CHICAGO—As part of Hyatt Corporation’s 2012 revenue management enhancement strategy, the international hotel company is significantly expanding its capabilities by furthering its partnership with Maxim Revenue Management Solutions (MaximRMS). MaximRMS provides pricing, forecasting and profit optimization technology to the hospitality industry for properties ranging from 5,000-room convention hotels to small, select-service hotels.
Hyatt invested in the company’s predictive analytic technology to increase the performance of its owned and managed as well as franchised properties in the U.S., Canada and Caribbean, across all brands. “Hyatt has utilized MaximRMS’ system for many years to provide state-of-the-art pricing and revenue management technologies to our hotels,” said Greg Cross, SVP of revenue management for Hyatt. “The new revenue management system implementation is a key component of Hyatt’s strategy to remain leaders in the hospitality industry.”
Hyatt purchased its proprietary version of the system subsequent to a lease agreement with MaximRMS. “We see our costs coming down by moving to an outright purchase,” Cross told HOTEL BUSINESS. “It’s a long-term solution. Once we have absorbed the cost of the purchase, we anticipate our per-room-per-year cost coming down across our entire network of hotels,” he said, adding that for Hyatt, it was the perfect time to buy. “Revenue management has become much more in-focus at Hyatt as a core competency, and owning our own technology was a cornerstone of that,” he said. “Our familiarity and comfort level with the product underscored our decision.”
The MaximRMS e.FLEX system has been in use by full-service Hyatt properties since 2007. In 2009 and 2010, Hyatt deployed a version of e.FLEX at its select-service properties. In late 2011, Hyatt rolled out the latest group sales functions of the Maxim system to manage and price group room business at full-service Hyatt hotels. Now, the MaximRMS hospitality business intelligence system is being deployed throughout Hyatt properties. Steve Gelb, CEO and founder, MaximRMS, characterizes the hospitality business intelligence system as “extending the e.FLEX revenue management system to become a crucial analytic, decision-making and action-oriented center.”
This investment by Hyatt expands the long-standing relationship between the two companies, and according to them, is grounded in three initiatives:
• The development and customization of market-leading revenue management capabilities, featuring competitive price/demand market response and dynamic pricing for profit optimization.
• Immediate full deployment of the MaximRMS hospitality business intelligence system.
• Long-term global licensing of the patented advanced predictive analytic mathematical forecasting and optimization system.
The consolidation of data coming from different database systems and the high quality of those interfaces were key issues for Hyatt in trying to determine what type of solution it wanted. “We felt very confident that MaximRMS offered us the best in both areas,” said Cross. “That, plus the depth of reporting, the speed and performance. We believe this is something we could build on into the future and the ROI would be there for many years to come.”
This technology provides a package for hotels to understand, manage and profit from their various hotel properties. The hotel business intelligence system combines all the detailed hotel and competitive data available with advanced analytics to explain and evaluate past and future hotel performance, deliver recommended actions and optimize decision-making. “Deploying MaximRMS’ technology achieves multiple objectives for Hyatt,” said Cross. “By using the predictive and analytic capabilities, we are endeavoring to improve revenue realization, speed response to competitive actions and changes in demand, increase efficiency and improve profitability across our brands.”
The level of detail and the ability to handle complexity are essential parts of the technology, which is based on the patented mathematics that underlie the system and enable it to respond to hotels from thousands of rooms to less than 60. “Hyatt has tightly integrated the revenue management technology into its operations,” said Gelb, who added that it’s nimble, easy to use and can be configured to the needs of any hotel. “The technology includes intelligence capabilities to answer critical business questions, and enables immediate actions across properties and brands with great speed, great flexibility and ease of customization—at no extra cost,” said Gelb.
The system has been a powerful strategic and tactical tool for Hyatt, enabling the brand’s teams to rapidly implement its strategies. “This is a significant competitive advantage for us,” said Cross. “The analytic capabilities allow staff at many levels throughout the organization to accelerate their access to important performance metrics and trends. We can gain insights into competitive actions, spot areas that need attention, and use the analytical tools to drive our business forward and improve hotel and chain-wide performance.”
Hyatt is also adopting and customizing features; the new capabilities span advanced mathematical forecasting and optimization methods, new predictive analytic tools and group revenue management functions. These features are designed to contribute to better hotel performance, greater revenues and less manual efforts by the users. The system includes the advanced revenue management capability to: dynamically incorporate price elasticity from changing customer behaviors into “state contingent” price sensitive optimization to produce profit maximizing pricing and optimal rate control; and to optimize hotel rates based on the market’s dynamic response to competitive demand and rate actions.
“What I want out of the application is the ability to make wholesale changes to it that Maxim can support,” said Cross. “It’s entirely probable that Hyatt will want to add market segmentation forecasting benefits to the system so we need the flexibility of an adaptable platform that allows us to customize the application to our needs.”
Additionally, the system is scalable, if Hyatt wants to take it outside North America or acquires another brand or hotel company. “If we do elect to use it in, say, Europe and Asia, it’s adaptable to foreign currencies. Right now, it’s our solution for here, but it has a lot of potential if we someday want to move beyond that.”
