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The Software Algorithm That Turns Hotel 'Lookers' Into 'Bookers' (Part Two)

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Read Part One here.

PART TWO

So after being callously let go from his executive position at Merrill Lynch in London, Jean Francois Mourier pondered his next move.

But it didn't take long for the effervescent Mourier to make that move.

In October, 2003 he and his family moved to Miami and he started a new and prophetic career in the U.S. hotel industry. Starting work in a much different environment from the lofty confines of ING and Merrill Lynch, Mourier attacked his new, somewhat lower stratum position as revenue director for The Palms and The National hotels with zeal.

"The hotels first employed me to do reports," Mourier said somewhat dejectedly, "I did this once or twice and got really bored. So I decided to automate the whole reporting process. I created robots to go out and shop for hotel rooms with my competitors; looking at what the competition was doing and adjusting my prices." Hmmm, talk about 'secret shoppers.'

Perez recalls, "When I first met Jean Francois, I was getting paid based on the amount the two hotels were making, so I was highly motivated to get a system like the one Jean Francois told me about. Before Jean Francois arrived, we were meeting to discuss bookings, occupancy and profits three times per week, Monday, Wednesday and Friday for about two hours each day; it was a gigantic waste of time," Perez said. What they needed was an intelligent system for pricing and filling their hotel rooms -- "to turn lookers into bookers," as Perez says.

"I was raised in an environment," Perez added, "where the basis of sales and marketing was relationships not computers. But I was forced into understanding the value of using a lot of CPUs and tremendous computing power; I saw how quickly and efficiently it could handle the enormous amount of data that needed to be grabbed, crunched and analyzed."

The system looks at so many variables, Mourier told me, that it would take someone years to analyze them all and by then the data would be stale. These include hotel competitor's prices locally and globally; rates in the same time period; prices of sold-out properties and so on across the board. "With all of this information," Mourier declared, "it's (the software) able to make a decision that is efficient... effective in terms of the sales. It doesn't have emotion."

So Perez and Mourier were trying to put together a system, service or software product that would make the aforementioned harried hotel revenue managers' lives bearable. To help transform them into:

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Perez went on to say that he and Mourier wanted to install a system at the Palm/National hotels which would take into account "the human aspects and psychology of consumer hotel booking not just mechanical software."

Very quickly after an initial installation, the new software took the two hotels' occupancy rate "from 65 percent to 98 percent," according to Perez. It would seem that the two friends had teamed up to create 'The Holy Grail' of hotel revpar improvement.

But though their success was encouraging, there was still the fact that they were working for others not themselves. "Wow," said Perez, "I thought 'wouldn't it be great if we could do this for other hotels?'"

Though they felt ambivalent, in January 2008 the two headed off to start REVPAR GURU. "We had two or three hotels as clients," Mourier said seriously then quickly joked, "we went out and bought 60 computers which we put in a garage; there were wires running everywhere and we were like Einstein blowing up fuses in the power supply."

After the usual entrepreneurial seizures and a lot of late nights, REVPAR GURU released their first product for hotel clients. Looking like a continuously updating and perpetually recalculating spreadsheet, a client has an amazing dashboard snapshot of their and their competitors' rates and occupancy allowing them to make the critical pricing decisions rapidly.

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The REVPAR GURU system allows hotel owners and staff to monitor many of their key metrics while in the office or on the fly.

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Using some pretty nifty online marketing tactics such as an online "Results Calculator" which when a hotelier enters a few simple numbers the app churns out an estimated increase in revenue when using these advanced software algorithms.

The company is focused with laser-like intensity on the online market for its service and is very jazzed about social media's potential for the hotel industry. Mourier was recently interviewed by a hotel industry analyst and talked specifically about "Social Technology's Impact on Revenue Management."

REVPAR GURU has had numerous hotel GM clients who explain how this new system is beneficial to their business.

Currently, the company prices its service according to the number of rooms at a client hotel. Whether they will go to a more traditional software licensing model based on a per-seat or per-server basis is anybody's guess. I could see it going either way.

REVPAR GURU told me they handle more than $300 million annually in hotel room revenue in 19 countries. With 18 employees and currently cash-flow positive, the company has been entirely self-funded until now. Previously, Perez and Mourier were regularly approached by hotel industry people wanting to invest in them; they've always declined. "Now, we've decided to have those conversations in order to finance our future growth," Mourier said.

One thing was most striking to me: the way these two Frenchmen took a bit of complex financial algorithmic code and jury-rigged it neatly into a hotel industry innovation. Intriguingly, this might mean that the same code is transferable to other industries.

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