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Retail Price Optimization at InterContinental Hotels Group

Dev Koushik (), Jon A. Higbie () and Craig Eister ()
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Dev Koushik: Intercontinental Hotels Group, Atlanta, Georgia 30346
Jon A. Higbie: Revenue Analytics, Atlanta, Georgia 30339
Craig Eister: Intercontinental Hotels Group, Atlanta, Georgia 30346

Interfaces, 2012, vol. 42, issue 1, 45-57

Abstract: PERFORM SM with price optimization is the first large-scale enterprise implementation of price optimization in the hospitality industry. The price optimization module determines optimal room rates based on occupancy, price elasticity, and competitive prices. The approach used is a major advancement over existing revenue management systems, which assume that demands by rate segments are independent of price and of each other. As of this writing, over 2,000 InterContinental Hotels Group (IHG) hotels use the price optimization module; all IHG properties will eventually use it. To date, price optimization has achieved $145 million in incremental revenue for IHG. At full rollout, we anticipate that this capability will generate approximately $400 million per year.

Keywords: hotel pricing; price optimization; revenue management; price elasticity; competitor rates (search for similar items in EconPapers)
Date: 2012
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Handle: RePEc:inm:orinte:v:42:y:2012:i:1:p:45-57