The solution
Carlson Rezidor manages hundreds of hotels, and online travel agents pushed rates into the open while making it trivial for travelers to compare competitors, so gut-feel pricing started giving away revenue.
Working with JDA Software, it built Stay Night Automated Pricing, which forecasts demand enterprise-wide across its US properties and then uses price optimization to recommend the rate for each stay night rather than for a fixed room category or season.
The model cut rate fluctuations, kept prices in line with the market and made revenue management a short daily routine. In head-to-head testing it delivered a consistent 2 to 2.5 percent lift in revenue per available room, and the work was a finalist for the 2012 INFORMS Franz Edelman Award.
What it achieved
Price stay-nights from demand, not from a fixed curve
Why it worked
Demand-side pricing captures what each night is worth instead of charging one rate card all year.
Optimizing occupancy and average rate together avoids flooding rooms at too low a price.
Small day-to-day swings protect reputation and reduce price-sensitive guest churn.
Automation lets one analyst manage hundreds of properties rather than refreshing each rate manually.
What can be applied
When pricing is transparent, a model that sets each unit's price from demand beats a rate card that has to be guessed room by room.
Aftermath
The SNAP system was rolled out across Carlson Rezidor's US portfolio, and the project was a 2012 Franz Edelman finalist. The partnership with JDA became a template for hotel-group revenue management at scale, and the results were published in an INFORMS Interfaces paper.
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