Scaling Hotel Revenue Management using AI, with Luca Rodella of Smartpricing.

Welcome to The Unnoticed Entrepreneur. This show will tell you how to get the recognition you and your business deserve. Our guests share their practical insights and tools which you can use straight away. Your host is international entrepreneur, podcast host, and author Jim James.

I'm going to say ciao because we are going to Italy today. We're going to meet Luca Rodella.

Luca, ciao!

Hello everybody.

We're going to talk to Luca, who is a co-founder of an amazing company called Smart Pricing, and it's a hotel revenue management system. They've got over 2,000 clients now, mainly in continental Europe, serving SME hotel and venue owners that need to maximize the revenue from their property. So it's an unexplored area for us on this show, And Luca, welcome to the show. I'm looking forward to you telling us more about Smart Pricing and how you've built this amazing brand. Now you've got 5 different offices across Europe. So tell us about Smart Pricing.

Thanks for having me. It is a pleasure. So yeah, from the name, probably you already understood a lot about what we do. So we help these little entrepreneurs, so small hotel owners, and apartment complexes owner to determine the best prices for their hotels and apartment complexes and lodging establishment across Europe. And we do that in real time and they don't have to move a finger because we do it automatically.

Luca, now you said we could probably tell about what you do from the name, but not everybody chooses a name.

that says what the company does.

People, you know, get a little bit confused.

Tell us about your strategy for naming the company because it's not as obvious as you've made out.

Sure. So we spent a lot of time deciding the name. So it was not easy. At the beginning, we started with a very bad name actually. And after that, we found out that the smart pricing domain, a lot of domains for European countries were available. And so we went for it. It was a very good choice because everybody understands immediately what we do and we understand that there is a power behind.

So if you like, just taking sort of a direct approach of explaining what you do within the name, which seems so logical, is often not what happens. But as you say now, for smart pricing, it's fantastic. Just explain then how you are serving your audience and where they are, because then we're going to talk about how you managed to scale the business across the 5 different countries and dealt with issues of, for example, being across different languages. So Luca, tell us about where the business is operating now.

So we are mainly in Central Europe and Southern Europe, and the 2 main languages are Italy and German. And we started from Italy and we approached one country at a time. And we are a bit different from other B2B SaaS, software as a service, because we prefer to reach a domino effect in the countries we operate. And after that, just switch, not reach, but start working, operating in the new countries.

And tell us, how has that worked from sort of a rollout perspective?

Because as with all businesses, you don't start with any customers, you start with a product, Luca. How did you get smart pricing up, you know, onto the net and into these venues so they could start using smart pricing?

So 2 ways, I would say, 2 channels, 2 main channels, like inbound, outbound. So outbound's more about we reach out to the potential customer, and inbound, on the other side, we use traditional marketing like online advertising rather than content marketing. We believe content is one of the most important things for us.

But at the very beginning, when you and your partners, I think there are 3 of you who started the business, just explain how you got the first clients because that's the hardest part.

Sure.

I believe the best way is to go meeting the people where they operate. And speak with them, understand what are the problems they face and what their day-by-day looks like, and really start understanding how they work and how they face their daily routine. And another important thing is that we have another company that manages hotels, apartment complexes. So we were our first client. So we decided to start on Smart Pricing because we had this problem ourselves.

I see. So fantastic you're able to sort of, if you like, incubate the business Smart Pricing from your first company. When you started to go out and meet clients, I'm sure they loved it and were receptive, but what were some of the challenges that you faced, Luca? Because, you know, you're introducing something new. These are maybe owner-operated, family-owned businesses. How did you overcome their initial objections?

So that's a very, another very good question. And it was not easy because our business, like a lot of other businesses, but our business is a lot about trust because we are changing automatically the prices for these folks. So we are kind of really determine their destiny in terms of revenue streams, right? So one of the biggest fears they have is that we screw up their pricing strategies and really like lower too much or like raise too much their prices. And that was the biggest issue and the biggest problem and the biggest like questions that we have about at the time. And we still have.

Yeah. And so how did you overcome that?

Because you're affecting both their profitability but also their occupancy levels, aren't you, Luca? Which, you know, if it's overpriced and they've got empty rooms, then that's just cash that's gone out of the door, or rather not come in the door, I should say.

So how did you overcome that, Luca?

Because you're, you know, a young company.

Yep.

And approaching people who maybe didn't even feel they were doing anything wrong. They may have been quite happily trading with one price, sort of set and forget with an annual calendar according to holidays and weather and so on.

Yeah, I believe one of the most important things was the free trial. Let's say, okay, we invest, we believe in your establishment, like talking to the hotel owners, we told them we believe in your hotel. We believe you can really make more money from your business. So we invest time to onboard you and we invest our time and our people time to go live with your property. And you can try, and if you're happy, you keep going with that. Otherwise, you can stop using it. You don't pay onboarding and that's it.

Okay, that was really key then.

And just a quick question then, can the customers override the pricing of Smart Pricing?

So they still have some control if they want to, they can presumably see the flexible option pricing driven by your algorithm, but do they still have the ability to override that?

Sure, absolutely, yes. Yeah, if they want to really override some prices, they can do that. But we see very few overrides. really like less than 10% of the overall prices. Maybe at the beginning they are a little bit more afraid of what could be our pricing strategies, but after a while it's like they just trust us and let us do our job.

So Luca Radella of Smart Pricing, what about the issue of confidentiality? Did the hotels feel as though if you're in one hotel that you might somehow have access to information Or share the information with other hotels?

Yeah, sometimes they have this fear, but obviously it's not the case. We don't share any information with other folks, other lodging establishments. We definitely use the information, the data. That's one of our important things, that more data we have, better our algorithms work, but we don't share information.

But presumably for the customers, the building of trust in your brand, the integrity of the data and so on will be absolutely key. So tell us also from a brand building point of view, Luca, what have you been doing?

I noticed now on LinkedIn you've got nearly 20,000 followers, which is amazing. I know you've got some 2,000 customers, so, you know, you've got a big X, you know, 10x on LinkedIn. What have you been doing in terms of the social platforms to build out the brand awareness and generate trust for the brand?

Yeah, I really believe that you have to give value to people. So to create content that really matters to the people, to your audience, to your potential customer. And so definitely we keep like working on content that makes sense and we keep giving value, not just with the company profile, but with other profiles of our talents that work with us. So it's like we try to work together to achieve the same goal in terms of like social media. I don't think it's like the company page, but it's more about the pages of the profiles of other people that works with you. And so it's about like giving value for potential customer and clients, but on the other side, you have to target people that you might work with you in the future, right? So like employer branding, which we believe is crucial, like employer branding is very important because finding the right people obviously is the way to go to keep scaling and keep growing as we're doing.

Yes, Luca, that's interesting you talk about employer branding because you've now got 5 sites. I think you've mentioned to me before, 5 sites, over 100 staff, and plainly growing. We can talk a little bit about the fundraising that you've done and how you've managed to position the company to be attractive to investors. But what has been the positioning of the company?

Because as we know, you know, now employees want to work for companies that they buy into as well as getting paid by.

So how have you gone about that?

Yeah, I don't believe it's About like ping pong tables. I mean, we do have some ping pong tables, but no, I don't really think it's about ping pong table, but it's about the culture that you have in your company, right? So the culture of like, we have like no jerk rules and like mistakes are allowed. And we don't just tell, say that, we actually do that. And one of my first job is Be sure that no jerks around, that people really are allowed to do mistakes, make mistakes. And so it's about culture. And the interesting thing is that when you have the right culture and you really enforce these very important points, as I mentioned, people arrive by themselves. Even developers, a lot of times it's difficult to find them. They reach out to you and not vice versa.

Oh, that's very interesting. So the kind of existing employees are reaching out and it's getting new employees through sort of almost social networks then.

For example, we have a lot of people that brought their like boyfriend, girlfriend, like wife, or so there's like few people that did that. So that's one of the most important thing for us.

Luca, that's fantastic. Now, you know, I like to ask a slightly awkward question, which is what hasn't worked. So for Smart Pricing, from a communications point of view, are there any things that you can say that you've done that you don't recommend that the Unnoticed Entrepreneur tries?

That's a good point. And we could talk for hours about this, but I believe that It's really about being able to change strategy with the time. So, when you start, you are able to go yourself meeting people and understand how they approach businesses and sell in a certain way. So, like in person. But when you start scaling, at least in our case, we target small businesses, you have to change a bit. So, you have to be ready to change. change. So what we did wrong is keeping some time with some strategies and don't change the strategy until it was— I mean, it was not too late, but we understood late. We could have understood that earlier. So like, we went meeting people in person a lot and to acquire customer. We did that probably too much. We could have stopped earlier.

Yeah, so Luca Rodella, that's interesting that Smart pricing. Once you've got a certain momentum behind the business, you know, going and visiting one or two customers is quite an expensive use of your time when you're running a bigger organization, right? And then people are starting to come to you now through your inbound marketing as well.

You've raised money and it would be very useful to hear, you know, what has been the positioning and the experience that you've got from a communications point of view, Luca, for Raising funds for a growing business?

So we raised so far around like €5 million equity and €3 million, €2.5 million debt, and so around €7.5 million totally. And in terms of communication, it's really about understanding the story and being able to tell Your story and your future story to people. So, and I think it's a very valuable exercise. So being able to understand what did you do, what are you doing now, and what you want to do in the future. And it's valuable for, I mean, for sure for raising and for the company as well, because you put down your thoughts and what is in your mind. And definitely, like, in terms of communication, you have to really define the message you want to give, not just to the clients, but to a person that is inside your business.

Luca, I love that.

Would you give us the pitch, as it were, for Smart Pricing that you've given to give us some ideas of where you've come from, where you are now, and where you're going? That'd be really nice to hear your story.

How you've packaged this business.

It takes kind of like 10, 15 minutes for the entire pitch. So maybe next episode we can go through that, but like short—

The abridged, an abridged version.

Yeah, like an abridged version maybe you've got there.

Yeah, sure. So I start with the intro. So the fact that we are bringing an industry that use software that a lot of time are not on the cloud, or don't use software at all to manage their tasks to use AI. So from really not being on the cloud to use AI is— that's the first concept that we try to make them understand. Because like, to make our pricing strategies effective, we use machine learning models since day zero. And that's the first concept that we try to communicate to investors. The second one is about numbers. So When we gave the high-level idea of what we want to do, what we are doing and what we want to do on scale, we give to investors the numbers of the business are quite good in terms of metrics, from cost of acquisition to churn rate. And we just try to make them understand that the numbers are there and they're great. And after we go with our story. So why are we doing this? What are the reasons behind? So, as I said, we started with another business that still exists, that is profitable. It's a small business but very profitable. And thanks to that business, we understood the problem in the industry and we really did the work by ourselves. So, we went there and cleaned up rooms. So, we make them understand that we know what we are doing. And the pitch goes on and we then make them understand the product roadmap. So we go a little bit deeper, how it looks like today, the product, and how it will look like in 6 months, 12 months, and 24 months, and why we need the money and the investment to keep creating new tools. And it goes on.

No, but I can see that's helpful.

That's really helpful that you've got the credibility piece about yourselves there, but also you've got about The way that you're helping a whole industry transition across the digital divide. And I think you've mentioned before, something like 90% of hotels in the continent of Europe are run by, you know, families or independent operators.

And that's kind of the addressable market, isn't it, that you've got? And that you've also got a roadmap for how you're going to get people from one place to the next. So Luca, that's brilliant. Luca, if I can ask you, A piece of advice for my fellow unnoticed entrepreneurs.

As you've built Smart Pricing, great name, great positioning, right on the money in terms of what you're doing.

So you've got a lot of practical wisdom you can share. What would be the one piece of advice that you might give to us about getting noticed?

Probably sounds kind of common, Probably lots of people said that, but I said that at the same. So I believe you really have to care about the people, about your customers, and you really have to understand them and understand what they need, not what they tell they need, but what they really need. And forget about competitors and just focus on like customers and loving them and understanding what really makes the difference for them. And that's— The only advice, the best advice I can give.

Yeah, but that's wonderful advice though, Luca Rodella, because, you know, that's the guiding star, isn't it? The other variables will change, but if you're always focused on the love of your customer, you know, ultimately that's what will guide the company forward. Luca, if you want to find out more about you and smart pricing, where can they go?

So on LinkedIn, on my profile, Or on the company profile. So Smart Pricing, you'll find us. We are LinkedIn and Facebook. We are more active on LinkedIn and on our website. So smartpricing.it and .de.

That's wonderful. Yeah, because you've got your Italian site and your German site. So I'm very grateful that you've come on the show and share with me what's happening in, you know, in Italy and across Europe for hotel pricing.

Luca Radella.

I hope I'm finally getting my accent right. I feel like I should be also waving my arms around a little bit more than I have been. Thank you so much for coming on the show today and sharing your wisdom with me and my fellow unnoticed entrepreneurs.

Thank you for having me. It was great. And ciao. See you soon.

Yes, I say ciao. Is it arrivederci, isn't it?

Yeah.

Arrivederci. You see, I've been studying up my schoolboy Italian. Thank you for joining. Luca Rodella and myself here on the microphone.

And if you've enjoyed this, do please share with a fellow unnoticed entrepreneur.

And if you like the show, please review it on your player.

And until we meet again, I just do encourage you to keep on communicating. Thank you for listening.

Ciao.