In this increasingly automated age, hoteliers need all the help they can get to remain competitive, and nowhere is this truer than in their pricing strategies.
Dynamic pricing has long been integral to the operations of large hotels, which use complicated algorithms to generate prices in response to numerous variables, including seasonal occupancy rates and room availability.
Historically, small and independent accommodation providers have had to operate without access to such strategic advantages, due to the sheer amount of data-processing involved. Without the money, time, and expertise required, smaller hotels are often left by the wayside, unable to provide the kinds of marginal price variations that lead to bookings, and ultimately revenue, in a competitive market. Ari Andricopoulos is the CEO and co-founder of RoomPriceGenie, a software company aimed at providing smaller hotels with the edge they need. A PhD-level financial mathematician, he spent 15 years developing trading algorithms for hedge funds, before deciding to put his skills towards something else. He found inspiration close to home.
“My father moved from London with his partner to the Isle of Wight to open the Grange B&B in 2004,” Andricopoulos explained. “I realised the larger hotels around him were cheaper than him during the off-season and he was often almost empty. But then by autumn, he was already sold out for the festival days the following summer.”
Working with co-founders Marvin Speh, COO, and Joerg Siegel, CTO, Andricopoulos developed RoomPriceGenie to assist his father and other small hotel owners like him with their revenue management. “There was nothing available to help him, and this was something I could definitely help with. So, I thought, why not try it out?”
Working with hotels, RoomPriceGenie set up the system with occupancy rates and seasonal price fluctuations in mind, as well as an awareness of competitors.
“The price then moves around using knowledge of how the hotels with the most information are doing,” Andricopoulos explained. “So if there is a large hotel that knows that things are getting busier and moves its prices up, yours will move up too. If things are quiet and everyone is moving prices down, so will you.”
The second part of the algorithm relates to occupancy – if a hotel has only one room left to sell, then it just needs to find one buyer, meaning it could potentially charge more than if 20 rooms are vacant. These kind of dynamic calculations, standard fare for large hotel chains, have previously been tricky for small hotels to perform year-round.
So far, despite only launching in early 2019, the company has secured a first round of external funding, led by Wingman Ventures, and surpassed the 100-client mark. It’s been quite the ride for the small team, which includes founding partners Marvin Speh, COO, and Joerg Siegel, CTO. But Andricopoulos is confident that their product, combined with their approach to business, is already yielding results, with average revenue improvements of 20 percent.
“I think that our small success so far can be attributed to a real drive to always improve, combined with really closely listening to feedback from both customers and senior revenue managers,” he said. “We have something of a mission to help independent hotels – we think our customers know how much we care, so we are like a team together. We try to help them, and they help us too.”