Minor Hotels' Chief Commercial Officer on Automating 2 Million Daily Rate Changes
We have our own proprietary system that is giving us an automated forecast every single day for the next eighteen months for every single hotel by channel and by segment. And this is something that is giving us a competitive advantage on how we are supporting our revenue managers.
Speaker 2:From Hotel Tech Report, it's Hotel Tech Insider, a show about the future of hotels and the technology that powers them.
Speaker 3:On this episode, we have an insightful conversation with Fernando Vides, the chief commercial officer at Minor Hotels, who represents over 400 hotels across Europe and The Americas. You won't want to miss hearing about Minor Hotels' approach to distribution, which aims to consolidate the number of distribution channels they work with in order to preserve rate integrity and profitability. Well, thank you so much, Fernando, for taking the time to speak with us. Very excited to chat with you, learn more about your organization and how you think about technology. I would love to start with a quick intro on yourself.
Speaker 3:If you could introduce yourself, let us know what you do at your organization, how long you've been there, and a little bit about the properties you manage.
Speaker 1:Very good. Thank you so much. First, thank you for having us, and thank you for having me, especially representing minor hotels, and specifically minor hotels, Europe and Americas. I'm Fernando Dives. I'm the chief commercial officer for minor hotels Europe and America.
Speaker 1:I'm based in Madrid, Spain with a beautiful sun outside today as usual. We are 1 of the cities with, most amount of numbers with, with daylight and with blue skies. It's a beautiful day here. And I do represent over 400 hotels, but of minor hotels which are sitting in Europe and Americas. I lead the commercial discipline in the region, which basically means from sales, revenue management, distribution, business intelligence, ecommerce, digital marketing, our contact centers, everything that is driving the top line of the organization within the region.
Speaker 1:Minor Hotels Europe and Americas is owned by Minor International. It's our main shareholder with more than 95% of the shares of Minor Hotels Europe and Americas, and we are headquartered in Bangkok.
Speaker 3:And I'm curious to know a bit more about the hotels. I understand you have properties all over the world. What is the target guest? You know, are they heavily branded or independent? Could you tell me a little bit more?
Speaker 1:Sure. In total, minor hotels operates close to 600 hotels. My division, which is Europe And Americas, we run over 400 properties. We are 1 of the top operators in Spain, Italy, The Netherlands, Germany. Very strong presence in Latin America, specifically Mexico, Colombia, Argentina, Chile.
Speaker 1:And we operate under 8 brands. Our luxury brand, which is Anantara hotels and resorts. It's followed by Tibony hotels and resorts. This brand is heavily implemented in Portugal and in Brazil. And now we are expanding the brand through some European countries such as Italy and Spain.
Speaker 1:NH collection with over 100 hotels in more than 50 destinations, which is the brand with the biggest exposure in terms of, where we are present in different countries. We just opened our first NH collection in Thailand. We just opened our first hotel collection NH collection in Sri Lanka, Maldives last year. So we are expanding this brand very fast on the upper upscale segment. NH collection is followed by NH, hotels and resorts.
Speaker 1:NH hotels and resorts. It's our biggest brand with more than 250 hotels. Pretty much concentration in Europe and Latin America. We are now expanding. Again, we just opened a hotel in Malives.
Speaker 1:We have opened a hotel in South Africa, in Johannesburg, and in Bangkok in the last couple of months were signed and opened. We operate another brand called Avani. Oaks, which is very strong in Australia and New Zealand with more than 60 hotels. And then Eleuana, which are loaches sitting in Africa. Very high end and luxurious, Eleuana, and specifically sitting in Africa.
Speaker 1:So we we are not 1 of these hotel chains with more than 30 brands. We try to keep it simple. 8 brands from luxury to essential as we like to call it. I forgot 1 important brand which is called Now, n h o w, which is meant now. It's happening now, playing with the NH words.
Speaker 1:And we operate close to 10 hotels. We are opening the now in Lima at the this year in 2025. And it's our lifestyle brand.
Speaker 3:Well, even though you don't have 30 brands, 8 is still quite a lot of brands It's
Speaker 1:been a lot. Yeah. It's been a lot.
Speaker 3:Operating in different segments, different countries. I can imagine that technology is crucial for smooth operations. What would you consider to be the most critical piece of software that you use?
Speaker 1:Well, it absolutely, it's crucial. I mean, the PMS, which is a transaction for any commercial expert or any commercial leader, we like to say that we are agnostic to the PMS. It's I mean, all the magic is happening when we talk about the revenue management system and when we talk about distribution. So revenue management, distribution, this is absolutely key on how we are progressing and how we are making advancements on how we commercialize our hotels. Since the very beginning, I've been with minor hotels since 2014.
Speaker 1:We made a big bet on our revenue management strategy. So with a provider based in The US called Duetto, with whom we developed a strategic partnership, allowed us to not only implement best in class revenue management, but create a roadmap where we would be able to implement revenue management on different phases as they were developing the system. When we first touch base with Duetto, I think they had less than 100 hotels. Now they have thousands of properties, including our hotels. And it made a lot of sense when we were looking at our road map on how we were gonna be able to progress in terms of revenue management and pricing implementation, and then the technology solution.
Speaker 1:Now 1 of the things that the industry sometimes tends to focus is on what we do and how we do it instead of thinking on why we do stuff. And this is something that I am pretty much obsessed on everything that we do, every single project that we're doing that is driving the top line based on either demand generation, demand creation, or demand optimization, what is where revenue management is being focused is why we're doing everything that we're doing. And what's the plan behind it, not only in the short term, but in the midterm. And, again, it made a lot of sense. We wanted to move not only into dynamic pricing.
Speaker 1:We were very excited when they launched open pricing. I think it was a breakthrough in the industry, their approach to pricing, and how this was giving flexibility in terms of pricing, not just for the b to c segments, but for our b to b clients. And we embrace the system, and we have been able to be extremely successful implementing the system in 100% of our portfolio with an adoption ratio of, 100%. I mean, there could be no way that our revenue managers would be able to manage pricing within the group without using the system as the enabler in order to push the rates. Today, where we do not only have automated pricing, this is something that we implemented during the pandemic in 2020.
Speaker 1:It was a project that funny enough, we wanted to implement in two years period. Unfortunately, the pandemic came. We decided to speed up the process as most of our hotels were closed and, some of our employees were on furlough. So we didn't have resources to manage either the little hotels that we had open or at least the hotels that we were opening where we didn't have enough resources. So we decided to speed up the implementation process from two years to in basically three months.
Speaker 1:Revenue managers thought that they would get all fired and that's why we had a two year period for implementation of pricing automation. It was the opposite. We continue hiring revenue managers. And what we are doing now is we're gaining time to market. We are able to optimize prices not only 3 or 4 times per day, but we have implemented in 2024 what we call dynamic optimizations.
Speaker 1:So this means that when the system is anticipating there is a change on the demand trend, We automatically identify this, and then we push the rates up to a point where we are pushing close to 2000000 rate changes on a daily basis. Not just for the short term, but within an eighteen month period. And it's absolutely fantastic. I mean, sometimes, not every day, but on a twice or 3 times per week, I look at the rate change report from our RMS, and it's incredible to see how we are making price changes for I don't know. We are in Jan.
Speaker 1:0 today. Last week, I was looking at rate changes for February 2026 where in 1 specific hotels, we were increasing rates by €5, by €10. Things that the revenue manager would never be able to do. So that why and again, the technology, it's the what we are implementing and then how we execute this throughout the processes. How do we foresee the future?
Speaker 1:And the future, we call internally bionic revenue management. It's a combination of the human and the machine and how you are able to get the best from both worlds. It's how technology can help us automate different processes. Pricing is 1 of the examples. We have a proprietary system that is giving us on top of what the RMS, the revenue management system, is doing, which is basically forecast based on transactional information and transactional data.
Speaker 1:We have our own proprietary system that is giving us an automated forecast every single day for the next eighteen months for every single hotel by channel and by segment. And this is something that is giving us a competitive advantage on how we are supporting our revenue managers. Not just looking at 1 forecast or their own vision, but at the same time, at the forecast from our own system. And then the combination of these 3 factors is creating the hybrid forecast, which is the 1 provided by the system, the machines, and then the 1 that is blended and utilized by our revenue managers. So I think this is 1 of the examples where in the end, what we expect is how can we support our teams so that they can dedicate more time to specific strategic actions, looking at the dates where we can really have a need of optimization and then securing time to market and that we have the right price at the right point and time for the future.
Speaker 3:How did you make the decision to partner with Duetto? What was that decision process like? Were you looking at other vendors, or what was it about Duetto that made you select that system, especially when the company was still so young? It sounds like it could have been a bit of a risk on your side to take a chance on a young company.
Speaker 1:Yep. I guess I was ten years younger, and I was willing to take more risks than I would do today with, I didn't have kids, and I have 2 kids. So it's I don't know if I would make the right decision. Actually, at 1 in time, I sat down with the 3 founders, especially with Marco and with Patrick. And I said, listen.
Speaker 1:If I get fired, you need to give me a job because this is a big bet that I'm doing. I mean, we are a big chain. We're gonna be your biggest client. And this is a big bet on you guys because you don't have the historical I mean, you don't have the history or the track record to secure that you would be delivering your promises. No?
Speaker 1:In reality, they not only deliver. I mean, they over deliver. As I said, it's true that we did as any process when you want to change or adapt your technology and your processes, what you do is you do an RFI. So first, we brought different providers into the table. Actually, Duetto was 1 of the latest SUCHA because there were so many as we didn't know them.
Speaker 1:So I'm just looking at I'm reading 1 press release on the web. The team realized that there was another vendor, so we add them at the final stage. And then once we had decided on the 3 finalists, we launched the RFP. And then throughout the RFP, of course, you have not only the technical requirements and the business requirements, then then you have the financial requirements. And what we liked about Duetto was and how we were able to build a tailor made interface that would allow us to have a competitive advantage even if we would be competing against other clients of Duetto.
Speaker 1:So we were not that much concerned that Duetto would spread and that some of our competitors would be using the same technology because of the singularity of our interface, which I cannot elaborate as you can imagine. But it has quite specific certifications and data that is traveling that allows us to use the system on a way that many other hotels, even using Duetto, may not be able to do it. No? At 1 in time, we even rebranded. In fact, actually, we have rebranded internally Duetto.
Speaker 1:We don't talk about Duetto. We talk about the NH game changer, and this is how we internally name our revenue management system. No? But in the end, as I said at the beginning, it's the roadmap on how we had to embrace revenue management that was pretty much detail on our three year plan. And we knew that we couldn't be from 0 to hero just in one year.
Speaker 1:And we had to face that implementation of revenue management processes, culture, teams, technology, pricing, and so forth. So the roadmap on how Duetto was evolving under their own roadmap and our roadmap matched pretty well. If it didn't match, we were able to find a solution on how we would be able to make it match. And then 1 of the things that we fall in love was the open pricing concept, which is something that we were trying to do without calling this open pricing and with a manual perspective, which is trying to avoid having specific price points. And again, I'm talking about almost eleven years ago that we started these conversations where we still our revenue managers, they still have a pricing grid with ten, fifteen, 20 price points.
Speaker 1:And then we were using those price points that were built on the database in order to price. And then we were missing opportunities. The idea of open pricing allowed us to go from fifteen, twenty different rates, of course, then on the mirror rates and the reference rates to those specific rate codes. That could be thousands of rates, but we were pretty much limited. And then we moved into a model where we started using infinite prices, which would allow us to completely optimize the entire demand curve at each specific hotel.
Speaker 3:What do you see as the key business impact of thinking about revenue management in this way? What are the metrics that are most affected, or is it a growth play? Is it efficiency for your team? You know, what are the impacts that you've seen?
Speaker 1:What I would say is that I think there are 2 areas. I mean, there are every area is impacted by AI. Every single area. Yeah. Yeah.
Speaker 1:Saw a video on LinkedIn a few days ago from the CEO of Nvidia saying that AI will not take your job. Someone who knows how to use AI will take your job. And I shared this video with my team. And, listen. I mean, we all need to I mean, this is a conversation we started in September.
Speaker 1:I mean, we all need to start thinking about AI and how this is gonna impact the way we work, our processes, our strategies, or technology. And the way I see it is it's quite simplistic. Today, we have available technology that it's either able to augmentate, accelerate, or automate what we do. Automate tasks where the human is not bringing any value, and then it's making our life easier. It's augmentating what we can do today, and then it's accelerating processes that would take us before one or two days into minutes.
Speaker 1:And how we embrace this, it's something that we need to think strategically on how we're gonna implement this. And then, of course, there are many vendors who are selling us technology that may be supporting us on 1 very specific area. Now we are, today working in a process that is impacting sales. Again, what can we automate? So we are we're revisiting all our processes.
Speaker 1:What can we automate? How can we augmentate? And how can we accelerate what our salespeople is doing so that they can become more efficient. Not just with the aim of being more efficient or saving costs, but how can we dedicate more time to those customers where today we may not be spending enough time with them. So it's not a question on how we save costs.
Speaker 1:Actually, it's the opposite. It's how can we get more shade of wallet from some of the accounts that we know that we have some leakage to the competition by having a better service to those accounts, by having salespeople having more time. There is a second discipline, which is our contact centers. I mean, there is a huge disruption in this area, pretty much impacted by technology, by voice agents powered by AI, chats, chatbots. It's incredible.
Speaker 1:I mean, today actually, today as we speak, we are implementing a technology that we didn't have available that it's allowing our supervisors to understand the customer sentiment of each call within the reservation process. So, basically, our supervisors, they do not only have today the queues, the traffic, the waiting times, the a vandal ratio, the SLAs. They have per call. They have amper agent. They have the status as as a lighthouse with greens, orange, and reds on how a conversation is going with 1 of our agents.
Speaker 1:And we are able to approach or the supervisor is able to jump into 1 of this call to support the agent if the call is in red. So that's something that it's allowing us anticipate massively when we see that a consumer may not be happy. He may be having a strong conversation with 1 of our agents and then support first our agent so that we can deliver a better service. And then the last component, it's revenue management. And I think there is no area against sales, contact centers, revenue management, which is gonna have biggest disruption in the next years.
Speaker 1:And then the KPIs that you're mentioning is the number of hotels that the revenue manager can manage when we are talking about either economy hotels, bed and breakfast hotels. If today they're managing 5 hotels, maybe tomorrow they can manage 10 or 15 because you would have technology that is supporting, automating, or augmentating what the revenue manager can do. Now there is another philosophy because then we tend this is like when we implemented pricing automation. You know, the revenue managers thought they would get fired. We haven't fired anybody yet.
Speaker 1:This is due due to the price automation. The opposite is if we are able to free time or or if revenue managers are able to have more time to value driven decisions. And as revenue management is being impacting not only on rooms revenue, but in all their revenues and in all their components of a hotel. I'm specifically thinking today about meeting space rental. I'm thinking heavily, massively about food and beverage.
Speaker 1:Why not revenue managers as they have now the time and they have the skills, they have the education, they have the knowledge, they should be dedicating time to other point of sales within the hotel, put on my words, meeting space. And this goes from minibar, from room service, from the restaurant revenue, and so forth.
Speaker 3:Thinking of guest experience, I'm curious to hear a bit more how do you think about reputation and guest reviews Given that you have so many properties, so many different types of guests, how are you thinking about upholding that strong reputation and maintaining good review scores?
Speaker 1:As my boss would say, I'm the advocate of the consumer, the internal advocate. So it basically means that I think I look on a monthly basis. We are receiving the guest experience reviews with all the data for hotel, our scores. I think I'm the first one opening the file when we receive this this report on a monthly basis. Because it's scientifically demonstrated on how improved guest experience and high scores on guest reviews, they give you more visibility and gave and they give you more traction on distribution.
Speaker 1:That's something that we follow-up very closely from the commercial perspective. Our operations team is doing an excellent job in all the different brands. We are happy to say that our scores are always over delivering what the competition is doing, which on the other hand is giving me more pressure to deliver better results because everybody at the organization is aware of that. I mean, the better quality we give, the more first we will be able to charge and the better visibility we will have in the distribution channels and the different distribution platforms. So it's absolutely we take this for granted.
Speaker 1:I'm not gonna talk about this report from review pro many years ago and Cornell where they were saying that an improvement of 10% on the quality score, I think it would give you an increased RevPAR of at least 1%. So it's very clear that it has an impact. What we measure almost on a daily basis on this, our technology and the reports, we measure this and it's part of our day by day routine of our revenue managers is looking at the quality scores and looking at what we call our quality filtration index. And then how this will be impacting our pricing versus our competition. Something that we measure a lot is the value for money.
Speaker 1:It has been heavily impacted in the last years. Not only for us, but for the entire industry as we have been able to fill the hotels after the pandemic very fast with very high rates, because, of course, we had to counter fight the huge inflation we had, not only impacting cost but impacting payroll in many countries. And we may not be able in the past to fill the different positions that we had open until the just after the pandemic. So this was giving us I mean, it's been some kind of a nightmare in terms of operations, but we have been able to recover very fast. But, yeah, the value for money, the quality penetration index, the GRI, we are using a CG review pro now.
Speaker 1:You know, our hotels, it's 1 of the tools that we use on a daily basis. It's part of the DNA of our pricing strategy.
Speaker 3:Speaking of distribution, curious how you approach distribution. What's your mindset on direct versus third party bookings? If you could tell me a bit about your distribution setup and your booking engine.
Speaker 1:We are a very asset heavy company. So when you compare ourselves, The US brands, today, we can say that we are not franchising yet. So it means that we own or lease more than 80% of our portfolio. And that is giving us some kind of, owner mentality against some other brands, which are mostly focused on the franchise business. There is a different motivation.
Speaker 1:It's when you are on the franchise business, you're trying to make your pipes bigger. You are trying to drive the most amount of business direct loyalty program. I'm not saying we are not focused on this direction. Because, I mean, we have a very strong more than 50% of our business is direct. So we have a strong push on this regard, but at the same time, we always say that we are EBITDA focused.
Speaker 1:I mean, what rules is the EBITDA? And some cases, when the EBITDA rules, you put in a different stage of priority, your channel mix. Again, I'm not saying that we do not need to prioritize, brand.com direct sales. I mean, we do and we have, quite aggressive growth on each of these, channels. But the reality is that we need to have a different mentality, let's say, this way.
Speaker 1:Because in the end, we own 80% of our portfolio and the p and l. And we have a massive amount of risk in those hotels that we are leasing. Now distribution, it's getting more and more complex. This is changing very dynamically, not as dynamic and fast as GM AI into our lives. But the reality is that it's something that is shifting and progressing very fast.
Speaker 1:We have moved from a diversification strategy and distribution that we had until 2018, '20 '19 to a concentration model. So we would what we have been trying to do is to concentrate our distribution with as few partners as possible, and then trying to get capillarity and distribution throughout these parties. 1 of the things that we did is we signed an strategic agreement with HBX, with HotelBets in 2021, which has been extremely successful. And we decided to concentrate our b to b distribution through HBX for different reasons. First, because of the capability they have as a b to b partner, the capacity they have to be an extension of our sales force, the transparency of the agreement, and, of course, the commercials as you can imagine.
Speaker 1:But at the same time, on how we have been able to work with this partner very closely and align both strategies on how we would approach and would regain control of our b to b distribution.
Speaker 3:What would you say the business impact of this strategy has been? Have you seen ADR increase or have you seen share shift as you're working with fewer partners?
Speaker 1:I mean, we've seen a massive improvement on what we call the distribution health score, which basically it's price competitiveness, rate parity. I mean, however you wanna call it. We've seen a massive increase, more than 35% increase on this regard, which is massive because it's very challenging. From the consumer perspective, rate integrity means more sales, not only direct, but more sales because you are giving more trust to the consumer that what they see, which is the same rate everywhere, it's trustworthy. Right?
Speaker 1:There will not be another channel that may be cheaper. So in the end, many customers, they have decision fatigue, and they see, I don't know. Wow. This hotel, they go on Google, Trivago, and then they see 5 different rates in 5 different channels. And they say, I I mean, why wouldn't be a 6 channel which could be cheaper?
Speaker 1:And then in the end, they decide to book somewhere else, not that specific hotel. So we have seen a massive increase on that perspective. 1 of the things that from the distribution perspective, I always like to say is that not necessarily connecting more channels will give you incrementality. So this is something that we look at it with a lot of care, which is the incrementality of the sales of each of the partners, and then how we are able to use distribution as a commercial tool to be able to gain popularity and distribution power in those markets where our, let's say, our brand awareness may not be as big as it is. I mean, we are pretty much known in Europe.
Speaker 1:We are pretty much known in Latin America. But when you look at The US, I mean, we only have 1 hotel in New York, DNH collection Madison Avenue. By the way, it's a fantastic property. But it's, I mean, we are competing in The US against the Marriott's, the Hilton's, IHG's, IHG's. I mean, we are probably significant from the brand awareness perspective to some of The US consumers.
Speaker 1:So so it's being able to have a good policy where we have popularity, where we have visibility, and we are able to get to the right consumer, it's something that it really makes sense. So, again, distribution by recommendation to everybody would be I mean, do not think that distribution is incremental. I mean, not everything is incremental because everybody's buying to each other. So that's the pressure I have from my regions. I mean, my regions, they call me our commercial directors, director of sales.
Speaker 1:Say, hey. Listen. I have this partner. We need to connect. Because everybody wants direct connectivity.
Speaker 1:Okay. The first question is, are we already sourcing to this account through some of our partnerships? And if the answer is yes, it's unlikely that we will build a direct connect with that account. Because if we are present, we have visibility, that's enough.
Speaker 3:Well, I would love to wrap up with 1 last question. I'd like to draw on your experience at your organization and throughout your career. What would you say are 1 or 2 skills that are absolutely crucial for a hotelier to have today?
Speaker 1:Well, I'm gonna say more. First, customer focus. This is hospitality. So we cannot forget that everything that we do needs to be customer centric. And sometimes, this is an exercise that I think we need to do on a daily basis, that our reason of existence is the consumer, is the customer.
Speaker 1:So as a hotelier, being able to be customer focused. Self awareness, resilience, not being complacent, those are things and skills that are very necessary. And in the end, the more we move into digital world and the more we will be able to embrace technology to do things that we have been used to do in the past, like managing excels, doing calculations. I mean, those things will be done automatically by an AI agent, by any kind of technology. So where we will be able to influence would be on the human touch, on how we are able to drive that human touch, that level of personalization, both with the consumer and then working with teams, which is having empathy, being able to be a team player.
Speaker 1:Not just a solo guy who's just trying to deliver their own results. So those are gonna be skills that are changing. So in the end, I think that the not just for hospitality. I think for the entire workforce, it's gonna be a huge change. First, the skills that were required when I started working, the skills that are required now, and the skills that would be required in the future.
Speaker 1:I read I think it was from the World Council. There will be 360000000 new jobs created until 2030. Jobs will disappear. But in the end, the net is positive. So there will be more than 60 to 70000000 new jobs that will be created in the future.
Speaker 1:But if you do not adapt to these new jobs that will be coming, this is where you will be losing the job instead of migrating to different tasks. No? But, yeah, very exciting times for everybody who's in the industry.
Speaker 3:Absolutely. Well, thank you so much for your time, Fernando. It was really great talking with you.
Speaker 1:Thank you so much.
Speaker 2:That's all for today's episode. Thanks for listening to Hotel Tech Insider produced by hoteltechreport.com. Our goal with this podcast is to show you how the best in the business are leveraging technology to grow their properties and outperform the concept by using innovative digital tools and strategies. I encourage all of our listeners to go try at least 1 of these strategies or tools that you learned from today's episode. Successful digital transformation is all about consistent small experiments over a long period of time, so don't wait until tomorrow to try something new.
Speaker 1:Do you
Speaker 2:know a hotelier who would be great to feature on this show, or do you think that your story would bring a lot of value to our audience? Reach out to me directly on LinkedIn by searching for Jordan Hollander. For more episodes like this, follow Hotel Tech Insider on all major streaming platforms like Spotify and Apple Music.
