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After graduation, both went their separate ways to American universities. Fate intervened again: a mutual friend became a conduit for the two to reconnect. Only this time, it was for good.
BACK IN THE DAY The practice of revenue management was still primitive in the 1970s and 1980s, governed by analog systems and gut instinct. This began to change in 1978 when the airlines were deregulated, which ended years of strict federal control over pricing. Airlines suddenly had more freedom to set their own fares and compete on price. It wasn’ t that simple: Merely lowering fares to fill planes could result in selling too many seats cheaply and having
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nothing left for passengers willing to pay more closer to departure. New methods were needed in a practice ripe for elevation and experimentation.
In 1989, Mehrotra and Nagalia launched IDeaS, a fanciful and fortuitous acronym for Integrated Decisions and Systems. Despite similar educational pedigrees, the two are more different than alike, according to Nagalia, but as scientists with electrical engineering backgrounds, they think similarly, which allows them to solve similar sets of problems.“ We complement each other,” Nagalia said.
As Nagalia recalls, the startup was indeterminate at the jump, but the rationale was not: create a business that concentrated on the field of decision systems.
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That direction was logical. As a professor at North Carolina State University, Mehrotra studied forecasting, optimization and decisionmaking under uncertainty. In short, how to make the best possible decision when the future is unpredictable.“ There was no concept of forecasting; there was no concept of understanding demand as a function of price and trying to optimize,” Mehrotra said of the early days of revenue management.
It was in those early days that IDeaS pioneered an approach called“ Opportunity Cost,” which dealt with length-ofstay effects. This meant that a hotel, for instance, needed to consider not simply the price of a room, but how long that
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room was being booked for and displacement, which is the acceptance of a lower-yielding reservation( business on the books) that prevents the hotel from selling those same rooms later at a higher-yielding rate. Other ideas IDeaS championed included hurdle rates and last room value or what a hotel would expect to sell its last room at based upon demand and price sensitivity.
It was radical, and much of it became the basis for modernday hotel revenue management. As it happened, airlines, not hotels, were where IDeaS got its first shot. Northwest Airlines was a thriving U. S. carrier prior to its merger with Delta in 2010. Twenty years before, it approached IDeaS to create a network optimizer for
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1989
• Ravi Mehrotra and Sanjay Nagalia launch IDeaS
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1996
• Sign Hilton( EMEA / APAC only)
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2008
• IDeaS is acquired by SAS- Analytics upgrade
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2013
• Launch of G3 RMS- Transaction Level Detail Driving Analytics
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2015
• Launch of Car Park RMS
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1995
• IDeaS expands into the hotel industry, bringing airline-inspired revenue management practices to hospitality
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2003
• Launch of G2- First SaaS RMSPlatform
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2009
• Sign Hilton Global Agreement
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2014
• Launch of Function Space RMS for Meetings and Events
• Launch of Extended Stay Capabilities
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2016
• Launch of 1st Gen RevPlan Financial Forecasting Solution
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28 hotelsmag. com September 2026 |