a&o is the largest private hostel chain in Europe - and one of the largest in the world - but also counts hotels and conference centers among it’s hybrid offering. With such a complex inventory mix, the leadership team decided to revamp their tech stack and needed a modern data-driven revenue management platform to optimise commercial decision making. In 2019 the private equity owned group ran a six month procurement process before choosing Pace’s revenue platform over competition including Duetto.
Siim Karu - Chief Revenue Officer at a&o - has been consistently running tests on the impact Pace Pricing has had on their revenue generation since they switched to Pace in January 2020:
“Before 2020 we were running an old fashioned static pricing revenue model, which required fixing the prices of all categories for a predetermined period of time either based on category or season and with no proactive price changes.
“Pace delivered a 27.4% increase in our RGI in August 2020 versus 2019”
In Q1 2020 we implemented Pace Pricing across all a&o properties, finally introducing a fully dynamic pricing model to our revenue management. One of the ways Pace works is that prices adjust in response to changes in demand, regardless of house level occupancy, day of the week or category. Furthermore, the dynamic pricing applies in a 365-day booking window. To reiterate, this was a revolutionary approach in comparison to what we were doing before with cruder static pricing.”
“ From start to finish (integration, implementation and full roll out across thirty nine properties), the whole process took three months and beat the expectations of the a&o team by a wide margin. Once implemented the Pace Pricing platform immediately delivered optimised pricing decisions updated hourly 24x7 on the full a&o inventory mix.”
Instant results and increased efficiencies
“ Pace Pricing has delivered substantial revenue upside for us regardless of how low or high occupancy has been. Their automated dynamic pricing platform keeps delivering across a range of scenarios, even during all the challenges of the Covid pandemic.
To measure the impact of Pace’s dynamic pricing during the COVID lockdown, we looked at actual revenue generated in the 90-day booking window from the dynamic fully independent traveler (FIT) segment at one of our properties in Frankfurt. Using Pace’s dynamic pricing, net room revenue picked up in the 90-day booking window was 7 percent higher than it would have been under our old static pricing model.
Pace Pricing also delivered an estimated 22 percent revenue uplift in the summer 2020 Covid rebound vs what our old traditional grid pricing would have done. There was stronger revenue penetration, especially in the 15-day booking window where occupancy remained well below 60 percent - a scenario our old rudimentary grid pricing was not able to adjust around at all. So, particularly in times of relatively low occupancy, Pace substantially impacts revenue with the ability to adjust to demand in real time.
We also looked at our actual revenue generation from that post-Covid recovery month of August 2020 and compared it to the previous (normal) year 2019. Our pickup was 5 percent higher in August 2020 compared to August 2019, showcasing once again how Pace Pricing keeps outperforming even during the challenges of Covid.
“Pace’s automated solution has allowed us to focus on revenue strategy for the long run and gave us an immediate uplift in our revenue, even during the worst of Covid lockdowns.”
Furthermore, we also saw a 27.4% increase in RGI in August 2020 versus 2019. So to cut a long story short - and despite all the challenges of Covid and historically low occupancy - Pace has really outperformed.”
Pace Analytics - the perfect partner to Pace Pricing
“ As part of the a&o digital transformation programme the team evaluated and adopted Pace Analytics. Pace Analytics is a full featured business intelligence platform providing advanced data analytics capabilities through an automated and easy to use interface. The analytics engine is built on the real time data management platform that underpins Pace Pricing. This data platform allowed a&o to offload analytics from an older transaction database and allow wider access to cloud analytics capabilities.
Adoption of Pace Analytics underpinned a company wide change to performance reporting. The move to a live cloud platform enabled broader access to all the data we were sitting on and the resulting data-driven decision making has really had an impact.”