We recently partnered with Duetto Research to bring their innovative revenue management technology to hotels in Southeast Asia (see announcement here). To find out more about Duetto and their game-changing solution, er, GameChanger, we had a good old chat with VP of Sales Amanda See…
The story behind the creation of Duetto is an interesting and unusual one. Please tell our readers how the company came into existence.
What sets Duetto apart is how its founders came together to join two hospitality experts’ innovative approach to revenue management with some of the best talent and tech expertise in Silicon Valley. CEO Patrick Bosworth and Chief Product and Analytics Officer Marco Benvenuti directed revenue management together at Wynn Las Vegas, and when they set out to build their own company to bring what would become Open Pricing to the hospitality industry, they did not see a revenue management system in the market capable of scaling up their strategy. They landed Craig Weissman, the former Chief Technology Officer of SalesForce.com, as their third co-founder to build that platform, a truly cloud-based solution combining big data analytics and a powerful pricing engine.
That partnership means that, from the start, Duetto has been a high-growth hospitality technology company, not a tech company dabbling in hospitality or vice versa.
Why is revenue management so important in the current climate?
Revenue management is important in all economic climates, good or bad. In a good economy, most hotel brands are growing, and their properties may even be selling out with some regularity. However, as a revenue manager, if you’ve sold all your rooms, have you done your job? Maybe not. If you sold out too early, then you left money on the table, because demand for rooms closer to the day of arrival is much higher and the supply is much lower. You could have charged a far higher price for rooms if some of that inventory had still been available.
In a bad economy, revenue management obviously is just as important. Competition to lure in whatever travelers may be out there is intense. But the key to winning that business is about more than just lowering prices. Revenue managers have to understand that demand encompasses not only how many travelers there are, but also what those people are willing to pay for a hotel room.
You call your product GameChanger. Tell us why.
It refers to Duetto’s philosophy of acting as an agent of change for the industry and helping it deal with the disruption it faces from OTAs or newer competitors like Airbnb. Revenue management was a practice that gained popularity for hotels in the late 1980s, when systems were much less sophisticated than they are today. The easiest way to dynamically yield prices for a whole hotel, from channels to room types, was to use the Best Available Rate, or BAR. The property would link all of its inventory together and really only needed to manage revenue off the one BAR rate.
But the issue with that is a property cannot raise a rate on one aspect of the hotel, be it a double-bed room or a room booked through an OTA versus directly, while lowering a rate on another aspect, unless it used many overrides. The way Duetto changes the game is with the Open Pricing approach, where each aspect of the hotel is priced independently of the others based on true supply and demand.
Duetto is built on the concept of Open Pricing, which, for most hoteliers, is a new idea. How does Open Pricing work?
Open Pricing is a flexible way to set rates so that all prices are set individually in accordance with demand for each aspect of the hotel, whether it’s by day, room type, customer segment, distribution channel or rate code. It gets hotels away from adhering too strictly to the BAR approach, where some room types or channels end up closed off or yielded below their full potential because of one restriction or another. With Open Pricing, each room can be priced dynamically 365 days a year, giving a hotel every chance to convert a shopper into a booked customer.
An example would be when the hotel is looking at a low-demand date overall, yet for that booking date a certain room type might be doing well and getting a lot of pickup. With Open Pricing, the property could simultaneously lower rates across the hotel’s room types while still raising the rate on this particular type that’s already on track to sell out.
Traditionally, revenue management has been as much art as science. Would you say that one of Duetto’s aims is to tilt the balance toward a more objective and scientific approach?
Common revenue management is already objective and scientific, but Duetto’s approach is more sophisticated in what the purpose of using all this data is, which is to look forward rather than backward. Traditional revenue management systems use a hotel’s PMS to pull historical data, and they end up emphasizing what happened in the past more than they predict what will happen in the future.
GameChanger integrates with PMSs and uses historical rates and current booking pace, but its real differentiator is to also incorporate forward-looking data like look-to-book ratios from the hotel’s website, airline data, weather and much more. It ends up giving a more holistic view to the hotel of the property’s true unconstrained demand, and the revenue managers can then be more accurate and confident in the rates they set for rooms.
What benefits are hotels typically seeing from using Duetto, and how quickly are they seeing its impact?
Duetto’s goal is to increase profitability for all our customers year in and year out, while simultaneously growing ADR and occupancy. In terms of RevPAR, the hotel industry increased that metric about 6.5% for the year in 2015. Our customers are beating that, increasing RevPAR by more than 8% on top of that. So even in years when seemingly all hotels are doing better, Duetto clients that use GameChanger at their properties are beating industry benchmarks by a large margin.
Why did you choose to work with RepresentAsia as your sales partner in Thailand, Vietnam, Laos and Cambodia?
Duetto was very interested in being able to approach the hotels of Southeast Asia alongside a company like Representasia, who know the landscape incredibly well and have the respect of the hotels. Although our Asian headquarters is close by in Singapore, we will still need to work with partners such as Representasia, who have intimate local knowledge befitting its close proximity to our potential customers. This gives us a great ambassador for a cutting-edge technology that aims to shake up the way hotels practice revenue strategy — but also, more importantly, make those hotels more money.
Finally, any interesting plans for future development for Duetto?
Duetto is constantly evolving, and much of that is driven by the ideas of our customers and prospects. In 2016 and beyond, you’ll see a greater focus on loyalty, and we’re excited about new abilities to price rooms on a one-to-one basis down to the customer level. This loyalty pricing won’t just be based on typical categories like Platinum, Gold and Silver status, but also on things like total lifetime value of the customer. That’s important because it can take into account all kinds of ancillary spending, like spa packages, golf, and food and beverage, or recency, frequency or any measure the hotel wants to use.