Hotelitix is a next-generation hotel revenue management system founded early last year by Andres Moreno and Roman Wunderlich after they determined that there was a major gap in the revenue management technology market. They observed that only 17% of all hotels around the world were using any sort of system to improve their hotel’s performance; however, this 17% made up 44% of the world’s room revenue. It became clear to them that revenue management technology was primarily being used by larger hotels and was prohibitively expensive for most small-to-medium-size hotels. Andres and Roman set out with a goal to architect not only an affordable RMS system, but also a highly intuitive and easy-to-use system for hotels of all sizes.
Roman, you are entering into a fairly saturated market. Why take this risk and join the RMS field at a seemingly late stage?
Roman: That’s a great question and a thought that ran through our minds quite often as we jostled and hustled our way into acquiring our first sales, but we realized that there was truly a void in the revenue management market for several reasons. First and foremost, the price of some of the legacy systems that currently exist. They are unaffordable for many hotels, especially as revenue management systems are still what we consider a “nice to have” product and for some, it may not be an absolute necessity. The goal of an RMS is to increase your revenue and save time. We push for more direct bookings, increase ADR, increase occupancy, and most importantly RevPAR. With this goal in mind, in what world would I want to cost a hotel an absorbent amount of money every month if my goal is to increase the bottom line? That would be completely counterproductive. Yes, an RMS also saves a lot of time for hoteliers, but then we would be calling this a time-saving tool and not revenue management. So ultimately in today’s day and age, there is no excuse for software companies to be overcharging hotels for these types of systems monthly and also with upfront costs. Our overall cost of operation is so much lower than 10 years ago, RMS systems should be truly affordable for everyone.
Secondly and more overwhelmingly we see a lot of new RMS systems popping up on the market at more affordable prices than legacy systems, but they are still dramatically lacking in one very important and critical area and that is at the interface level. Most of these RMS systems are extremely difficult to follow and understand, often taking more time for the hotelier to complete tasks than they are actually saving the client. Therefore, we developed an extremely logical, attractive and intuitive interface, that compresses the thousands of data points we are collecting on a minute by minute basis, outputting a beautiful easy to follow and understand product. It was very important for us to build an interface that was easy for many of our clients to learn and understand without compromising performance. We have heard from many hoteliers in small to medium-sized hotels, that GM’s, HM’s, and even owners, who are not classically trained revenue managers, are taking on these responsibilities of operating an RMS. So, it was integral for us to build a system that would be simple for anyone to understand and take full advantage of within a matter of hours and at the most, days. Believe it or not, if you look into the background of many of the founders of other revenue management systems you either see they were revenue managers with no background in technology, or you see software engineers with absolutely no hotel experience and certainly not in revenue management.
Roman, you say you are a startup geek. Could you both tell us a bit about yourself? How did you end up in hospitality technology?
Roman: Well, I was bitten by the entrepreneurial bug from a young age. When I was in college, I did an internship at Goldman Sachs in both Frankfurt and London and it would take me all but 2 days to realize that this was not a career path for me. I was studying business and thought I would become a banker like my brother-laws before me. I saw the hours these guys were working, and I couldn’t believe that people were sometimes staying at the office for 30+ hours, on the verge of a nervous breakdown, for someone else. I figured if you are going to hustle like this, why not hustle for yourself. So, I left this “glamorous” internship and started working for a start-up called Sportsyndicator, where I sold banner ads. That’s right! This is before Google ads, so I used to call different website owners of sporting oriented establishments, like golf courses, tennis clubs, physical therapists, you name it and would ask them if they would be willing to sell ad space in the form of a banner on their websites, to companies like Adidas, Nike, Callaway, etc. and would then negotiate a price-per-click or price-per-impression. Crazy huh? I loved the environment and excitement of working in a start-up, which would ultimately kickstart my career. I moved to the United States and co-founded several start-ups, with some being very successful and some with a less favorable outcome. The good did outweigh the bad ultimately, which is good, so I ended up making a jump into becoming an active venture capitalist for many years before moving to Miami, where I would end up meeting Andres. I was ready to immerse myself into a new start-up so here we would discuss and blueprint his vision for this next-generation RMS and decided to take a plunge and go for it. We launched Hotelitix as partners and I have been focusing primarily on the business development side, whereas Andres has taken on the responsibilities of architecting the technology side of the business. So far it has been a very fluid development and we are extremely proud of what we have achieved in such a little amount of time. So, while I may be new to hospitality, I am not new to tech start-ups and I feel very confident and comfortable working in this industry. I think it is more important to find a great co-founder, and working with Andres, building Hotelitix has been a phenomenal experience so far, he is the true Rockstar of this endeavor.
Andres, can you share a bit about your background?
Andres: Like many hoteliers, I actually started at the frontline of the guest experience and eventually made my way into Revenue Management. I think it was a drastic halt in tourism after 9/11 and experiencing the shift from offline to online sales that caught my attention. The Internet really changed the way we were doing business and it made the process of booking lodging a lot more transparent for guests and hoteliers alike. But it was probably not until I was in charge of revenue for four Miami Beach hotels that I started to leap into tech. I went from building interconnected forecasts in spreadsheets to trying out various legacy Revenue Management Systems to eventually helping build our own intelligence tools. I was able to experience first hand how technology improved efficiency and enabled us to make quicker decisions across all of our hotels. This sparked a huge interest in how technology can reshape the hotel industry and paved the way for me to spend the following 10 years working with web designers, software developers, and learning to code.
Roman, what has surprised you the most about the hospitality industry so far?
Roman: The aversion to change. It’s been blowing my mind. We find ourselves in 2020 and here I am speaking with you, Hotel Technology News, and I can say without a doubt the most surprising thing is the pace at which hotels dare to evolve and adapt with the time. Most importantly technology. I speak with hoteliers all over the world daily and I am still surprised at how archaic and outdated many of the systems and hotels are, let alone the mentality many hoteliers have when accepting and trying new technology. We accept and embrace technology as a positive in every walk of life most of the time, from self-driving cars to robotic surgery, to 5G technology on our phones, video gamers are making millions and the list goes on. Yet many hotels are still operating without fundamental technology that can make their hotels thrive. I understand that hospitality is a very traditional industry with many hoteliers having gone to school for years learning certain procedures and methods, but I guess it still comes at a surprise to me, especially having previously worked in an industry that lived off of a tech arms race and if you weren’t first you were last. Having said this, another surprising aspect is the gap between the discussions being had amongst hotel technology providers and the hotel technology consumers. The tech guys are naturally pushing ahead as fast as possible, while as mentioned the hotels are lagging in their comfort to adapt. I feel that the pace at which some of the technology is evolving is not necessarily good for some of the hotels. I feel like many hoteliers are just starting to get comfortable with one system and then all of a sudden boom, the technology developers are trying to change the way these technologies are sold, absorbed, or operated. I recently spoke on a forum hosted by Enzo Aita on FunnelTV, discussing exactly this issue. I am not saying it is a bad thing that hotels are slow to adopt technology, just that it is surprising, especially with Airbnb’s, Sonders, and VRBO’s popping up in the world. It ultimately is our responsibility as stewards of technology to find the right balance and right pace of development to build products that fit our customers’ needs and that was the objective when we set out to develop our RMS.
Andres, a big part of hotel technology is partnerships, integrations, joint ventures, and client acquisitions. How has this process been going for you so far?
Andres: There are a lot of companies that were extremely eager to partner with us right out of the gate. Roommaster, WebRezPro, Anand Systems, Siteminder, and Mews, we are very thankful to be working with such fantastic partners in the industry who are equally eager to progress and grow and share a common vision. We have a lot to thank them for when it comes to our early success. Surprisingly on the other hand is how closed off many other companies are when it comes to establishing strategic partnerships. The internet is moving towards a very open-source, open API direction and it is surprising to see, especially some of the larger legacy systems remaining so restrictive and complicated when it comes to integrating and joint workflow opportunities. If you truly believe in your product, it should be beneficial to provide seamless and open integration opportunities between complementary technologies. We admire the way Apaleo and Mews are leading the way in this regard in the hospitality space. I am sure at some point someone will come up with a way to create a marketplace for Hotel technologies and we will see it will all be plug and play. Siteminder has started their marketplace and I think its fantastic, but I think it will end up being one of the larger companies, like Amadeus who will have the capacity to capture this concept with their resources and wide net.
As for client acquisition, well that is always the challenge, isn’t it J. When it comes to selling revenue management software, sometimes it feels like finding a needle in a haystack. We are primarily focusing our efforts on the North American market, and the challenge is then finding hotels that are not bound to outdated systems that are required to be used by the flags, so usually, we are looking for independent hotels. And then once we find the independent hotels the challenge then becomes, are they working with a PMS that is compatible with our system or willing to integrate, and if the answer there is yes, then the final hurdle is helping the hotel understand that revenue management software systems are becoming more and more an essential tool in today’s hospitality tech stack. Airbnb, Sonders, Guilt, VRBO are starting to mount real challenges for hotels to keep up with from a manual pricing perspective. Hotels should no longer just be looking at their primary comp set, they need to cast a much wider net when gathering data and coming up with their pricing strategy and an RMS is truly the only way this can be done effectively. As for global client acquisition, we are proactively looking to find strategic resellers and partners all around the world. Every market is so individual and unique, we believe in working with strategic partners who can handle these individual markets in a far more efficient way than we could. While our focus is North and South America, we welcome and already have clients from all over the world.
Is Hotelitix working on new technologies that will further differentiate itself from competitors?
Roman: Yes, we are, and that is the cornerstone of our founding principle. Constantly evolve and improve. A lot of technologies out there are complacent and satisfied with their systems as they are and focus all of their reinvestment into sales as opposed to improvements. We want to constantly develop and remain years ahead of competitors, offering our clients the absolute best solution available at the best price. We also have a policy of grandfathering in our current clients into all the new features we deliver without changing their price unless it is lower. We have our early clients to thank for their confidence and trust in us, without them we would not have the opportunity to do what we love.
As for new technologies, I don’t want to reveal all too much, but there is one thing I can say, that we are deep down the rabbit hole, pursuing a shift from a linear algorithm-based system, to implementing a pricing system that is also based on deep reinforced machine learning. You hear the buzz word artificial intelligence and machine learning being thrown around a lot, mainly as a marketing gimmick as many companies truly have not yet implemented effective machine learning. This stems from the fact that basic ML does not differ too much from using a regular algorithm. Machine learning parses algorithms and learns from the data making smart decisions based on what it has learned. We as hoteliers have the capacity to still do this as well, so regular machine learning is not a large advantage for hotels over a linear algorithm. It is deep learning that is interesting to hospitality. With deep ML you are creating a neural network that now takes what it has learned and makes its own educated changes to the system that is far smarter than anything we humans can analyze in a split second. This change is then reimplemented, reanalyzed, changed again, over and over and over until it is perfected. If a hotel can use deep ML, the machine will 99% of the time find the perfect rate to the exact penny for the hotel. This is something we are extremely excited about and are looking to launch a beta, pilot program by the end of 2020.
Andres, in light of the current public health crisis, how are you able to help hoteliers who may be more hesitant than ever to deploy a new RMS? Do you have any advice for hoteliers from a revenue management perspective?
Andres: Without a doubt, COVID-19 has shaken up our industry and it’s unlike anything we ever imagined. Global travel restrictions are starting to ease and this is key for international travel to begin to resume. The good news is that the overall sentiment to travel is still there. We are seeing week over week occupancy numbers grow as more cities reopen. The domestic leisure segment is leading the way, which generally comes with a much shorter booking window. Hotels that are used to capturing bookings 30-45 days in advance are now seeing most of their activity happening within 10 days of arrival. Here is where our RMS platform excels, as it can identify these changes in lead-time so hoteliers can strategically launch promotions or join campaigns to target and attract those specific bookers. But the magic of our RMS doesn’t stop there; being a more forward-looking RMS than the traditional legacy systems, our platform continuously tracks the movement of all the hotels within a region. We are tracking hundreds of properties per market for a full 365-day window, not just the four or five hotels that are part of the competitive set. This along with our Autopilot feature that allows hoteliers to automate the rate decision process if they choose to are huge game-changers that can help hoteliers capture their fair share and more from the market.