HiRUM Software Solutions

Gold field or mine field?

Posted by Carly Crossley - 07/08/2016

Just as kids get caught up in the hype around the latest tech gadget to hit the market, so too it seems do accommodation providers.

The buzz word of the moment is all around rate management tools and the benefits they may or may not bring to a business. The interesting point to consider here is that rate yielding tools have been around for as long as channel managers, perhaps even longer, yet there has been minimal uptake to date.

So why might this be you may ask?

Unfortunately there are potentially many underlying reasons with no right or wrong answer. A leading factor may be that the way in which these tools could potentially assist a business increase profitably hasn’t been fully explained. Lack of understanding may lead to the belief that these tools simply add another layer of complexity into an already tech overloaded operation.

Perhaps pricing for these products presents prohibition to entry for many operators. In some cases operators struggle to warrant paying more for one tool than their whole tech operation collectively costs. So coupled with not understanding the potential benefits, they believe there is no return on investment on either their time or dollars

It could also be that operators have sufficient confidence in their own skill and understanding of the market in which they operate to feel that no gadget can perform as well as they can. And this may well be true. Some operators have owned their businesses for many years and they live and breathe the fluctuations that so many outside influences can bring to impact their operation.

How can a tech tool think like a human?

Everyone is aware of the price distress that has been brought about through on line visibility. Therefore the question must arise whether rate yielding tools, especially those that automatically adjust pricing based on competitor movements, may further exacerbate the rate distress situation many operators already find themselves facing.

Many tools currently available may adjust pricing based on demand, lead times and current occupancy. Some are smart enough to identify trends, both recent and year on year, in addition factoring in upcoming localised events. When reviewing products, it’s critical to ask where the rate comparisons are being drawn from.

Here are some suggestions of what to ask if you’re considering these tools:

  • Are the comparisons coming from a collective environment or from one single source?
  • What is that source
  • Is the Rate Manager affiliated in any way with a 3rd party travel provider?
  • If yes, how may this help your business?
  • How often is the data sourced and compared – Hourly, daily, weekly etc
  • What is the cost for this product
  • Is the price in your local currency – we all know the exchange rate has its moments!
  • How is payment made
  • Are there any lock in contracts
  • Does it integrate with either your Front Desk System or your Channel Manager
  • What other data from you will they require
  • Is your data shared with anyone else or used for competitor comparisons also

There are also some things to also consider for yourself:

  • Who are you sharing your private business data with?
  • Could this potentially harm your business?
  • Is there enough comparison data available to provide accurate recommendations to you
  • Where is the company located to ensure they have a good understanding of the market you operate in
  • Will they use the information they garner from you for any other purpose

The next 6 months will undoubtedly bring more rate yielding tools into the market and comparing them will be time consuming, time that may be better used servicing your guests. Rate management can be hugely beneficial to a business if managed well but it can also be a potential minefield too. Ensure you’re not stuck in the middle of a minefield with nowhere to go by contacting your current PMS provider to discuss these products further before making any decisions.


By Sylvia Johnston

HiRUM Software Solutions


Carly is the Social Media Coordinator at HiRUM Software Solutions.
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