Madeho operates ten boutique properties and restaurants scattered between the left and right bank of beautiful Paris. The hip French group are specialized in the design, management and development of independent and under franchised mid-range and high-end urban hotel establishments.
Each is unique – warm, friendly and inspirational – and with the return of tourism to France around the corner, they have been at the forefront of tech adoption in the hospitality space.
We spoke with Commercial Director Emmanuel Kerrien about Madeho’s approach to technology and revenue management.
Old school frustrations
“We had no Revenue Management System (RMS) in the past – we were using primitive tools provided by a revenue management (RM) consultancy that included a basic dashboard to control the pickup. Then we switched to the Mews PMS and their Marketplace opened up a world of potential tools for us.
“Pace, now FLYR for Hospitality, has fundamentally changed our thinking about pricing…We’ve seen a 17% ADR boost on our suites – without Pace (FLYR for Hospitality) we would have left that kind of money on the table.”
At the end of the day, we were overpaying for a consultancy and we couldn’t monitor the results of the service they were providing for us. Furthermore, there were always gaps and major time lags in rate changes. Eventually, our hotels threw in the towel and just stopped following the figures provided by the consultancy anyway. We needed a new solution…”
“We chose Pace (FLYR for Hospitality) for a number of reasons. Firstly, I had to find a system that was so intuitive that it could accommodate a range of different users. We have a mix of professionals working in the group and not all are experienced with revenue management. There are junior managers and senior managers and sometimes they are good at RM and sometimes they are not. Also, our GMs do RM on their own so it was clear that we needed an easy-to-use tool – something simple and user friendly with an intuitive dashboard that allowed them to manage their pricing independently.
When you look at the dashboard it just all makes sense so quickly and you can navigate around it immediately, no matter your level of experience. Even our CEO, who has no background in the nuances of RM, said to me when he first saw the Pace (FLYR for Hospitality) dashboard:
“Emmanuel, I’ve never really understood revenue management and how it works, but now with Pace (FLYR for Hospitality) … I get it!”
Then there are the efficiency gains. Before, I used to spend hours every day staring at competitor pricing and manually changing prices accordingly – perhaps three or four times a day – and I was always worried my competitors would change prices after I went home! NowI can relax as the system is adapting prices to demand automatically and in real time.
The recommendation engine also works a good year out – we can take reservations for a year’s time and still see good pricing changes as the system is controlling it that far out based on demand. We really weren’t expecting anything like that.
For example, last week in our Parisian property Pley Hotel we saw some new bookings already coming in for the end of the year and 2022 and we could see that Pace (FLYR for Hospitality) was still working that far out with price variations and always optimising pricing for demand. It just gives me so much confidence as an RM. Now we can really concentrate on where we can add value – on the analysis and strategy – and not waste time on pricing changes.
Oh and Pace’s (FLYR for Hospitality) ability to handle complex inventory mix was another crucial reason we chose them. No matter the size of the property or the type of inventory, Pace (FLYR for Hospitality) just handles anything.”
“The onboarding was super fast and simple and even though we didn’t have the historical data that most RMS require, it wasn’t a problem as that’s not how their algorithms are built. Besides, with the impact of the pandemic it’s clear that historical data is broken. Pricing algorithms need to be focused on the future and Pace’s (FLYR for Hospitality) science has resoundingly been proven correct.
Initially, we shopped around for an RMS and, to be honest, the other options on the market were very difficult to even approach. Either the implementation would take way too long (weeks!) or the product was too complex and with a lot of unnecessary technology. Even one of our new GMs, who was an ex-Revenue Manager, couldn’t understand their software! We actually started implementing another RMS for a test drive but we gave up after two weeks as it was a real mess. Then we got in touch with Pace (FLYR for Hospitality).”
“When we switched on automated pricing we almost immediately saw much more pickup coming in.
Even during the pandemic, we’ve outperformed. In Q12021 we had 55-60% occupancy vs 14-15% average in Paris. One of our hotels, the Pley Hotel, saw a consistent increase in average occupancy up to the end of March. During Valentines we even got up to 80% occupancy. Why? It’s a new product. We offer a great service. And the rates were spot on and priced well.
And the system forecast was very accurate. We did tests going from a lower rate of €110 euros up to €160 or €170 euros and the demand was the same. Pace (FLYR for Hospitality) could see what demand was doing and the dynamic rates were really important for us to monitor.
One great thing about the decision enginge is how it deals with a super short booking window and a super long one. In 2020 and this year, pickup has ranged from seven days and up to the day of arrival. 40% of our pickup is within three days of arrival and Pace (FLYR for Hospitality) could always see that there was still that small bit of demand. But it also picks up on demand very far out – a year even, as I mentioned earlier. It’s impossible for us to focus and play with rates so far out but Pace (FLYR for Hospitality) is doing it for us. We can focus on the short term strategic stuff instead and that means we need less staff.
We have learnt to be far more open minded about rates because we are using Pace (FLYR for Hospitality). Now our rates range from €100 up to €300 in some cases and I don’t lose any sleep about the recommendations. In fact, the system is much more consistent now.
Let me give you a specific example of how much the Pace (FLYR for Hospitality) pricing recommendations have fundamentally changed our thinking. With a room type like ‘Suites’ we had always just set flat rates during weekdays as we just thought there was never much demand during the week as it wasn’t a corporate product. We had rates set at €240. But then we plugged in Pace (FLYR for Hospitality) and the automated pricing kicked in. We now have a better ADR on these kinds of luxury products – we’ve seen weekday prices go up to €280 some nights! That’s a 17% boost!
Without Pace (FLYR for Hospitality) we would have left that kind of money on the table. It’s so difficult to measure demand for these kinds of products and it’s almost impossible to monitor it manually. Without the decision engines pricing, we would have kept believing that luxury products like that were only impacted by the leisure market and that we could only price higher at weekends. Wrong!”
“Now we have automatic reports generated every morning at 830am and that alone is saving me a lot of time in comparison to the old days of crunching all the numbers manually on an Excel sheet, then somehow combining them and trying to send them to the different teams.
Even our CEO now gets something automatically sent to him seven days a week with the data and reports he needs. Particularly during the pandemic and the downsizing of our teams, the automation has really made the difference.”
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