Blue Yonder Case Studies Winning the Price War

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	Winning the Price War Blue Yonder

Winning the Price War

Blue Yonder

Technology Category	Analytics & Modeling - Predictive Analytics Functional Applications - Inventory Management Systems
Applicable Functions	Business Operation Sales & Marketing
Use Cases	Demand Planning & Forecasting Predictive Replenishment
Services	System Integration Training
Challenge	The hospitality industry is facing a new price war due to market transparency and the rapid growth of Internet bookings. This has created significant challenges for hotel operators, including Carlson Hotels, which is constantly looking for ways to differentiate itself and maximize its revenue in this competitive, price-driven environment. Traditional yield management is only sporadically effective when market conditions lead to fewer sold-out nights. Carlson Hotels identified a need for a more sophisticated method of matching rates to actual demand so they could measure their success based not only on occupancy rates, but also on the revenues generated by individual bookings and the value of 'missed opportunities' caused by quoting higher prices during a low-demand cycle. Read More
About Customer	Carlson Hotels is a global hospitality company with a worldwide reputation for service and quality. The company operates in a highly competitive, price-driven environment and is constantly seeking ways to differentiate itself and maximize its revenue. Despite its strong market position, Carlson Hotels recognized the need for a more sophisticated method of matching rates to actual demand in order to optimize its revenue. The company wanted to measure its success not only based on occupancy rates, but also on the revenues generated by individual bookings and the value of 'missed opportunities' caused by quoting higher prices during a low-demand cycle. Read More
Solution	Carlson Hotels turned to JDA Software for a radically different approach. They embarked on a new revenue optimization project called SNAP, which stands for stay night automated pricing, to drive higher revenue for its hoteliers using JDA Demand and JDA Travel Price Optimization. Carlson Hotels is now able to quantify price elasticity and use that output to generate optimal prices, bringing competitor data into its revenue management system and forecasting how customers will respond to price changes. JDA Demand delivers a powerful forecasting capability, allowing Carlson Hotels to react more quickly to shifts in demand or competitive rates. By combining JDA Demand with JDA Travel Price Optimization, Carlson Hotels is able to shift from pricing based on the product and guesses about competitive impacts to pricing based on a demand forecast and price elasticity compared to real-time competitor prices. Read More Log in to view content
Contents

Technology Category

Analytics & Modeling - Predictive Analytics

Functional Applications - Inventory Management Systems

Applicable Functions

Business Operation

Sales & Marketing

Use Cases

Demand Planning & Forecasting

Predictive Replenishment

Services

System Integration

Training

Challenge

The hospitality industry is facing a new price war due to market transparency and the rapid growth of Internet bookings. This has created significant challenges for hotel operators, including Carlson Hotels, which is constantly looking for ways to differentiate itself and maximize its revenue in this competitive, price-driven environment. Traditional yield management is only sporadically effective when market conditions lead to fewer sold-out nights. Carlson Hotels identified a need for a more sophisticated method of matching rates to actual demand so they could measure their success based not only on occupancy rates, but also on the revenues generated by individual bookings and the value of 'missed opportunities' caused by quoting higher prices during a low-demand cycle.

About Customer

Carlson Hotels is a global hospitality company with a worldwide reputation for service and quality. The company operates in a highly competitive, price-driven environment and is constantly seeking ways to differentiate itself and maximize its revenue. Despite its strong market position, Carlson Hotels recognized the need for a more sophisticated method of matching rates to actual demand in order to optimize its revenue. The company wanted to measure its success not only based on occupancy rates, but also on the revenues generated by individual bookings and the value of 'missed opportunities' caused by quoting higher prices during a low-demand cycle.

Solution

Carlson Hotels turned to JDA Software for a radically different approach. They embarked on a new revenue optimization project called SNAP, which stands for stay night automated pricing, to drive higher revenue for its hoteliers using JDA Demand and JDA Travel Price Optimization. Carlson Hotels is now able to quantify price elasticity and use that output to generate optimal prices, bringing competitor data into its revenue management system and forecasting how customers will respond to price changes. JDA Demand delivers a powerful forecasting capability, allowing Carlson Hotels to react more quickly to shifts in demand or competitive rates. By combining JDA Demand with JDA Travel Price Optimization, Carlson Hotels is able to shift from pricing based on the product and guesses about competitive impacts to pricing based on a demand forecast and price elasticity compared to real-time competitor prices.

Impact #1	Carlson Hotels was able to see a return on investment within weeks of a hotel adhering to the rate recommendations.
Impact #2	The company gained a significant competitive advantage in its local markets across the Americas.
Impact #3	The solutions provided an 'early warning system' for both high and low demand periods, giving Carlson Hotels an edge on its competition.

Impact #1

Carlson Hotels was able to see a return on investment within weeks of a hotel adhering to the rate recommendations.

Impact #2

The company gained a significant competitive advantage in its local markets across the Americas.

Impact #3

The solutions provided an 'early warning system' for both high and low demand periods, giving Carlson Hotels an edge on its competition.

Benefit #1	Improved revenue performance at a typical hotel by 2 to 4 percent.
Benefit #2	Maximized occupancy and profitability by setting optimal room rates.
Benefit #3	Increased competitive advantage.

Benefit #1

Improved revenue performance at a typical hotel by 2 to 4 percent.

Benefit #2

Maximized occupancy and profitability by setting optimal room rates.

Benefit #3

Increased competitive advantage.

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Overview

Winning the Price War

Operational Impact

Quantitative Benefit