, "How many people use the physical map?" And nobody. And they say, "How many use their GPS?" And everyone raises their hand. And then you talk to people like, "Yeah, why would I not want something to pull all this data in and do an analysis for me?" Tim Kolman: Oh, yeah. I'm guilty of having my binders of MapQuest maps printed out for a road trip. And that says how old I am. But the thing that I also want to add to that, Steve, is it's very important to have kind of a human in the loop alongside. Like a black box and the algorithm—I hate using the word algorithm, like that scares people, especially if there are any sort of hesitancies going in using this technology. So giving them the confidence that there's a human in the loop that understands what their strategy is, has gone through that in their career—and that's why I'm here, because I have gone through that as a hotelier. And there's nothing more satisfying than helping a potential owner overcome that fear of the black box and become comfortable with technology alongside the human that's there to support them. David Millili: Yeah. Absolutely. Well said. Well, that does it for another episode of The Modern Hotelier. Gentlemen, this is where you get to let people know how they can find out more about the company and how they can get in touch with each of you. Steve Taft: Sure thing. Obviously, I can be reached on LinkedIn, Steve Taft. Our website's https://www.getampliphi.com/ Tim Kolman: And I'm Tim Kolman. You can find me on LinkedIn. You can also find me in a 16-bit video game where Tim was trying to make his way from Miami International Airport to the Independent Hotel Show here in Miami. So play the game, get a high score. I can't tell you that there's a prize to be won, but you at least help me get to the booth and meet hoteliers here. So thank you, David. David Millili: All right. Yeah, thank you. Well, that does it for another episode of The Modern Hotelier, the most engaged podcast in hospitality. Whether you're watching or listening, we appreciate you and hope to be with you again soon. Thank you, guys. Tim Kolman: Thank you. Steve Carran: Thank you.