How RateGain is helping the travel and hospitality industry maximize revenue using AI

RateGain Travel Technologies Limited (NSE,BSE: RateGain) is a provider of software-as-a-service (SaaS) solutions and is one of the world’s largest processors of electronic transactions and price points for the travel and hospitality industry. It works in more than 100 countries with more than 2,200 travel and hospitality companies to help them accelerate revenue generation through acquisition, retention, and wallet-share expansion.

I sat down with Bhanu Chopra, the Founder and Chairman at RateGain, to discuss how he plans to build a revenue maximization platform using artificial intelligence (AI) that helps the industry acquire guests, retain them, and drive wallet-share expansion.

1. Although your business is recognized publicly by many, what’s one unique characteristic or feature that is either lesser known or understood about RateGain?

Unlike a lot of other start-ups, RateGain was bootstrapped for the first 10 years of its operation and, until the COVID-19 pandemic, had not delivered a quarter of loss. The funding that we raised on two occasions was strictly deployed for acquisitions and not meeting our costs.

Though this might be extremely relevant now as more companies look at going the IPO route, at RateGain we observed this discipline from day one. This characteristic allows us to focus on what is most critical to our success.

2. You went public in December 2021. Some people might look at the additional complexity that a public company has, such as more transparency to stakeholders, being scrutinized by the investing public, and the expense of maintaining compliance with regulations, as detracting factors. Can you share your “why” for choosing to take RateGain public?

I agree with you on the added layer of complexity as a public company, but it also drives accountability, something that is acting as a driving force for our employees to deliver value to our shareholders and the industry at large. As a company, we have always kept transparency internally and externally with our investors as a standard practice. So for us, adjusting to these new norms was not very difficult and is well managed between different departments.

The decision to go public was influenced by a lot of macroeconomic factors.

The first reason was the acceptance of start-ups.

We believe that in the last few years, India as a country has sharpened its focus on start-ups and no longer views start-ups as a risky proposition. Over the last 10 years, a lot of giants have emerged from the start-up world, and investors and employees alike understand the scale and growth start-ups can deliver.

This acceptance is also driven by the change in the investor profile, where a lot of millennials are now entering the stock market to invest in companies that can deliver high growth and have a wider acceptance of new age technology firms. This has given the stock market a depth to accept new age tech companies the same way that we saw IT services being adopted 2 decades ago.

The second reason was the acceptance of AI.

Most companies looked westward because investors in India did not understand technology; however, with our phones, smart speakers, and a lot of consumer devices making AI ubiquitous, the investor community in India is more understanding of the impact that AI can have on businesses and their potential. This relates to the point above that a lot of retail investors want to get into high-growth companies at an early stage.

The third reason was the opportunity to build a global tech brand out of India.

The travel industry has seen many business-to-customer (B2C) brands come to the fore and disrupt the industry; however, seldom has there been an opportunity for a business-to-business (B2B) company to innovate and disrupt the industry, and that is what the pandemic has provided us. The travel and hospitality sector has been reset, and the need for technology has never been higher in the industry.

We want to take this opportunity to build a technology brand that will allow the commercial teams in the industry to truly have a platform that allows them to engage with the guests at each point in the value chain and unlock additional revenue with every transaction.

3. I’m sure that during the IPO process, everyone around you offered expert advice. Where and who did you turn to when you needed trusted guidance? And what is one nugget that stuck with you?

I operate with a growth mindset and, therefore, am open to feedback and guidance from any quarter. The whole IPO process was a steep learning curve for me and my team.

A few people I constantly went to for advice during that time were:

• Nipun Goel from IIFL (our bankers), to guide us through the entire IPO process. Also, all the key bankers at Kotak, Noumra, and IIFL
• Sir Raja Kumar, board member at RateGain, to guide us through the compliance process with Sebi
• Prashant Gupta, lead lawyer from Amarchand Mangaldas, to help us through all the legal frameworks of the IPO process
• Girish Vanvari, board member at RateGain, for all the guidance through the IPO process
• My family to provide support throughout the process

One nugget that I remember:

The nugget that I remember was from one of the partners we were working with. Most people think that the IPO is akin to salvation, as the start of a transformational journey—a journey where you move from making decisions for only your business and your people to a place where you can truly transform an industry with the support of external investors of all sizes, who truly believe in you.

4. No conversation can occur without a reflection on the past couple of years. In the face of the disruption to the industry, we’ve observed incredible innovations. How has RateGain innovated through these challenging times, and what are you most proud of?

Increased volatility due to the COVID-19 pandemic has made it difficult for any business to plan for the future. In addition, the COVID-19 pandemic introduced an anomaly in demand forecasting by disrupting historical data trends, making the data less reliable for understanding how much demand companies can expect in future months.

Although the pandemic has been challenging for most industries that depend on tourism to drive revenues, the challenge has been more pronounced for teams that rely on historical data for planning their future demand, especially in hotels, airlines, vacation rentals, car rentals, destination-marketing organizations, and tourism boards.

Inaccurate forecasts also affect agencies that need to deliver localized outdoor campaigns and events dependent on footfall in a city’s specific locality; hence, the need for an easy-to-use and affordable platform has never been higher.

We saw an opportunity to build the next generation of products that the industry would need to come out of the pandemic.

We conceptualized and developed RG Labs, RateGain’s in-house incubator that uses RateGain’s data lake with billions of data points on user searches, transactions, and price points across hotels, airlines, car rentals, and vacation rentals to build products that help in accelerating recovery and solving the challenges of tomorrow.

We already have three products that have been launched, and we are seeing good uptake from our customers. Each of these products solves an acute challenge that the industry is facing.

Our team has already been recognized by HSMAI, an independent body that recognizes excellence in hospitality, and has awarded us in the category of Innovation for our new products.

5. A subject that is near and dear to both of our hearts: RateGain has built its business on the cloud with Amazon Web Services (AWS). Can you share insights into how the cloud has facilitated agility and growth for your business and why you’ve chosen to build on AWS?

One of the core differentiators of our business is agility and scale to be able to respond to high-booking volumes or high need for transactions data in the quickest time possible while ensuring that our systems are available 100 percent of the time. Without these, our ability to deliver in-time insights or reservations is severely impacted. Also, because we are a cost-sensitive business, working in the cloud allows us to improve efficiency while keeping cost low.

Adding machine learning (ML) to this to deliver value makes it more complicated as the datasets that we deal with are extremely huge. However, using AWS, we can meet these objectives seamlessly to delight our customers, who in turn can delight their customers.

6. The industry has demonstrated its incredible resiliency. As you look toward recovery, what innovations born out of disruption do you see lasting well into the future?

One disruption that will last into the future is accepting that volatility is here to stay, and relying on traditional forecasting methods will no longer help the industry to prepare for the worst and to maximize the best.

The second innovation would be the blurring of lines between different departments and hotels adopting technology that not only solves for point solutions but also looks at solving problems from beginning to end.

Technology companies will also innovate to solve for the labor shortage problem in the industry, and that will generate quite a lot of potential solutions that can help hotels generate more revenue without increasing costs.

Conclusion

More travel and hospitality companies are turning to ML and AI to improve their forecasting, increase revenues, and meet customer demand. To learn more about RateGain, visit RateGain.com.

In the coming weeks, AWS will be publishing a series of ebooks on modern revenue management in the cloud. Be sure to download them to learn more about how you can use the cloud, AI, and ML to improve forecasting and optimize revenue.