Carlson Rezidor Hotel Group Maximizes Revenue Through Improved Demand Management and Price Optimization

Pelin Pekgün (), Ronald P. Menich (), Suresh Acharya (), Phillip G. Finch (), Frederic Deschamps (), Kathleen Mallery (), Jim Van Sistine (), Kyle Christianson () and James Fuller ()
Additional contact information
Pelin Pekgün: JDA Software Group, Marietta, Georgia 30067; currently at Moore School of Business, University of South Carolina, Columbia, South Carolina 29208
Ronald P. Menich: JDA Software Group, Marietta, Georgia 30067
Suresh Acharya: JDA Software Group, Marietta, Georgia 30067
Phillip G. Finch: JDA Software Group, Marietta, Georgia 30067
Frederic Deschamps: Carlson Rezidor Hotel Group, Minnetonka, Minnesota 55305
Kathleen Mallery: Carlson Rezidor Hotel Group, Minnetonka, Minnesota 55305
Jim Van Sistine: Carlson Rezidor Hotel Group, Minnetonka, Minnesota 55305
Kyle Christianson: Carlson Rezidor Hotel Group, Minnetonka, Minnesota 55305
James Fuller: Carlson Rezidor Hotel Group, Omaha, Nebraska 68164

Interfaces, 2013, vol. 43, issue 1, 21-36

Abstract: Under changing market conditions for the hospitality industry, the Carlson Rezidor Hotel Group (CRHG) collaborated with JDA Software Group to use operations research to drive higher revenue for its hoteliers and to stay ahead of the competition. This highly innovative revenue optimization project, Stay Night Automated Pricing (SNAP), started with enterprise demand forecasting across 600 US hotels in 2007. It was followed by a large-scale network optimization solution to dynamically optimize hotel room rates based on price elasticity of demand, competitor rates, availability of remaining inventory, demand forecasts, and business rules. All North American hotels were operational in SNAP by March 2011. Starting from the optimization prototyping results in 2008, CRHG consistently measured a 2–4 percent revenue improvement in compliant hotels over noncompliant ones. To date, compliant hotels have increased revenue by more than $16 million annually. After a successful deployment in the Americas, CRHG extended the partnership with JDA to globally roll out SNAP, with an initial focus on Europe, the Middle East, Africa, and the Asia Pacific region. CRHG anticipates that the worldwide incremental revenue from this solution will exceed $30 million annually.

Keywords: hospitality; hotel; price optimization; revenue management; demand forecasting; competitor prices; price elasticity (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (14)

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