IHG Doubles Down On Dynamic Pricing Push - Business Travel News

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IHG Doubles Down On Dynamic Pricing Push

November 06, 2012 - 04:40 PM ET

By Michael B. Baker

More than 40 percent of InterContinental Hotel Group's corporate customers after negotiations are complete this year will be using dynamic pricing agreements for some portion of their programs, CEO Richard Solomons said Tuesday during the company’s third-quarter earnings conference call.

IHG for several years aggressively has pushed the dynamic pricing model, in which buyers receive a discount on the best available rate rather than flat rates. Solomons' projections are more than double the 20 percent goal the company had just two years ago.

"It gives corporate customers confidence that they're going to be getting the best rates or good discounts off whatever rate the hotel is charging," Solomons said. "It makes a lot more sense than just negotiating a flat rate the whole time and seems to us a very sensible way of driving that business forward."

IHG also is aiming to increase flat negotiated rates, though it's "very early to say what percentage we are going to get to," Solomons added.

During the third quarter, the average daily rate at IHG properties increased by 3.4 percent compared with the prior year, including a 4 percent increase in the Americas, a 2.4 percent increase in Europe, a 1.1 percent increase in Africa, the Middle East and Asia and a 3.8 percent increase in Greater China. Overall occupancy increased slightly, by 0.4 percentage points, but was up in all regions except Europe.

IHG's operating profit for the quarter was $167 million, up from $153 million in the third quarter of 2011.

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