Arriving in the United States from China 24 years ago as a graduate student, Dan Zhang embarked on what would become a remarkable career in academia and consulting, which took him from McGill University in Montreal, Canada, to his current position at the Leeds School, where he has been shaping minds since 2011.
His academic and professional journey is rooted in the study and application of pricing optimization, a field he has contributed to since his doctoral studies. Starting with revenue management for airlines and the hotel industry, he expanded his expertise into consulting for various sectors, including e-commerce and ridesharing, showing the versatility and applicability of pricing optimization across industries.
A pivotal moment in his career came with his work for DiDi, a leading ride-hailing company in China, which illuminated the broader potential applications of pricing optimization. He observed that while industries like airlines had been pioneers in pricing optimization since the 1970s, sectors such as the hotel industry lagged behind, adhering to outdated practices despite the critical role of pricing optimization in their operations.
How Pricingservice.ai Levels the Playing Field with AI-Driven Pricing Optimization
Identifying a significant gap in the market, Dan saw an opportunity to bring advanced, AI-driven pricing optimization to independent hotels, which represent about two-thirds of the market yet lack the sophisticated pricing strategies of their franchised counterparts. Many of these hotels, he noted, rely on rudimentary pricing due to the prohibitive costs of acquiring and maintaining advanced pricing systems.
To address this challenge, he envisioned a subscription-based service offering cutting-edge, AI-powered pricing optimization delivered via the cloud. This innovative approach led to the creation of pricingservice.ai, which democratizes access to advanced pricing strategies, making them accessible and affordable even for smaller, independent hotels. By leveraging cloud technology, the service eliminates the need for hotels to hire dedicated personnel or manage complex software systems, significantly reducing costs and leveling the playing field in the hospitality industry.
In 2021, Dan co-founded Pricingservice.ai and secured its first customer in December of the same year, with the company officially forming in 2023. The co-founder's background as an Associate Dean of Research and Academics at Leeds, specializing in advanced data analysis and holding a keen interest in addressing substantive business problems through research, played an important role in the venture's creation. The motivation to create a real-world impact led to collaboration with two other co-founders: Professor David Li at the City University of Hong Kong and Matt Schwartz, the Chief Technology Officer at SageHospitality. Their collective expertise and the recognition of an opportunity in the hotel industry were instrumental in launching this innovative pricing service.
Historically, setting the right prices for hotel rooms was a grueling task, burdened by the need to consider countless variables ranging from event schedules to weather patterns. The use of AI in this domain has revolutionized the process, enabling automated systems to make pricing decisions with minimal human intervention. PricingService.ai's system exemplifies this shift by integrating with leading property management systems, such as those provided by Oracle, to offer dynamic pricing updates. This integration allows the system to adjust hotel room prices every few hours based on a comprehensive analysis of data, including historic booking patterns, upcoming events, competitor pricing, and even weather forecasts. This level of responsiveness was previously unimaginable, as manual adjustments in response to rapid market changes, like a surge in demand due to a Taylor Swift concert, would be too slow and impractical.
The system was developed from scratch, and incorporates custom algorithms designed to optimize hotel pricing effectively. This AI-driven tool not only enhances the efficiency of pricing strategies but also ensures that hotels can respond to market dynamics swiftly, maximizing revenue and staying competitive in a fast-paced industry. PricingService.ai is not just about leveraging AI for better pricing decisions; it's also a symbol of redefining the future of hotel revenue management by making it more adaptive, intelligent, and efficient. Through their innovative use of AI, the founders envision a new paradigm for the hotel industry, where data-driven insights lead to smarter business decisions and ultimately, greater success in a highly competitive marketplace.
A hot topic in today’s daily conversations, Dan stresses the importance of Artificial Intelligence in our day-to-day lives, and viewing it as a tool rather than the enemy, or something that may “replace” jobs in the future:
“We use what we have for the people, not against the people. The idea is to get that idea back, man working seamlessly with machines.”
Transforming Research into a Revenue Boost
Starting a business can happen by chance, not just by planning. Dan’s story is one of a researcher who didn't set out to be a business owner, but ended up becoming one because of his desire to make his research useful to others. His work led to creating a tool that helps small hotels set their prices using advanced technology, a task usually too expensive for them to manage on their own.
The idea came to life after noticing a lot of interest from tech companies in his research. These companies saw value in his work and even offered him jobs, but he chose to focus on helping smaller hotels instead. He wanted to use his skills to make a real difference, allowing these smaller players to compete by offering them a low-cost, high-tech solution for setting their room prices.
Dan notes that one of the best parts of this adventure has been seeing how much his tool has helped. For example, a small hotel in Yorktown, Virginia, managed to increase its revenue by 25% thanks to the tool. This hotel used to charge $199 for rooms in July, but now they can charge up to $450, all because the tool helps them set the best prices without needing to hire extra staff.
His story shows that starting a business isn't just about wanting to be an entrepreneur. It's also about wanting to do something meaningful with what you know and can do. Helping others succeed and making a positive impact can be the most rewarding parts of being in business.
The business was recognized with a EX20 People’s Choice Award at HITEC Toronto in June 2023, the largest hospitality technology conference in the world. More recently, PricingService.ai participated in both NVC Deep Tech Competition and NVC General Competition at CU Boulder and is the only team that is a finalist in both competitions. The final showcase for NVC General Competition will be on April 17 at the Boulder Theater.
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