Loading presentation...

Present Remotely

Send the link below via email or IM

Copy

Present to your audience

Start remote presentation

  • Invited audience members will follow you as you navigate and present
  • People invited to a presentation do not need a Prezi account
  • This link expires 10 minutes after you close the presentation
  • A maximum of 30 users can follow your presentation
  • Learn more about this feature in our knowledge base article

Do you really want to delete this prezi?

Neither you, nor the coeditors you shared it with will be able to recover it again.

DeleteCancel

Make your likes visible on Facebook?

Connect your Facebook account to Prezi and let your likes appear on your timeline.
You can change this under Settings & Account at any time.

No, thanks

Retail Price Optimization at InterContinental Hotels Group

No description
by

Emily Qu

on 28 January 2015

Comments (0)

Please log in to add your comment.

Report abuse

Transcript of Retail Price Optimization at InterContinental Hotels Group

The Problem
In the early 1990s,

The Limitations of the Model
Rate Expansion and Fill-In Logic
Too expensive to acquire the necessary shop data;
Do only 20–30 shops each day.
Fill in the missing dates
Integer variables and logical constraints greatly complicating the optimization model.


The Problem
A Key Web Portal

The Problem
A new
Price Optimization Module
in PERFORM

Support pricing analysis;
Recommend prices;
Adjust forecasts based on IHG’s own and Competitive prices;
Automate price execution.

Centralized Reservation System

In the third quarter of 2006, IHG engaged Revenue Analytics.

Core OR Model

Market response model
Competitive rate shopping
Benefits estimation
Rate expansion and fill-in logic
Optimization model

Retail Price Optimization at InterContinental Hotels Group
Thank you!
Revenue Management System
optimize
Occupency
Rate
Revenue
Fundamental assumption:
Demand is
independent
of the price offered.

PERFORM
RM System
PERFORM optimized availability and LOS inventory controls based on the assumption of
independent demand
.

Profits Fell
Decline in hotel demand
Growth of Internet booking channels & price transparency
Deepening travel recession
The tragic events of Sep.11,2001

Key part of the solution:
Transient and group forecast errors significantly reduced the benefits of price optimization.

Elasticity and price-sensitive demand forecast,
LOS price optimization model formulation
Competitive rate shopping algorithm
The competitive rate fill-in logic

Benefits Estimation

Comparing the change in
REVPAR
.

REVPAR= Rooms Revenue/ Total Available Rooms

Plain Formulation

Results of the model
IHG’s price optimization system is already having a major impact on the hotel industry.
Carlson Hotels is also implementing a price optimization solution (Rozell 2009).

The methods for estimating price response developed at IHG are applicable to many industries.
Rental cars (length of rental)
Airlines (origin and destination)

InterContinental Hotels Group (IHG) is the world’s largest hotel group based on number of rooms.

It owns a portfolio of well-recognized and respected hotel brands, including
InterContinental Hotels, Crowne Plaza Hotels and Resorts, and Candlewood Suites
.

It also manages the world’s largest hotel loyalty program, Priority Club Rewards, which has 52 million members worldwide.

InterContinental Hotels Group
Full transcript