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The Stock Market vs. The Hotel Industry

The history of the stock market… I’m sure it’s not a topic that most in the hospitality industry have ever contemplated in great detail but that should change right now. Why? Because hoteliers and revenue managers can learn a great deal from the evolution of stock market technology that will benefit their property’s revenues.

The first stock exchange was established in London. The original home of the London stock exchange was at a local coffee shop called Jonathan’s Coffee-House, where lists of stock and commodity prices were issued and trades were made until the creation of the formal stock exchange in 1773. Shortly after that, other markets were established across the globe. For hundreds of years in all areas of the world, stocks were traded in person, face-to-face, before the advent of stock market technology.

In the beginning of the hotel industry, everything worked the same way: face-to-face. There were no reservations made by phone or by Internet. Travelers would show up at an inn, bag in hand, and hope that there was room for them to rest their heads. It wasn’t convenient and in busy times, often travelers would have to sleep outside because the inn was at capacity. But this continued to be the only way to find an inn for hundreds of years, all around the world.

But of course, technology came along (thank goodness!) and changed both industries for the better…

In 1986, the Stock Exchange Automated Quotation (SEAQ) system was implemented in the London Stock Exchange. The SEAQ system was the first technology that enabled brokers to buy and sell stocks, eliminating the need for face-to-face transactions. It had a great many advantages over the prior system:

It shortened the length of time that it took for a transaction to be completed.

  • Provided private investors with independent access to the stock market.
  • Drastically increased volume of trades executed each day. Before the implementation of the automated technology, 20,000 trades were completed each day (on average). A few months after implementing the SEAQ technology, the average of trades rose to 59,000 per day.

Stock market technology has continued to develop since then, growing more accurate, more useful and has helped millions of people make much more money than with the old face-to-face methods. And across the board, all of the major stock markets worldwide have transitioned to use this technology.

Like stock market technology, hotel revenue management technology has continued to become more and more specialized, sophisticated and easy-to-use since its development. Revenue management technologies are now fully automated. They are able to collect, analyze and suggest pricing in real-time, 24/7. It removes the need for the revenue manager to waste time on tedious manual data entry tasks, freeing up significant time for inter-departmental planning and strategy – a function that computers/technology cannot manage and which can cause significant increases in overall profitability.

Food for thought… The stock market has embraced technology and profited in ways that traders and investors never dreamed possible. The technology now exists for hotels to do the same; so why haven’t more hoteliers taken advantage of this technology when it is quicker, easier, more beneficial and cheaper than ever to do so?

I’d love to hear your thoughts on why some hotels are still using older revenue management tactics and what we (as an industry) can do to make hotel executives aware of the significant benefits that sophisticated RMS technology can provide for their property. Contact me at comments@revparguru.com with your thoughts or respond in the comments section below.

 

https://www.revparguru.com/automated-revenue-management/

 

 
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