# Algorithms for the hospitality industry

Our algorithm optimises the prices in hotelrooms.
Read how it works!

## What is an algorithm – simply speaking?

In very general terms, an algorithm is a unique set of instructions for solving one or more problems. A finite number of individual steps form a solution plan.  The algorithm contains instructions that must be followed step by step to achieve the goal – solving the problem.

Algorithms can be incorporated into computer programs, in which case it is like a calculation process according to a certain scheme that can be repeated. In these individual steps, input data is converted into output data.

However, algorithms can also be formulated in human language.

In any case, the steps are unambiguously formulated so that they are always executed in the intended manner and sequence.

## Algorithm in everyday life

We encounter algorithms in many things every day. Some of them are even really famous.

Google search engine: The output of results in a Google search is done by the PageRank algorithm. This one checks the web page results for relevance to the query.

Navigation devices: Various algorithms are used here. For example, there is the shortest path algorithm – it finds the fastest route taking into account traffic jams, traffic volume, etc.

Traffic lights: Here, switching instructions regulate the red, yellow and green phases.

Cooking recipes, laws and contracts and assembly instructions also represent a subgroup of algorithms.

## Classification of algorithms according to classes

Algorithms are divided into classes. There are various characteristics, for example:

– According to complexity: differentiation according to space and time complexity.

– By problem: decision-making vs. optimisation algorithm

– By method: Approximation algorithm, Dynamic, Probalistic or Evolutionary algorithm, Greedy algorithm.

– By machine capability: deterministic or non-deterministic, quantum mechanical or randomised (Las Vegas, Monte Carlo, Latin Hypercube)

## happyhotel – “our” algorithm

We also use a special algorithm, in our case of course a machine learning algorithm.

With this algorithm we calculate the maximum purchase willingness for a room rate at a certain point in time and under consideration of the respective demand.

Our calculation takes into account the booking curve, the booking speed and the occupancy rate as well as the day of the week or regional events.

In this way, our software can draw insights from the past and thus predict demand for individual days and adjust the price: When demand is high, the price increases and vice versa.

The goal is to skim off demand before it occurs: our focus is on the future. This way, the hotelier can increase his prices before the strong demand appears.

We thus offer revenue management for small and medium-sized hotel businesses as well as small hotel chains. By calculating optimal, dynamic room rates, we maximise revenue for the hotelier. This gives the hotelier the opportunity to make more profit. We also offer comprehensive reporting, for example for RevPar and ADR.