CARLSON REZIDOR HOTEL MANAGEMENT
Carlson rezidor hotel group maximizes revenue through improved demand management and price optimization
Presented To: Professor Evrim Dalkiran
Table of Contents
Introduction
Revenue management is the art and science of selling the right product to the right customer at the right time for the right price, through a combination of inventory controls and pricing (Cross 1997).
Traditionally, the Carlson Rezidor Hotel Group (CRHG), the world ninth-largest hotel group by revenue, utilized a revenue management system (RMS) that controlled availabilities for different categories of products they offer, typically using Length of Stay (LOS) control. For examples, for a specific room type, one future arrival date might have an associated full pattern LOS= 1,2,3,.. Nights. Thus the decision was, whether each LOS should be open or closed for sale on that arrival date. This model was difficult for time-pressed hotel operators to understand. Moreover, it has to be manually done by the operator and thus its very time consuming. As a result an arising need for a more sophisticated and more efficient model was requested by CRHG.
The changes in operating conditions that happened in 2006 for the hotel industry, had shifted the RMS from LOS control to price control which was considered as the prominent differentiator between hotel rooms, ignoring elements of the room offerings. The challenges in this new system, were to build a model that accounts for the price sensitive nature of demand, and put the competitor data at the heart of its forecasting and price recommendation process. Moreover, the implication of this solution must address the large and complex hotels, and smaller hotels with limited staff, and during all types of stay nights.
Solution and Methodology
The CRHG collaborated with JDA software group on a highly innovative revenue optimization project, Stay Night Automated Pricing (SNAP). The project’s methodology can be splitted into 3 major parts:
Presented To: Professor Evrim Dalkiran
Table of Contents
Introduction
Revenue management is the art and science of selling the right product to the right customer at the right time for the right price, through a combination of inventory controls and pricing (Cross 1997).
Traditionally, the Carlson Rezidor Hotel Group (CRHG), the world ninth-largest hotel group by revenue, utilized a revenue management system (RMS) that controlled availabilities for different categories of products they offer, typically using Length of Stay (LOS) control. For examples, for a specific room type, one future arrival date might have an associated full pattern LOS= 1,2,3,.. Nights. Thus the decision was, whether each LOS should be open or closed for sale on that arrival date. This model was difficult for time-pressed hotel operators to understand. Moreover, it has to be manually done by the operator and thus its very time consuming. As a result an arising need for a more sophisticated and more efficient model was requested by CRHG.
The changes in operating conditions that happened in 2006 for the hotel industry, had shifted the RMS from LOS control to price control which was considered as the prominent differentiator between hotel rooms, ignoring elements of the room offerings. The challenges in this new system, were to build a model that accounts for the price sensitive nature of demand, and put the competitor data at the heart of its forecasting and price recommendation process. Moreover, the implication of this solution must address the large and complex hotels, and smaller hotels with limited staff, and during all types of stay nights.
Solution and Methodology
The CRHG collaborated with JDA software group on a highly innovative revenue optimization project, Stay Night Automated Pricing (SNAP). The project’s methodology can be splitted into 3 major parts: