1. Travel and Transportation | B2B & Commerce | United States
A leading hotel company in the United States
What 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 accurately
pinpoint optimal room prices every day of the year, helping minimize vacancies and capitalize on more revenue opportunities.
The Opportunity What Makes It Smarter
This leading hotel company strives to improve When hotels don’t offer the right prices to customers, rooms lay vacant, and revenue
profitability and minimize vacancies by setting opportunities are missed. By implementing a robust price optimization solution, this leading
optimal prices for its rooms. In the past, hotel hotel company gained the ability to quickly and accurately pinpoint optimal pricing for its hotel
operators 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 market
market research and seasonal demand trends response, demand forecast and competitive rates databases. Using powerful algorithms, the
when setting daily rates. However, the solution determines optimal room rates based on factors such as occupancy, price elasticity
efficiency of this method varied, and with and competitors’ prices. Through an intuitive, centralized interface, hotel operators can set daily
more than 76,000 potential pricing decisions prices for rooms based on the recommendations of the system. During days when a hotel has
to consider each day, the majority of the high occupancy, price sensitivity will be lower, and the solution will recommend higher room
company’s hotels missed revenue rates to maximize revenue. During days when hotel occupancy is low, price sensitivity will be
opportunities. Moving forward, the hotel higher, and the solution will recommend lower rates to help the operator capitalize on more
company needed to analyze pricing factors in revenue opportunities.
near-real time and offer its inventory of rooms
to 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 edge
Solution 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.