Leading hotel company_in_the_us_2012_09_5_smarter_planet_blinded_external [read-only] [compatibility mode]
Travel and Transportation | B2B & Commerce | United StatesA leading hotel company in the United StatesWhat if hotel companies could fill their rooms to capacity year-round?By becoming the first hotel company of its size to use price optimization to enhance revenue management, this company can accuratelypinpoint optimal room prices every day of the year, helping minimize vacancies and capitalize on more revenue opportunities.The Opportunity What Makes It SmarterThis leading hotel company strives to improve When hotels don’t offer the right prices to customers, rooms lay vacant, and revenueprofitability and minimize vacancies by setting opportunities are missed. By implementing a robust price optimization solution, this leadingoptimal prices for its rooms. In the past, hotel hotel company gained the ability to quickly and accurately pinpoint optimal pricing for its hoteloperators used spreadsheets and reports to rooms in a way that maximizes the revenue it derives and minimizes vacancies. At each hotel,analyze factors such as competing prices, the solution gathers data from multiple sources, including the reservation system and marketmarket research and seasonal demand trends response, demand forecast and competitive rates databases. Using powerful algorithms, thewhen setting daily rates. However, the solution determines optimal room rates based on factors such as occupancy, price elasticityefficiency of this method varied, and with and competitors’ prices. Through an intuitive, centralized interface, hotel operators can set dailymore than 76,000 potential pricing decisions prices for rooms based on the recommendations of the system. During days when a hotel hasto consider each day, the majority of the high occupancy, price sensitivity will be lower, and the solution will recommend higher roomcompany’s hotels missed revenue rates to maximize revenue. During days when hotel occupancy is low, price sensitivity will beopportunities. Moving forward, the hotel higher, and the solution will recommend lower rates to help the operator capitalize on morecompany needed to analyze pricing factors in revenue opportunities.near-real time and offer its inventory of roomsto customers at optimal rates. Real Business Results • Increases revenue per available room (RevPAR) by 2.7 percent • Expects to increase incremental revenue by USD300 million per year once fully deployed • Minimizes room vacancies and missed revenue opportunities, thereby sharpening competitive edgeSolution Components The price optimization solution is important to our hotels and guests because it takes the guesswork out of pricing. The• IBM® ILOG® CPLEX® Optimization Studio [solution] strengthens the ability to make pricing decisions that bolster bottom-line results at our hotels and offer market-driven rates to guests. We are proud to have developed this capability ahead of the industry, rolling it out to our hotels when they needed it most.