Recently, we sat down with Rick Elrod and Jarred Drown, two of the Terrace Bay Hotel’s co-owners. They shared with us how renovations, new technology, optimized workflows, and implementing price automation to maximize revenue, got their hotel through pandemic times.
We also found out how their new approach to revenue management helps them get a greater return on their recent property upgrades.
About the Terrace Bay Hotel
Set on the Northern shores of Lake Michigan, the Terrace Bay Hotel offers 61 spacious rooms and suites. Its familiar ambiance and waterfront location make it a perfect weekend getaway for nearby city-dwellers and a sought-after wedding venue. Guests can enjoy various activities on or around the lake and explore the Upper Peninsula’s stunning natural attractions.
Examining and shifting the hotel’s business focus
Like most hotels, the pandemic hit us hard. However, since we mostly cater to regional guests coming by car, our 2020 summer season was good in terms of overnight stays. We did lose an entire wedding season though, since we couldn’t put on large events.
Having this slower summer gave us time to reevaluate our business and where we wanted to focus our time and energy. We examined our past results and decided to narrow our offering to the core elements with the highest profitability. That meant eliminating time-consuming and low-yield activities like small-scale events and our outdoor activity equipment rental business.
This would leave us with more time to work on the higher-margin areas. That includes room sales, our wedding business and our restaurant, all of which had been doing increasingly well before the pandemic. At the same time, we also completed the first set of room renovations. Now that they were done, we were keen to drive more revenue in this key area of our business.
“When we bought the hotel, it hadn’t been refurbished since the 70s or 80s, but we knew it had a lot of potential. After getting the first lot of rooms redone, it finally made sense to charge higher rates. This was the moment we knew we wanted a tool that would help us optimize our prices and generate the desired ROI on our renovation,” Rick explains.
Maximizing revenue potential through technology
In the past, we handled all revenue management-related tasks manually. That included picking and monitoring our compset, reporting and updating our rates.
We had two sets of base prices in the system, one for the peak season and one for the offseason. When we saw clear demand drops or surges (e.g., around an upcoming event), we adjusted them accordingly. However, since we did all this manually, we couldn’t always take the most advantage of new trends and often left money on the table.
Once we’d completed the first set of room renovations, we knew it was high time to change that and begin maximizing our revenue. That’s why we implemented the Atomize RMS in January 2021. The system immediately took over all the manual work. It analyzes the market, evaluates demand and pick-up to optimize our rates every time there’s a shift. This saves us tremendous amounts of time and ensures our prices are always in line with the latest market developments.
One of the best things about using Atomize is that it often sets considerably higher prices than we would have set ourselves. We decided to trust the system with this and have seen it consistently generate bookings at the best rate possible. Relying on the algorithm has helped us be more daring in our pricing and our current results prove that’s a good choice. While it’s not a surprise that we’ve beat 2020, we’re pleased to be outperforming 2019 and hope this trend continues.
“We had an idea in our mind of what makes a reasonable rate for our rooms during high and low season. Atomize often challenges this idea by setting higher prices than those we would have set; had we been pricing manually. But since the RMS leverages so much more data in its rate calculations than we ever could, we trusted the system and have never looked back,” Rick says.
Embracing automation for more efficient workflows and optimized rates
When we first implemented Atomize, we still reviewed and manually approved each rate suggestion. However, since we were always satisfied with the algorithm’s updates, we recently switched to full autopilot. Today, the system optimizes our prices on its own, without us having to step in.
When we still checked all updates, we weren’t always able to review them right away which sometimes led to missed opportunities. Now, if Atomize wants to change the rate first thing in the morning, it does so. This has two benefits for us: we always sell our rooms at the best price, and we save even more time which we can reinvest in other important work.
“Going on full autopilot proved to be a fantastic choice, especially in the busy summer season. That’s when the demand is most dynamic and there are the most changes. But during those months we also have less time to check and approve rate suggestions because we’re so busy with operations. Atomize on autopilot is the perfect solution,” says Jarred.
Driving more revenue with open pricing and real-time price optimization
In the past, we had a fairly fixed price hierarchy for our room categories. We changed it to reflect major demand shifts but did not have the time to do it regularly. Atomize has been a true game-changer in this regard. It analyzes pick-up and demand by room type to see which category we can optimize our rates for. Now, we usually have a smaller difference on slower days and more substantial supplements during high-demand periods. The RMS calculates and adjusts all this automatically and in real time which helps us further increase our room revenue.
“Managing our pricing and adjusting category supplements every time demand changes would be a full-time job on its own. But even if I concentrated only on that, I think I still couldn’t do it as well and as fast as Atomize. The algorithm is simply faster and more efficient at finding and evaluating the data,” Jarred elaborates.
Looking into the future
We want to offer our guests the best and most modern facilities, so on top of renovating all our rooms, we’re planning on revamping the public spaces as well. While increasing our property’s star rating is one of our goals, creating a fantastic guest experience remains our number one priority. That’s why we’re also working on making our operations more efficient, so we can quickly and effectively cater to all our guests’ needs.
One way we aim to do that is by investing more in technology. For example, we’re implementing a new point of sales system in our restaurant to help make services run more smoothly. We also switched to using Mews as our PMS recently and appreciate that it integrates with Atomize. The data exchange between the two systems keeps our manual work to a minimum and ensures both tools always run on real-time information.
Finally, with the renovation work being completed step by step, we also want our ADR and RevPAR to reflect our upgraded facilities. Atomize has already proven helpful in that regard and we’re looking forward to seeing more great results once travel and demand are completed unrestricted again.
Did the Terrace Bay Hotels’ story make you want to know how your property could benefit from an RMS and flexible automation options? Then find out more about Atomize here.
Or simply reach out to us and book a demo – no strings attached.