You stepped into the hospitality world by launching Octave Hotels and after sometimes the brand touched new success and you own a chain of 7 hotels. What were the major challenges you faced and overcame to make Octave hotels a success?
Siddharth Goenka:- There were several challenges that I faced while growing Octave Hotels. First, I was a complete newbie in the industry without any prior experience in hotel management or any exposure to the industry. So, I had to learn from scratch on the job and figure my path out as I moved along.
Secondly, this industry employs a fixed mindset and assumptions in most areas. Whether it is operations, marketing, technology usage, manpower utilization, most veterans of this industry are reluctant to change and trying to convince anyone to change was a challenge that took many years.
Thirdly, setting the right systems and processes in place that would reduce management’s involvement in operations and day-to-day decision making so that we could grow from one hotel to seven hotels was also something that took time and continuous improvement.
You have launched Aiosell, an automated Hotel Revenue management software with a tagline “maximum result, minimum efforts”. Please tell us how does the software justify the tagline of your brand?
Siddharth Goenka:- The automated revenue management product helps a hotel optimize rates in real-time in a way that can maximize revenues and occupancy while reducing the day to day involvement to changing rates manually on the online extranets. Hence, the net result of our company is maximum revenues, ADRs, the efficiency with minimum time, effort, and costs.
How much time do you think it takes for a team to map-up the room prices manually? Why do you think technology can do it in a better way?
Siddharth Goenka:- When rates are updated in online channels manually, it has limitations to maximum results as the revenue manager is not sitting on their computer screens all day long. Moreover, the excel sheets can only give you new recommended rates on a few dates and dimensions based on a few parameters. When an AI and automated system can calculate and push those rates, the net result is at least 20x more effective and prompt.
Sir, please tell us what exactly forces the sales team of OTA or other well-known hospitality company managing hotel booking cheat their clients? Please help us with some stats of approximately how much have they taken illegally from other hotels and the guests?
Siddharth Goenka:- The primary reason for unethical practices have crept into our industry (either by OTAs or aggregators) is due to the funding and valuation pressures mounted by the VCs who are looking to artificially boost valuations of these companies beyond reality. This forces the companies to show unprecedented growth by giving discounts and cashback to the customers to keep the growth intact. At some point, the funds start tapping out and these companies cannot sustain these discounts and cashback. Hence, they reach a point where they have no other option but to start taking more from either their suppliers or their customers, which results in unethical practices. Many such unethical practices have involved additional commissions / take-aways from between 5-20% of the value of the bookings.
How important do you think it is to use technology properly to save them self from such frauds as done by hotel chain platforms?
Siddharth Goenka:- Technology can be used as a major driver to reduce frauds and unethical practices. Each and every transaction should have complete transaction details of how much the customer has paid for a product/service, and then what are the commissions deducted as per contracts between aggregators and suppliers and that would result in the reduction in frauds. However, it is for obvious reasons that aggregators are unwilling to be transparent at each transaction level, as it gives them the opportunity to keep a higher share for themselves than they probably should.
Indian hospitality is still lacking when it comes to comparing it globally in terms of technology. How many hotels do you think are still doing their property management manually?
Siddharth Goenka:- Less than 5% of hotels in India (including the branded chains) are using the power of technology to maximize their effectiveness. There are still on-premise based PMS systems that should be replaced by cloud-based systems, they still monitor their rates, reviews, operations manually, which should be automated using advanced systems that exist today.
Tell us something about AI-based ARM created by Aiosell? How beneficial and productive can it be for the hotels and how much revenue has it generated to date for the hotels?
Siddharth Goenka:- AI-based ARM developed by Aiosell is not just unique for Indian hotels but is relevant for hotels globally. There are very few Revenue Management systems available in the world that can claim to do revenue management effectively using several real-time contextual parameters and can assist a Revenue Manager effectively with effective automation. Hotels can increase their occupancy by 10%, ADR(s) by 15%, revenues by 30% while at the same time reducing their time, energy and costs.
You test the technology created by Aiosell in your hotel first before taking it out. What exactly made you start doing it and why do you think it is the need of the hour?
Siddharth Goenka:- We had no other choice. When I started running Octave Hotels I realized this kind of automated pricing technology was the need of the hour and was missing from the industry and I realized a technology like this could increase revenues and effectiveness tremendously. Due to lack of availability of a suitable alternative, I went ahead and developed this product over a few years and now we have reached a point when the product is unique and relevant for the industry.
How important are hotel Revenue management software for hotel owners and how do they increase the productivity and revenue of the hotel chains if they are operated and implemented properly?
Siddharth Goenka:- Revenue management systems in today’s world are absolutely essential for every hotel of all sizes to maximize its revenue potential. Most bookings happen in the last few days/hours and how the price should optimize during this short time window determines the overall revenues/success for a hotel. If the right system is implemented in the hotel, it can help them sell each room to the right customer, at the right time, at the right price, through the right channel.
What is the Y-O-Y growth expected by Aiosell globally?
Siddharth Goenka:- We are expecting almost 50% growth for the first few years and then stabilize to about 30% after the first two years.