IHG is the largest hotel company in the world with roughly 5000 hotels across 8 brands.
Challenges
IHG supports the development of their brands by helping franchisees open new hotels in key locations. At times, IHG also invests in hotels or invests along with other owners.
- IHG needs to understand the best markets for additional hotel investment
- IHG wants to invest in the markets and locations with the best potential return on investment
Approach
- Developed time-series multi-variate regression model to evaluate 100’s of potential drivers of hotel revenue and profit
- Identified most important drivers for top US markets
- Created user-friendly analytics model to allow evaluation of different investment scenarios
- Utilized Monte Carlo simulation to model 10,000 potential scenarios and develop probabilities and expected values for hotel investment in each key market
- Helped structure specific deal parameters including $ invested, annual cap, lifetime cap and claw back provisions
Results
- Prioritize US markets for future hotel development
- Provided analytical framework tool to guide selection of best $100 million+ hotel investments
