When Matt Schwartz was pitching the idea for a hotel pricing company that uses artificial intelligence to a industry vendor visiting Denver several years ago, he recalled how excited the vendor was at the thought.

Many hotels do the math for how much to charge a room by hand or Excel spreadsheets. And most of the revenue management systems in place, if a hotel has one, have been around for more than a decade.

It’s a part of the market that hasn’t been disrupted for a long time, the vendor told Schwartz.

But if Schwartz was going to pursue the idea, the vendor told him it better be up to par with the dynamic pricing systems used by major e-commerce sites such as Amazon and Alibaba.

Schwartz recalled how he looked across the table at his business partner Dan Zhang at the comment.

Little did the vendor know about Zhang’s background, an operations management professor at University of Colorado Boulder who has worked with major companies and on academic research that has helped shape dynamic pricing models around the world.

After that meeting, they began writing the code for Ramsi the next day.

Ramsi is a Boulder-based startup founded in 2023 that uses AI to maximize hotel profits by digesting several data trends that can impact booking such as weather, historical sales, guest cancellations, competitor rates and local events.

“What if we could take all this math that Dan has helped with these companies, like the Amazons and Ubers of the world, and apply it to hotel pricing?” Schwartz said. “We really wanted to make it super sophisticated.”

The company, originally called Pricing Services Inc., received a $250,000 grant from the Colorado Office of Economic Development & International Trade through its Advanced Industries Accelerator Program earlier this year. It also won $300,000 from the National Science Foundation.

It now has nearly 50 hotel clients across the world, Schwartz said, including the Stanley Hotel in Estes Park.

Some of the legacy revenue management systems hotels use are very complicated, said Jeff Loucks, Ramsi’s vice president of revenue strategy.

The software requires hours of training and hotels usually have to have a designated staff member to manage the pricing system.

“For a lot of the smaller independents, like a lot of hotels in Colorado, they simply don’t have the budget to pay for a full person, plus these systems, which are very expensive,” Loucks said.

Ramsi is designed to be intuitive, easier to use and more affordable, he added.

It uses an “agentic AI” system, which are several models trained to act like experts on certain subject matters that come together to develop a final price. So there’s an AI agent on weather patterns, another studying local events or one that specializes in competitor pricing.

It’s like having several PhD level experts who are available 24/7 to hotels, Schwartz said.

If there’s a Broncos game, it will not only evaluate how a game day affects hotel bookings but predict how the importance of the game in the season can create a surge in demand. Or if Taylor Swift comes to town, hotels will raise their rates to meet the high need and ensure fans willing to pay extra to stay in town for the concert can get a room.

“Efficient pricing will help resolve tension in the market,” Zhang said.

The company’s leaders also said they are adamant against using AI to individualize pricing for customers based on their personal data, citing ethical concerns of using the technology to maximize profits in that way.

Loucks also said they’ve built in stop gaps to prevent price gouging during natural disasters such as a tornado or wildfire.

Ramsi is working on developing AI summaries of the price for hotel managers to understand why the price is what it is based on the “agents” expertise.

But maximizing profits doesn’t always mean raising hotel room rates.

Schwartz said they’re a revenue maximization system, not a “price” maximization system. And there’s a difference.

Human bias can affect hotel prices and lead them to be higher, Schwartz said. If there’s a busier season, hotel managers may be tempted to raise room costs through the roof.

Ramsi’s AI model is designed to help hotels raise their occupancy and stay competitive.

“Some of our hotels, especially for those that have seen the most revenue growth, are ones that have grown in occupancy,” Loucks explained. “And they’ve done that by actually lowering rates.”

Some hotels that haven’t had pricing systems in place are seeing revenue growth up to 20% since using Ramsi, according to Loucks.

With the help of OEDIT funding, Schwartz said Ramsi is offering special rates for Colorado hotels to make it “very affordable” to onboard.

“We know it’s competitive so we’re here to help every single hotel in Colorado attract all of those guests and grow the tourism industry of Colorado,” he said.