Is Pricing Automation the Future of Revenue Strategy?

fernando vives pricing revenue management Apr 03, 2024
Explore AI's role in pricing automation that boosts hospitality revenue and competitive edge.

Think of your pricing strategy getting a smart upgrade – now it's nimble, sharp, and syncing perfectly with the market's beat, all thanks to AI.

This isn't a distant dream but today's reality, where AI and human insight converge to craft a pricing symphony, playing the notes of profitability and guest satisfaction in perfect harmony.

In this edition, we're sailing into the heart of pricing automation, a strategy that blends the precision of AI with the nuanced understanding of a seasoned Revenue Manager.

Dive in as we unravel the power of automation, where every decision is a step towards optimizing performance and profitability in the hospitality industry.

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Introduction to Pricing Automation

The hospitality industry is undergoing a major transformation with the advent of AI technology, which enables Revenue Managers to optimize their pricing strategy and maximize their revenue.

AI does not replace human expertise, but rather complements it by providing data-driven insights, recommendations and automation.

Pricing automation is the process of using AI to analyze and adjust prices based on various factors, such as pure transactional data, demand, competition, seasonality, events, and customer behavior.

Pricing automation helps Revenue Managers to achieve the following goals:

  • Improve efficiency and productivity by automating tedious and repetitive tasks

  • Enhance accuracy and consistency by reducing human errors and biases

  • Increase profitability and competitiveness by capturing every revenue opportunity

  • Improve customer satisfaction and loyalty by offering fair and personalized prices

Pricing automation does not eliminate the need for human intervention, but rather empowers Revenue Managers to make better and faster decisions and provides them with the following benefits:

  • Real-time data and analysis, which allow Revenue Managers to monitor the market trends and customer preferences

  • Dynamic pricing and optimization, which allow Revenue Managers to adjust prices automatically and continuously, based on the current and expected market conditions

  • Scenario planning and simulation, which allow Revenue Managers to test and compare different pricing strategies and outcomes, and prepare for various scenarios

  • Alerts and notifications, which allow Revenue Managers to be aware of any significant changes or anomalies in the market, and take appropriate action.

Working by exception is the present, not the future

We are charting a course where AI and technology takes the wheel, navigating through the vast data oceans that no human could sail alone.

In this age of information, AI and machine learning outpaces any manual effort in processing endless streams of data – a reality that makes automation not just a choice, but a necessity for those who aspire to capture the crest of revenue optimization and market share.

Imagine a scenario where your pricing strategy isn't just recommended but enacted upon, with AI dutifully managing the bulk of decisions.

It's about switching to 'working by exception,' allowing the machine to steer pricing across an 18-month vista.

This frees up Revenue Managers to zoom in on the near-term, on those critical dates demanding meticulous attention, and to only step in when AI's long-term strategy calls for a human touch.

Those harnessing the power of pricing automation are setting themselves up to win big, leveraging every opportunity to stay ahead in the competitive hospitality industry. 

The Human Touch

While AI is a powerful tool for pricing automation, it is not a substitute for human expertise and creativity. For example, AI may not be able to handle situations such as:

  • Unusual or unexpected events, such as natural disasters, pandemics, or political unrest.

  • Special or strategic pricing, such as segmentation optimization, loyalty programs, promotions or long term partnerships.

  • Customer feedback and complaints, such as negative reviews, refunds, or disputes.

  • Ethical and social considerations, such as fairness, transparency, and sustainability.

These situations and many more, require human intervention and judgment, as they involve factors that are beyond the scope and capability of AI.

By using pricing automation, Revenue Managers can increase their agility and responsiveness, and ensure that their pricing strategy is always aligned with the market opportunities and customer expectations.

Conclusion: The Harmony of Human and AI

Pricing automation is a game-changer for the hospitality industry, as it enables Revenue Managers to optimize their pricing strategy and maximize their revenue.

Not embracing pricing automation isn't just a missed opportunity; it's a direct hit to staying competitive, retaining market share, and optimizing profits.

The tech is out there, ready to be harnessed, but it's not just about flipping a switch. It requires the right vision and the adept touch of Revenue Managers equipped with the capacity to drive it forward.

It's all about the mix – strategy, talent, knowledge, skills, technology, and processes coming together.

This isn't a choice between human or AI; it's about the synergy of both. Failing to integrate this could mean falling behind, as the rest of the field leverages this blend to pull ahead.

To conclude, as we navigate the future of hospitality, let's not forget: it's the combined force of our human expertise and AI's analytical power that will set the course for success.

The golden age for Revenue Managers isn't just coming—it's here, for those ready to step up their game.

Stay ahead in the hospitality game. Subscribe to my newsletter at Hospitality Labs for early access to extended and unique content.

Until next time, keep exploring the endless possibilities of hospitality.


Fernando Vives


About Fernando Vives

Fernando Vives stands at the forefront of hospitality expertise, guiding NH Hotel Group as the Chief Commercial Officer. His dynamic leadership oversees a vast portfolio, including sales, revenue management and digital growth, steering a team of over 2,000 across 30 countries and managing a turnover of over $3 billion USD. Awarded as one of the Top 20 Extraordinary Minds in the industry for Commercial & Revenue Optimization Leadership, Fernando's extensive background includes senior roles at renowned hotel chains and ventures into entrepreneurship. He is an academic pioneer, and an esteemed speaker and a passionate industry advocate, Fernando's educational prowess is matched by his commitment to shaping the future of hospitality as an Ambassador for Hospitality Labs.


The views and opinions expressed in this newsletter are solely those of Fernando Vives and do not necessarily reflect those of any company or organization I work for or I am affiliated with, nor those of their partners or suppliers. The data sources used are mostly public, ChatGPT may have been used for research assistance, copywriting or editing. If you find any discrepancies or errors in the data or insights shared, please reach out to me via LinkedIn for necessary adjustments. Thank you for following and being a part of this community.

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