International Hotel Chain Optimizes Revenue-Generating Strategies to Capture Customer Demand

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Time-consuming manual processes and “gut feel” pricing practices were costing millions in potential profits. Read how this problem was solved.

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International Hotel Chain Optimizes Revenue-Generating Strategies to Capture Customer Demand

  1. 1. Customer Success Study: International Hotel Chain 1 International Hotel Chain Optimizes Revenue-Generating Strategies to Capture Customer Demand Unlock Your Data • Unleash Your Sales Time-consuming manual processes and “gut feel” pricing practices were costing millions in potential profits INTERNATIONAL HOTEL CHAIN Customer Success Study
  2. 2. Customer Success Study: International Hotel Chain 3 International Hotel Chain Optimizes Revenue-Generating Strategies to Capture Customer Demand OVERVIEW: A leading international hotel chain with more than $500 million in annual revenue selected PROS for price optimization, guidance, and control. With over one million customers each year and hotels throughout Asia Pacific, this travel industry leader effectively used PROS Hotel Revenue Optimization Solution (HROS) to improve room-type level forecasting, optimize across a cluster of hotels in one market, and price by length of stay. As a result, gross revenue increased by three to six percent across its hotel portfolio. BACKGROUND: This company operates in highly competitive destinations where demand and competitor actions require quick pricing actions. The chain’s manual pricing process, based on Microsoft® Excel® spreadsheets, was cumbersome and inaccurate. As a result, the revenue management team spent its time generating reports rather than implementing informed pricing strategies. Existing pricing approaches lacked the science to forecast demand accurately and the ability to set the best price for the right customer at the right time, leaving management to rely on best-guess pricing. This travel industry leader effectively used PROS Hotel Revenue Optimization Solution (HROS) to improve roomtype level forecasting, optimize across a cluster of hotels in one market, and price by length of stay
  3. 3. Customer Success Study: International Hotel Chain 4 See How Accommodating Big Data Can Be Upgrade to Bay View room would cost an additional $184 for a 3 night stay. Front Desk Upsell Optimization provides the upgrade price to move a customer to a higher room category, based on forecast and optimization. A lack of science-based upgrading and overbooking led to inefficient inventory control. Furthermore, the chain lost opportunities to optimize revenue because hotels in the same market were not taking their sister hotels’ inventory into consideration when pricing. In addition, working with online travel agents, dealing with different booking channels, and handling thousands of transactions a month left little time to focus on pricing strategies outside the immediate booking window. As a result of these timeconsuming processes— along with the practices of “gut-feel” pricing and competitor- based pricing— the hotel chain was failing to realize millions of dollars in potential profits and losing customers that could have been won.
  4. 4. Customer Success Study: International Hotel Chain 5 OBJECTIVES: Executive management understood that to maximize revenues, the company would have to accomplish some critical objectives. • Implement a comprehensive pricing strategy informed by detailed forecasts, price elasticity, and competitor pricing. • Move the company from a fixed pricing model that relies upon manual forecasts based on Excel spreadsheets to a dynamic, automated pricing system. • Provide users with real-time reports covering every facet of their business. • Enable users to manage by exception. SOLUTION: This company requested software as a service (SaaS) because it didn’t have the capabilities in-house to implement and maintain the hardware, software, or other IT infrastructure it would need to effectively utilize HROS. Although SaaS wasn’t part of PROS’ usual delivery model, PROS agreed to host the company, giving it access to applications via the Internet so it could focus on its core competency. The primary benefit of the SaaS model for this company was affordable access, which can be an issue especially for small or medium-sized companies grappling with a significantly constrained IT budget. Additional advantages included ease of maintenance, as well as a shorter implementation cycle, faster upgrades, guaranteed up time and speedy problem resolution. 5
  5. 5. Customer Success Study: International Hotel Chain 6 These features ensured the customer maximized the value of the software to the best of its ability within the limitations of its business model. The company began using the most sophisticated hotel revenue management system available today. To increase revenues, PROS provided science-based forecasts and optimization and targeted those customers most likely to stay with the hotel company. To further increase revenue and profits, this hotel chain also turned to Upsell Optimization, an extensive front desk program available with HROS. Moreover, to ensure that its hotel portfolio was capturing the demand of customers turned away from its sister hotels, the company used Market Revenue Management functionality enabled by the HROS Cross-Property Upgrade technology. These one-of-a-kind capabilities enabled the company to further increase revenue for its cluster hotels. Users experienced a significant reduction in revenue managers’ time to price and a significant improvement in individual and customerwide margins and profitability.
  6. 6. Customer Success Study: International Hotel Chain 7 RESULTS The hotel chain improved revenue across its hotel portfolios by three to six percent. The revenue management team reduced its nonrevenue generating activities by 60 percent. Hotel properties that implemented the front desk up-sell feature increased revenue by more than $700,000 annually. Finally, the hotels outpaced their competition in terms of revenue per available room (RevPar) by 8 percent. The critical intelligence delivered by the hotel revenue management system, combined with greater overall visibility into product and customer transaction history, made it possible to establish a consistent and profit-driven pricing strategy. PROS enabled the revenue management team to focus on profitable, value-added strategic pricing. Ultimately, PROS supplied software that delivered real-time, science-based prices to hotels around the world, creating high levels of user adoption of pricing best practices with little training required.
  7. 7. Customer Success Study: International Hotel Chain 8 PROS Holdings, Inc. (NYSE: PRO) is a big data software company that helps customers outperform in their markets by using big data to sell more effectively. We apply 27 years of data science experience to unlock buying patterns and preferences within transaction data to reveal which opportunities are most likely to close, which offers are most likely to sell and which prices are most likely to win. PROS offers big data solutions to optimize sales, pricing, quoting, rebates and revenue management across more than 30 industries. PROS has implemented more than 600 solutions in more than 55 countries. The PROS team comprises more than 700 professionals around the world. To learn more, visit www.pros.com. About PROS PROS.com Copyright © 2013, PROS Inc. All rights reserved. This document is provided for information purposes only and the contents hereof are subject to change without notice. This document is not warranted to be error -free, nor subject to any other warranties or conditions, whether expressed orally or implied in law, including implied warranties and conditions of merchantability or tness for a particular purpose. We specically disclaim any liability with respect to this document and no contractual obligations are formed either directly or indirectly by this document. This document may not be reproduced or transmitted in any form or by any means, electronic or mechanical, for any purpose, without our prior written permission.

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