Marriott Group Pricing Optimizer Essay

1332 Words Apr 14th, 2011 6 Pages
Marriot – Group Pricing Optimizer

Revenue management has been a system long used by the airline industry to optimize revenue on airline routes. Marriott implemented their own revenue management One Yield system twenty years ago to optimize individual guest room rates and allocation. One Yield is used in 97 percent of Marriott’s 3,300 hotels in 70 different countries to handle over 75 million individual guest room transactions per year. Recently, Marriott decided to move from One Yield to Total Yield so its revenue management system would include all revenue generation instead of just individual guest rooms. To develop this system, Marriott created a proprietary Group Pricing Optimizer (GPO) to help hotel managers decide on what
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The constraints would be the bookings, inventory, inventory rates and the already allocated rooms. Since One Yield works in a real time setting these constraints would change day to day to maximize profit. More complicated scenarios when groups and catering events are incorporated in the formula would require large complicated decision trees or programs such as QM for Windows.

Deciding whether to use a room for an individual or as part of a group could be a large decision tree, but the probabilities of renting out the room would need to be decided. Deciding on the probabilities of renting a room to an individual guest that gets the best return is a complicated procedure, which is why a computer program would be best utilized. This step is the most complicated one. Marriot had to decide what ultimate factors should be used to price a room. This info was not revealed in the case because it is proprietary and has increased profit for Marriott by $120 million since its inception.

Total Yield does an excellent job analyzing pricing for current hotels and is able incorporate a lot of different customer types. Marriott has been using for One Yield for twenty years and Total Yield was just rolled out a couple years ago so the amount of individual data vs. group data is staggering. As Marriott moves forward and tweaks any problems that Total Yield has, the amount of group data is