Case Studies Hotel Promotions

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	Hotel Promotions

Hotel Promotions

Technology Category	Analytics & Modeling - Predictive Analytics Analytics & Modeling - Real Time Analytics
Applicable Functions	Business Operation Sales & Marketing
Services	Data Science Services System Integration
Challenge	A global hotel company launched a limited time promotion offering a 10% discount to guests staying two or more nights. The company sought to better understand the effectiveness of this promotion by measuring the overall incremental profitability in light of three types of guest stays that would qualify for the reward: Incremental Stays, Upsells, and Accidental Qualifiers. Incremental Stays were guests who would not have otherwise booked a stay during this period but were called to action by the promotion, offering the highest incremental gains. Upsells were guests who stayed an extra night at the hotel to qualify for the promotion, offering moderate incremental gains. Accidental Qualifiers were guests who did not reserve or extend their stay because of the promotion but benefited from the discount anyway, representing a loss for the company because they received a discount not tied to any incremental profit. Read More
About Customer	The company is an international hotel franchisor and operator of thousands of hotels across multiple brands. As a global entity, it manages a diverse portfolio of properties catering to various market segments. The company is known for its extensive reach and ability to offer a wide range of accommodations, from budget-friendly options to luxury stays. With a strong focus on customer satisfaction and revenue growth, the company continuously seeks innovative solutions to enhance its service offerings and operational efficiency. The marketing group within the company plays a crucial role in driving promotions and targeting markets to maximize revenue gains. Read More
Solution	Working with APT’s Test & Learn software, the marketing group was able to measure the promotion’s lift in revenue by using a carefully selected set of control hotels to account for many complex external factors and thus isolate the bottom-line returns generated by the promotion. By comparing each hotel that offered the promotion to a group of comparable hotels that did not, APT was able to accurately quantify the incremental stays – and thus revenue – resulting from the promotion. Equipped with a reliable analysis of the promotion’s value, management was able to determine that the revenue generated by the promotion did, in fact, exceed its costs. As expected, the promotion drove an increase in revenue from 2+ night stays, indicating that stays from incremental stays and upsells off-set the losses to accidental qualifiers. The increase in 2+ night stays was partially offset by a decline in 1 night stays as some guests booked longer stays than they would have otherwise. In addition, management identified the attributes of those hotels that had the largest revenue lift from upsells and incremental stays, and, consequently, the highest returns from the promotion. Read More Log in to view content
Contents

Technology Category

Analytics & Modeling - Predictive Analytics

Analytics & Modeling - Real Time Analytics

Applicable Functions

Business Operation

Sales & Marketing

Services

Data Science Services

System Integration

Challenge

A global hotel company launched a limited time promotion offering a 10% discount to guests staying two or more nights. The company sought to better understand the effectiveness of this promotion by measuring the overall incremental profitability in light of three types of guest stays that would qualify for the reward: Incremental Stays, Upsells, and Accidental Qualifiers. Incremental Stays were guests who would not have otherwise booked a stay during this period but were called to action by the promotion, offering the highest incremental gains. Upsells were guests who stayed an extra night at the hotel to qualify for the promotion, offering moderate incremental gains. Accidental Qualifiers were guests who did not reserve or extend their stay because of the promotion but benefited from the discount anyway, representing a loss for the company because they received a discount not tied to any incremental profit.

About Customer

The company is an international hotel franchisor and operator of thousands of hotels across multiple brands. As a global entity, it manages a diverse portfolio of properties catering to various market segments. The company is known for its extensive reach and ability to offer a wide range of accommodations, from budget-friendly options to luxury stays. With a strong focus on customer satisfaction and revenue growth, the company continuously seeks innovative solutions to enhance its service offerings and operational efficiency. The marketing group within the company plays a crucial role in driving promotions and targeting markets to maximize revenue gains.

Solution

Working with APT’s Test & Learn software, the marketing group was able to measure the promotion’s lift in revenue by using a carefully selected set of control hotels to account for many complex external factors and thus isolate the bottom-line returns generated by the promotion. By comparing each hotel that offered the promotion to a group of comparable hotels that did not, APT was able to accurately quantify the incremental stays – and thus revenue – resulting from the promotion. Equipped with a reliable analysis of the promotion’s value, management was able to determine that the revenue generated by the promotion did, in fact, exceed its costs. As expected, the promotion drove an increase in revenue from 2+ night stays, indicating that stays from incremental stays and upsells off-set the losses to accidental qualifiers. The increase in 2+ night stays was partially offset by a decline in 1 night stays as some guests booked longer stays than they would have otherwise. In addition, management identified the attributes of those hotels that had the largest revenue lift from upsells and incremental stays, and, consequently, the highest returns from the promotion.

Impact #1	Management changed the Two Plus Night promotion by offering it only at hotels that would, in fact, achieve the target lift and ROI from the promotion.
Impact #2	The marketing group used APT’s analytic software to identify and target the markets that would experience the highest revenue gains.
Impact #3	The hotel company now works with APT to project increased revenue from a variety of promotions and to target specific promotions to the highest yield markets.

Impact #1

Management changed the Two Plus Night promotion by offering it only at hotels that would, in fact, achieve the target lift and ROI from the promotion.

Impact #2

The marketing group used APT’s analytic software to identify and target the markets that would experience the highest revenue gains.

Impact #3

The hotel company now works with APT to project increased revenue from a variety of promotions and to target specific promotions to the highest yield markets.

Benefit #1	The value of subsequent promotions increased by over $2MM.
Benefit #2	The program’s NPV increased by $2M upon rollout.

Benefit #1

The value of subsequent promotions increased by over $2MM.

Benefit #2

The program’s NPV increased by $2M upon rollout.

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Overview

Hotel Promotions

Operational Impact

Quantitative Benefit