We are thrilled to announce the first investment from our fourth fund into Pace as part of a £2.5 million seed round. Out to automate hotel pricing to match real-time demand Pace uses machine learning and dynamic pricing to maximise hotels’ revenues and occupancy.
The investment is led by InterGlobe, the group behind IndiGo, India’s largest airline and includes investment from Seedcamp alongside Speedinvest and Amadeus Capital Partners.
Managing hotel occupancy and room prices has been a long-running challenge for the hotel industry. During the low season, average occupancy can fall as low as 62% in many markets, while at other times, demand far exceeds hotel capacity. This imbalance in supply and demand costs the industry up to $100 billion every year, as inventory is wasted and hotels fail to get the best price for their rooms.
Existing revenue management systems are costly, require large amounts of historic booking data, and can take more than six months to be up and running with forecasts and reasonable price recommendations. As a result, many independent hotel chains still rely on manual pricing – a slow, complicated, and ineffective process.
Founded in 2016, Pace is the first company to fully automate pricing so that it responds to demand and price sensitivity, and ensures that every room is consistently sold at the optimum price. Its dynamic pricing software means that, for the first time, hotels can respond immediately to changes in consumer demand and price elasticity.
Built on powerful machine learning, Pace fully automates pricing decisions within 24 hours of integrating with a hotel’s property management system. Currently targeting boutique and independent hotels, the company is working in closed beta with 20 properties across 5 markets, including innovative brands such as Prague’s Emblem Hotel and the Teleport Hotels in Amsterdam and Hague.
When managing room prices manually, hotels adjust their prices thousands of times a year at best. Through automated, real-time market intelligence, Pace changes hotels’ prices at least 500,000 times a year, helping them to increase revenues by over 10% on average. Floris van Es, General Manager at Star Lodge Hotels in Utrecht, said: “Pace has revolutionised how we price our property. After just 6 weeks, our revenues are up more than 25%.”
Pace was co-founded by Jens Munch, John-Paul Clarke and Jason Pinto, who share deep experience optimising airlines and financial systems through machine learning. Having seen first-hand the value that dynamic pricing unlocks in aviation, they decided to apply their experience to the hotel industry. Over the last twelve months their team has built the first engine designed from ground up for real-time price sensitivity analysis, using proprietary algorithms that stem from John-Paul’s twenty years of research.
Jens Munch, CEO and co-founder of Pace, said: “Static and inefficient pricing has held hotels back for too long. Drawing on research from finance and aerospace, we want to raise the bar for revenue management and help hotels sell every room at the optimum price. We’re excited to announce this investment, which lets us expand our science and engineering team and give hotels the solution they deserve.”
To optimise their revenue, hotels must understand the relationship between price and occupancy based on real-time demand – a complex computational challenge that requires deep statistical analysis and complex machine learning. The new funds will be used to further science and technology development at Pace, as well as fuelling the expansion of the company’s commercial teams.
On the raise, Seedcamp Managing Partner, Carlos Eduardo Espinal, comments: “Waste in any industry is a bad thing, particularly in the travel industry where it involves many services that are interdependent and where customers end up footing the bill for poorly optimized travel and hospitality options. By backing Pace, we hope that the industry will have a new tool to take a step in the right direction and reduce the friction of over/underbooking and the negative impact it has to us all.”
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