Some vacation rental management companies may see pricing management tools such as Price Labs and Beyond Pricing as the ultimate keys to higher occupancy and rental rates. The idea is straightforward – get the software, feed it with some data, and let it do its magic.
While these tools, designed to automate repetitive tasks, indeed save time and enhance efficiency and accuracy, they are not replacements for human involvement. Let’s explore why.
First, let’s examine what pricing management tools do. They handle bookings, cancellations, weather patterns, guest demographics, demand, local events, and more. These tools, powered by complex algorithms, are constantly recalculating the optimal rental rates based on the data at hand. However, the quality of the data input determines the accuracy of the information output.
Understanding Pricing Management Tools
There are two types of pricing management tools: “rule-based” and AI-driven. While both follow certain rules, the AI-driven versions are more sophisticated, courtesy of artificial intelligence (AI). Rule-Based Pricing Tools: They are designed for simplicity and ease of use, even by individuals with no experience in revenue management. However, they are basic and provide limited results.
Rule-based tools, like some functionalities in Beyond Pricing, use a basic algorithm that usually manages one or two variables and automatically adjusts rates accordingly. For instance, they can identify that higher market demand or property occupancy can warrant higher rates. But they cannot contextualize and correlate all the possible variables. Moreover, they can’t make analytical decisions that could lead to increased demand. AI-Driven Pricing Tools: These take into account multiple variables and use machine learning to learn how human revenue managers react to these variables to replicate their behavior. AI-driven tools, such as those offered by Price Labs, do not replace humans; they complement them.
Revenue managers are the “engineers” and teachers of these systems. Without them, modern pricing management tools would not exist.
The Role of Pricing Management Tools
The AI-driven pricing management tool and the revenue manager work hand-in-hand. The tool simplifies data collection, rate calculation, and online distribution (provided there’s a well-integrated open API connecting the systems). When revenue managers continually feed the pricing management tool with data, it integrates the machine’s work and the human’s expertise. With regular updates, the machine learning component “learns”, and if the revenue manager is off-duty, the pricing tool can automatically adjust rates according to the learned data. However, AI-based pricing management tools must be continuously monitored by skilled human revenue managers, especially during their learning process. Much like search engines that have evolved thanks to software engineers who build complex algorithms, the predictions made by pricing tools evolve based on the revenue manager’s understanding of the data they input. Pricing management tools automate and cross-check historical data, future projections, and current market conditions to predict customer demand and make rate recommendations. It’s a cross-section of data that helps a vacation rental pinpoint optimal timing and guest segments. Yet, it requires a revenue manager to run the reports based on variable factors and apply their analytical skills to predict the revenue potential. While the pricing management tool handles pricing automation, it’s the revenue manager who interprets the data and makes strategic adjustments, teaching the tool on a regular basis.
Machine Learning in Pricing Management Tools
Modern pricing management tools such as Price Labs and Beyond Pricing are built on AI and machine learning (ML). The ML component learns to be more efficient with rental pricing as the revenue manager continues to feed it data and adjust based on results. This collaboration leads to improved revenue. While these pricing management tools simplify data gathering and make pricing suggestions, they stop there. Strategic thinking comes from the human side. The revenue manager decides the segmentation, configures the data to input, and suggests a commercial strategy
Mr. Alfred is an Integrated Solution for Vacation Rental and Revenue Management
In this complex and ever-evolving landscape, a holistic approach is crucial to success. Mr. Alfred, a robust Software de Alquiler Vacacional (PMS) coupled with Revenue Management Services, provides this by seamlessly integrating the capabilities of advanced pricing tools with the irreplaceable insights of a human revenue manager.
Our technology-enabled PMS goes beyond just managing bookings and guest communications. It interacts intuitively with top-tier pricing tools like Price Labs and Beyond Pricing, collecting and processing a wide array of data points. This facilitates the crucial tasks of your revenue management process, from data collection to rate calculation and distribution.
What truly sets Mr. Alfred apart is its commitment to human involvement. We understand the indispensable role of a skilled revenue manager in interpreting this data and making strategic decisions. The human touch guides our AI-driven system in its learning process, enabling it to make more accurate and profitable pricing predictions.
With Mr. Alfred, you don’t have to choose between technology and human expertise. You get the best of both worlds. Our platform empowers revenue managers to do their jobs more efficiently, thereby driving the continued growth and success of your vacation rental business.
If you’re ready to elevate your revenue management strategy, take the first step with Mr. Alfred. Contact us today to learn more about how our advanced PMS and Revenue Management Services can supercharge your vacation rental revenues.
