As part of their room sales strategy, many hotels make rooms available at reduced rates through such web sites as Priceline.com. While this approach fills rooms, it also creates challenges regarding how the price point will affect hotel revenue, explains Chris Anderson, an assistant professor at the Cornell School of Hotel Administration. In a new report from the Cornell Center for Hospitality Research (CHR), Anderson and coauthor Radium Yan, who is with InterContinental Hotels Group, America, show that judicious use of Priceline's reports to set optimum rates can be an effective hotel revenue management strategy. The report, "Making the most of Priceline's Name-Your-Own-Price Channel," is available from the CHR at no charge at .

"Although Priceline creates a screen between the hotel and its customers, the hoteliers can use Priceline's reports to determine what is the best price to offer through Priceline," said Anderson. "The math is complicated, but we show how it works. We field tested this method on a large convention hotel earlier this year, and we saw a 24-percent increase in revenue from Priceline."

Priceline's name your own price application allows consumers to bid on hotel rooms with certain specifications. But the consumer does not know what hotels have placed rooms in the Priceline system. The hotel revenue manager is faced with a decision about what price to charge, because the hotel will sell the room only if it is priced sufficiently below the customer's bid. Priceline provides reports on bids received, which allows the analysis developed by Anderson and Yan. The report includes a sample of the spreadsheet calculations to optimize revenue through Priceline.

Meet and interact with Chris Anderson when he presents a session during the Cornell Hospitality Research Summit (CHRS): .

Thanks to the support of the CHR partners listed below, all publications posted on the center's website are available free of charge, at .

About the Center for Hospitality Research

The purpose of the Center for Hospitality Research is to enable and conduct research of significance to the global hospitality and related service industries. CHR also works to improve the connections between academe and industry, continuing the School of Hotel Administration's long-standing tradition of service to the hospitality industry. Founded in 1992, CHR remains the industry's foremost creator and distributor of timely research, all of which is posted at no charge for all to use. In addition to its industry advisory board, CHR convenes several industry roundtables each year for the purpose of identifying new issues affecting the hospitality industry.

Center Members: Accenture • Access Point Financial, Inc. • Barclaycard US • Cvent • Davis & Gilbert LLP • Deloitte & Touche USA LLP • DerbySoft • Four Seasons Hotels and Resorts • Fox Rothschild LLP • Hilton Worldwide • Host Hotels & Resorts • Hyatt Hotels Corporation • IDeaS Revenue Solutions • InterContinental Hotels Group • Jumeirah Group • Marriott International • NTT DATA • Preferred Hotels & Resorts • priceline.com • PwC • The Rainmaker Group • RateGain • ReviewPro • Revinate • Sabre Hospitality Solutions • STR • Taj Hotels Resorts and Palaces • Tata Consultancy Services • Wipro EcoEnergy • Wyndham Hotel Group

Glenn Withiam
607.255.3025
CHR

Related