In an exclusive interview, Jurgen Ortelee, Managing Director for APAC, shares insights into IDeaS’s unique approach, the pivotal role of revenue management, challenges faced by Maldivian resorts, adapting to industry disruptions, and future trends. As a leader in the competitive hospitality industry, IDeaS distinguishes itself through data-driven pricing and revenue management strategies, leveraging diverse data sources for accurate revenue optimization.
IDeaS Revenue Solutions presently collaborates with 45 resorts in the Maldives.
We are a revenue management company, and our focus is on providing hotels and resorts with solutions to optimize revenue across various revenue streams, not limited to room revenue alone. These solutions can encompass multiple aspects of a resort’s business, including function space, food and beverage, and other hotel departments. As the Managing Director for APAC, my role involves overseeing all New Business efforts in the Asia Pacific region.
I think one of the key points to consider is the sheer volume of data available today, making it difficult to determine which data is relevant and should be used. What really stands out in my mind is our focus on using the most pertinent data to inform your pricing and revenue management decisions.
We gather data from various sources, including property management systems (PMS), rate shopping, reputation scoring systems, and tools used by hotels. It can also originate from other sources. We then consolidate all this information in the G3 Revenue Management System to develop the best possible forecast and strategies to achieve the best revenue results.
For many years, having a revenue management system was considered a luxury because, obviously, it’s an investment that the company has to make. However, after approximately 30 years of revenue management, it’s no longer a nice-to-have; it’s a necessity.
In my opinion, it’s required to achieve commercial success in a hotel. It’s one of the essential tools that a hotel must have, similar to having a CRM or a property management system. You can’t effectively run a hotel without it.
Hotel investments are substantial, often reaching millions or even hundreds of millions of dollars in some cases. Not having a tool that helps you achieve a return on investment is unacceptable. We believe it’s no longer a luxury but a standard requirement.
Revenue optimization involves achieving the right mix of business. This means attracting the right customers at the right time, who are willing to pay the right price for a specific product. Achieving the optimal balance in this mix will result in the highest possible results.
We encounter numerous challenges in this area. I’ll mention one example from the Maldives, where many hotels rely on static rates or wholesale business. Sometimes, this may not be the most advantageous approach, and diversifying the types of business can be beneficial.
Finding the right mix of business not only optimizes room revenue but also considers segments of guests who may spend more in other areas such as the bar, restaurants, or spa. It’s essential to focus on these segments as well.
Regarding Maldivian Resorts, I should clarify that they are not necessarily isolated, but they are situated in highly unique locations. When guests stay at these resorts, they tend to spend a significant amount of their time on the property. While they may venture out for excursions or boat trips occasionally, the majority of their activities, including dining, evening drinks, spa visits, and more, take place within the resort premises. This creates a captive audience.
This is where Maldivian Resorts distinguish themselves from resorts on a single island, where guests have the freedom to easily explore neighboring areas and restaurants. In the Maldives, such exploration is more challenging, making it even more crucial to analyze your business based on the fact that guests will primarily remain within your resort. Getting the mix of guests right, with those that will spend the most money at the resort, is the key to successful revenue management of all revenue streams.
The pandemic disrupted everyone, leading to complete closures or partial closures and a steep decline in business, with some areas and properties experiencing almost zero occupancy.
We’ve undoubtedly learned valuable lessons from this experience, such as becoming more agile in our forecasting and decision-making processes for hotels. We’ve also assisted hotels in shifting their focus to other areas, encouraging them not only to consider what to do during peak periods but also how to optimize during quieter times.
Even when a hotel is only 10% occupied, as was the case for some properties during the pandemic, you can still maximize the potential of those 10% and attract the right clientele. In many instances, we’ve made adjustments to our backend and algorithms to adapt to these extreme fluctuations in business. Even as we emerged from the pandemic, there were fluctuations in business levels, with periods of growth followed by declines due to various factors, but now we are seeing a gradual recovery.
Last year was very successful for the Maldives, for example, but this year presents more challenges. We’ve learned how to adapt to this ever-changing environment, which is much more dynamic than in the past. This adaptability is one of the key lessons we’ve taken from the pandemic.
Regarding our presence in the Maldives, we’ve had a presence there for approximately 15 years. Personally, I’ve been visiting the Maldives for work for the past seven years, collaborating with hotels and conducting workshops. However, our relationship with hotels in the Maldives predates that, with some properties having our system installed for even longer.
As I mentioned right at the beginning, having a revenue management system is no longer a luxury but a necessity. It’s one of those essential tools you must have, especially for hotels and resorts. The focus is shifting towards optimizing profits rather than just revenue. Even though we still call it revenue management, it’s increasingly about improving the bottom line—how can a revenue management solution contribute to profitability?
In the early days of revenue management, the primary focus was on room revenues. Today, even hotels with a strong room revenue strategy are exploring how to maximize their other revenue streams. They are looking at improving negotiations with wholesalers by gaining a deep understanding of their booking patterns. This requires having analytical intelligence, which we emphasize as crucial for success. In addition to AI (Artificial Intelligence), we emphasize the importance of Analytical Intelligence.
We offer various services, including onsite training and consulting. For instance, when new hotels open, we assist them in positioning themselves effectively in the market. We assess the market dynamics and align their hotel’s objectives with the market conditions. Additionally, if a resort wishes to change its approach, particularly on the commercial side, we can guide them through this transformation. We refer to these services as “transformational services.” It’s not solely about the system; it’s about adapting to a new way of thinking.
Yes, try not to wait. Start by getting any system, any help. Eventually, you will figure out which system works best for you, but it’s crucial to get some assistance to kick things off.
Don’t rely solely on individuals who may or may not have extensive experience in revenue management to make your pricing decisions. In my view, you need expert guidance. What we often observe is that, due to the challenge of finding experienced professionals, hotels sometimes entrust pricing decisions to junior staff. I always wonder, “How can you have a junior person determine the entire pricing strategy for the resort?” We need to improve this and provide education for these individuals, as they are often eager to learn and grow professionally. So, it’s also a benefit for them if the resort partners with a vendor that can offer assistance and support their professional development.
One key point to reiterate is that revenue management is not just a nice-to-have; it’s essential. We often come across situations where hotels delay budgeting for revenue management, but this can result in missing out on an incremental 3%, 4%, or even 5% of revenue. While these percentages may seem small, they can have a significant impact. Especially when you consider other revenue streams, the impact can be substantial. Additionally, revenue management or a revenue management system is often viewed as a cost item, but we see it as an investment item. When you invest in a revenue management system, you expect a return on investment, and you will receive it many times over.