Fred Deschamps discusses two key focus areas for revenue generation: rate optimization and social media. Rate optimization involves determining the optimal prices and room allocation to maximize bookings and revenue given factors like demand, capacity, and price elasticity. Lessons learned are that systems help avoid dilutive pricing but education is also important, and the quality of inputs impacts outputs. Social media continues to explode in users and fragmentation, and is increasingly influential on travel decisions, suggesting the need for a real-time, location-aware approach integrating social media data into rate optimization.

1. Fred Deschamps
vice president, global revenue generation

2. Top 2 focus areas right now
Rate optimization
Social media
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3. Rate optimization
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4. The old problem
given these rates,
what is the optimal mix?
capacity
bookings
days before arrival zero
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5. Hotel are rarely full
64.0
63.0 63.1 62.8
62.0
60.0
59.8 59.9 60.0
58.0
57.6
56.0
54.0 54.6
52.0
50.0
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6. Price transparency challenges segmentation
@
travel management
business travel
companies
search engines
referral engines
brand.com
leisure travel
online travel agencies
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7. The new problem
given this elasticity,
what is the optimal price?
revenue
bookings
price
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8. Price-based revenue optimization
Market Response Competitive
Demand Forecasting
Model Modeling
• Demand Patterns • Customer Segmentation • Competitor prices and
• Seasonality and Booking Pace • Price Elasticity Modeling availability
• Special Events and External • Promotional Effects • Market Reference Price
Factors
Constraints Price
• Capacity
• Network effects Optimization
• Business Rules
Price Recommendations
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9. Lessons learned
• System cures dilutive pricing practices
• Education is as important as a smart system
• Output only as good as input
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10. Social media
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11. continues to explode
901M users
worldwide
Every 60 seconds, over
695,000 status updates
Over 8 million unique
visitors each month
200M tweets per day
Every 1.6 seconds a new account is created
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12. Continues to fragment
• 30 segments at least, with dozens of providers
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13. Increasingly influential
social media users….
• change their travel plans ~ 50% of the time
– hotels changed most often
• report on their experience ~ 40% of the time
–perpetuate the influence cycle
Source: L2 Think Tank and Buddy Media, “Digital IQ Index: Hotels, March 22, 2012
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14. a 3-step approach
LISTEN TALK ENGAGE
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15. next gen rate optimization?
• if growth/fragmentation continues
• if mobile continues
• if content remains public
Social media
location
real-time
situation
elasticity
real-time
rate
optimization
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16. Social media
PRICE
ELASTICITY
Rate optimization
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