Leaving Las Vegas with the ‘Innovation’ crown
A company which has wrapped rocket science up in a calculator interface won the day at this year’s EyeforTravel Travel Distribution Summit in North America. Pamela Whitby catches up iRates after the event to hear its next steps.
In the highly competitive, rapidly changing travel business where savvy consumers have far more choice and hotels are operating in a tough economic climate, it is perhaps a sign of the times that this year’s winner of the EyeforTravel innovator award is a revenue management tool. Judged by a panel of industry experts, iRates, the revenue management solution for small to mid-tier hospitality firms, was up against four other innovators – three of which were trip-planning tools of a kind.
But it was a tool for revenue management - an increasingly important part of a hotel’s business – that won day. The company’s chief executive, Vadim Asadov, says quite often iRates’ the target audience, namely small to mid-tier hotels, do not have the resources (financial or human) to invest in a complex RM system. Many of these hotels are working under the pressure of rapidly changing demand as a result of increasingly savvy and demanding customers who have a whole range of tools - aggregators, recommendation sites, mobile apps and so on - which enable them to find the best price available. The company says its programme is perfect for this group because it is simple to use with a ready-to-go interface and inexpensive implementation process. It is so simple that Asadov says a five-year-old child could run it. “It’s rocket science wrapped into a calculator interface,” he says.
According to iRates’ vice-president of business development, IraVouk, just 30 minutes of remote training is enough to learn how to use the system and will lead to an immediate improvement of a property’s RevPAR. An average three-star hotel saw a 42% increase in RevPAR, almost 30% higher than the market growth, after using the system, which led to $60,000 in additional monthly revenue. That sounds like good news but what are the next steps for the firm?
Buoyed up by the networking opportunity at TDS North America, which Asadov says offered the “perfect combination of the right people, industry expertise and abilities,” the company will now be following up leads. Says Vouk: “The summit was very useful from a strategic point of view. We met many people from different companies that we can develop mutually beneficial partnerships with.”
Asadov says the plan now is to focus on three major areas:
1. Improving and expanding algorithms inside the core system.
2. Integrating with different property management systems and rate shopping software to improve infrastructure that already exists.
3. Strategic development such as quality control, implementation and preparation for mobile and, in the longer term, a cloud-based version
The company had initial development support from parent company, Neurok Techsoft, following which it raised angel funding to the tune of 150K. Asadov says iRates is a few months from breaking even. So far, however, financial development has been “more linear and we are still talking with some VC to make it exponential”.
Winning the EyeforTravel innovator award may make that road a little less bumpy.
How it works
1. Using proprietary mathematical tools, historical sales data is analysed to build demand patterns specific for the property – we are extracting real demand from visible one. So, each iRates version is built and customised for a specific hotel.
2 When installed, the iRates’ algorithm takes into account incoming reservation data and other market information, like ‘comp set’ prices for example, to instantly react to changing market conditions and demand fluctuations.
3. Manager input can be used to provide additional information about market conditions. iRates’ interface allows a dialogue between the user and the programme, because human expertise may be very helpful.
4.iRates state-of-the art algorithm constantly analyses multivariable dynamic data to calculate the most optimal price for every day in the future for 365 days ahead with the ultimate goal to maximise the hotel’s bottom line profit - not just a revenue. The company takes into account the hotel’s financial structure for this purpose. The user has full control over the rates calculation process at every step.
5. The programme can be used from day one – there is no need to wait months for statistical data to accumulate. The benefit is evident from the first day and the results are seen within a few weeks. Documentable results are seen in 30 days, reflected in a range of performance reports.