Retail Price Optimization at InterContinental Hotels Group
Abstract: InterContinental Hotels Group (IHG) is the worlds largest hotel group by number of rooms. IHGs Revenue Management platform, PERFORMSM 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 is a major advancement over existing revenue management systems which assume demands by rate segments are independent of each other and of price. The Price Optimization module is currently deployed to 2,077 hotels globally and will eventually be deployed to all IHG properties. A 2.7% increase in revenue has been verified and acknowledged in the IHG 2009 annual review. To date Price Optimization has achieved $145M in incremental revenue for the IHG hotel estate. At full rollout, this capability will generate $300M per year.
PERFORMSM= IHGs yield management system featuring retail price optimization principles.