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Noteworthy Items

OR/MS Today Dec. 2011
Just Published!ORMS Today Dec. 2011 Issue

Nov. 2011
We Deliver Results!Uncle Bob's Self-Storage

Now Available from AmazonCover of The Arithmetic of BehaviorThe Arithmetic of Human Behavior
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Recently
releasedWiley Encyclopedia of Operations Research and Management Science Revenue Management in the Travel Industry

Hotel Price Optimization

Beyond hotel revenue management, hoteliers want to know what prices they should offer to maximize profits. Whereas hotel revenue management is generally focused on identifying which of several pre-specified rates should be offered for a given check-in date, price optimization identifies and recommends the prices that are expected to maximize profits, in response to the actual business and competitive conditions being faced by the hotel. The recommended prices may not be ones that the hotel has previously offered.

While the distinction between revenue management and price optimization may appear subtle, a brief example can help illustrate a key difference between the two. Consider a date for which demand is relatively low. A revenue management system will typically recommend keeping open, or available, all of the rates that the hotel has previously established. A pricing optimization system, however, may analyze the prices that competitor hotels are offering, as well as other factors, and recommend rates that are expected to maximize profits for the actual competitive conditions being faced by the hotel on that date. Even on a low demand date, depending on the rates offered by competitor hotels, the rates that maximize profits for the hotel may or may not be its lowest ones.

Using its Customer Behavior (CuBe) Mapping (patent pending) technology, Veritec can provide hotels with a range of price optimization capabilities, ranging from an optimal pricing guide and pricing analytics to a more comprehensive and integrated optimal pricing system. This allows small, independent hotels, as well as larger chains to benefit from Veritec's price optimization technology to maximize their revenues and profits in a cost-effective manner.

Unlike typical price elasticity methods, the output provided by CuBe Mapping is highly intuitive and simple to use. For example, the factors and conditions that drive a demand forecast, as well as the reliability of the forecast, are clear and easy for a Pricing Analyst to evaluate.

Want more information about how Veritec can help your hotel increase its profits through improved pricing analytics and price optimization? Contact us now!