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Indian Hotels Company Limited Raises Its Revenue Culture with IDeaS

Thursday, November 14, 2019, 10:00 Hrs  [IST]
HBI Staff | Mumbai

Incorporated by the founder of the Tata Group, Jamsetji Tata, the Indian Hotels Company Limited (IHCL) opened its first hotel, the Taj Mahal Palace, in Bombay in 1903. Currently, IHCL has a portfolio of 180 hotels, 380 restaurants and over 65 Spas, across four continents, 12 countries and in over 100 locations. IHCL began working with IDeaS in 2015 to strengthen the hotel group’s approach to demand forecasting and enhance the accuracy of its pricing strategies. Today, 56 Taj properties globally successfully use IDeaS to maximise revenues through a mixture of IDeaS Pricing System and IDeaS RMS technologies.

To ensure IHCL properties are able to maximise revenues in a growing and increasingly competitive market, the hotel group undertakes regular reviews of its commercial processes and monitors the industry for best-practice management strategies and technology. This approach recently extended to IHCL’s Taj Hotels inviting global revenue management solutions provider, IDeaS, to run a specialised Advisory Services workshop for 40 of its revenue managers in India.

Building a Revenue Culture through Education

The hotel market in India has experienced a strong period of growth in recent years, with one study noting demand has outpaced room supply in many areas of the country, leading to a prediction the sector could see a 9.5 percent growth in revenue per available room (RevPAR) in the coming year.

“A key motivation for staging revenue management workshops with IDeaS was to help grow a revenue culture across IHCL through revisiting core revenue management concepts,” said Karishma Singh, associate vice president, revenue management for IHCL. “This extends to revenue managers understanding how to best use revenue management systems to free up their time from focusing on simply executing tasks to actually being able to spend time applying their market knowledge on proper analysis and to support critical decision-making.”

The global revenue management team for IHCL attended the multi-day Revenue Educator workshop specifically tailored to the hotel group’s needs. Attendees ranged from highly experienced directors of revenue management to professionals with just a few years of practical industry experience.

The workshop ran in two distinct streams—intermediate and advanced—to accommodate attendees’ varying levels of understanding and experience. These educational streams also related to the systems attendees use at their properties, which for intermediate users is IDeaS Pricing System, while advanced users were given best-practice training on IDeaS Revenue Management System (RMS).

The workshop focused on knowledge sharing and practical exercises to improve the proficiency of IHCL’s revenue management teams. The sessions sought to create an understanding of how an advanced RMS working in tandem with a proficient revenue manager can effectively collect and analyse data to help increase efficiency and accuracy around market-pricing decisions.

“As a result of the Revenue Educator workshops staged by IDeaS, the revenue management team at IHCL globally has greater levels of understanding, confidence and enhanced skills related to the practice of revenue management,” said Singh. “The exercise linking reputation and pricing was particularly insightful for all attendees, as were the real-world case study examples.”


Growing Revenues in a Competitive Market

“The travel market in India is notoriously difficult to forecast for and hoteliers across the country are fast realising that to succeed they need to have a strong product, understand their segments, price accurately and be present on the right channels to secure guests,” said Singh. “It is not enough for a hotel to simply open its doors for business and expect their property to fill up—all hoteliers must ensure they have the right systems and offerings for their market in place.”

Prior to using a fully automated RMS, IHCL relied on a semi-automated RMS and prior to that had just begun its revenue management journey with spreadsheets and macros, and faced challenges around quickly pricing rooms based on local market conditions, setting rates for group bookings based on profitability, analysing the behaviour of different market segments and obtaining accurate forecasts for bookings.

“As competition levels increase and demand fluctuates in certain markets in India, a hotel’s ability to monitor the booking behaviour of certain segments and accurately forecast through advanced automated systems is key to operating successfully,” said Singh.

 “IDeaS has enhanced Taj Hotels’ approach to revenue management through delivering highly accurate 28-day forecasts, as well as helping predict longer-term demand beyond a 60-day horizon,” said Singh. “These forecasts help our properties plan demand-generation promotions and manage staffing levels based on occupancy. The scientific approach to managing group pricing and shoulder-night occupancies IDeaS RMS offers helps us maximise guest revenues through changing market conditions.”

IHCL closely monitors the transient benefits generated by IDeaS, mapped against the initial investments made. In all cases, the transient benefits have shown positive results. IHCL also benchmarks RevPAR and revenue generation index (RGI) growth as key indicators of their RMS success.
“We closely track the RevPAR and RGI of all our IDeaS hotels and have seen that in most of our large properties in deeply competitive markets, the RGI of hotels on IDeaS has exceeded 100,” said Singh.

Expanding Revenues Beyond the Guest Room

Looking to the future, IHCL has a five-year plan to adopt total revenue management across its portfolio, which will optimise revenues at the whole-property level with closer scrutiny on all revenue-generating departments. Of particular focus will be working with IDeaS to advance the hotel’s approach to optimising its meetings & events business.
“IHCL has always been committed to advancing our approach to revenue management, and we are constantly seeking best-practice technologies and strategies for our properties,” said Brij Bhushan Chachra, vice president, revenue management and distribution for IHCL. “With a partner like IDeaS, we believe we are well placed to strengthen our revenue performance in an evolving market.”

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