Sweet-Spot Pricing

Price optimization software helps retailers, hoteliers and other businesses set just the right price to appeal to customers.

Five years ago, executives at InterContinental Hotels Group decided it was time for the company to regain control of its pricing destiny. Industry dynamics were changing rapidly. The market was flooded with online distributors selling hotel rooms; travel Web sites let consumers compare IHG's rates to competitors' prices; and third-party companies were snatching up rooms in bulk and reselling them at prices they chose.

"We wanted to take more control over our inventory while keeping prices as competitive as possible," says CIO Tom Conophy. "If you're late to the game, you lose revenue on both the upswing and the downside."

The company started thinking about new sources of information it could leverage to help drive its pricing strategy. That's how IHG's proprietary price optimization application came into being. Today, more than 1,800 IHG properties worldwide use the price optimization component of the hotelier's Perform revenue management system, and they have reported margin increases of 2% or more.

Five years ago, executives at InterContinental Hotels Group decided it was time for the company to regain control of its pricing destiny. Industry dynamics were changing rapidly. The market was flooded with online distributors selling hotel rooms; travel Web sites let consumers compare IHG's rates to competitors' prices; and third-party companies were snatching up rooms in bulk and reselling them at prices they chose.

"We wanted to take more control over our inventory while keeping prices as competitive as possible," says CIO Tom Conophy. "If you're late to the game, you lose revenue on both the upswing and the downside."

The company started thinking about new sources of information it could leverage to help drive its pricing strategy. That's how IHG's proprietary price optimization application came into being. Today, more than 1,800 IHG properties worldwide use the price optimization component of the hotelier's Perform revenue management system, and they have reported margin increases of 2% or more.

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