mark w. shafer...decision science teddy benson, director decision science & integration ......
TRANSCRIPT
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© Disney
Mark W. ShaferSenior Vice President, Revenue Management & Analytics
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© Disney2
The views expressed are my own and not
necessarily those of The Walt Disney Company.
Any analytics strategies or techniques
attributed to Disney are not necessarily those
that Disney may use in a given situation.
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Who Are We
How Did We Evolve
Key Lessons Learned
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2018 Revenue $59 Billion
Parks &Resorts
34%
ConsumerProducts & Interactive
Media8%
StudioEntertainment
17%
MediaNetworks
41%
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© Disney6
To be the leader in the design, development,
and integration of innovative decision science
solutions to improve The Walt Disney Company
business performance.
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© DisneyConfidential
Sales Optimization & Media ResearchPricing & RM IntegrationMarketing & Content Analytics
Advanced Modeling and Scientific Engineering
Data Modeling, Analytic Solution Development and Project Management
Karin Kricorian,
Director
Management Science
& Integration
Olivier Flament,
Director
Management Science
& Integration
Tom Denslow,
Director
Management Science
& Integration
Hai Chu, VPDecision Science
Teddy Benson, DirectorDecision Science & Integration
Mark Shafer, SVP
Revenue Management & Analytics
Dis
ne
y D
ec
isio
n S
cie
nc
e &
In
teg
ra
tio
n
7
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Statistics
Cluster & Segmentation Analysis
Data Visualization
Network Modeling & Graph Theory
Machine Learning
Decision Theory
Probability Theory
Factor Analysis
Principal Components
Simulation
Extrapolative Forecasting
Explanatory Forecasting
Bayesian Forecasting
Unconstraining Methodology
Mixed Integer Programming
Linear Programming
Non-Linear Programming
Dynamic Programming
Economics Theory
Discrete Choice Modeling
Revenue Management Science (e.g. Overbooking)
Pricing Science (e.g. Elasticity Estimates)
Data Modeling
SQL (Structured Query Language)
SAS
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© Disney9
250+ Cast Members50+ PhDs
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How Did We Evolve?
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© Disney
1995
Hotels
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Merchandise
Food and Beverage
Sales Optimization
Theme Parks
12
Disney Cruise Line
Hotels
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Merchandise Food and Beverage
Disney Cruise Line
Sales Optimization
Theme ParksHotels
13
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7
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Mar 2014Front Page of
The New York Times
“Disney … has
turned this into a science.”
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“…Disney even managed to
do it by charging half as much for top tickets as some rivals.”
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© Disney16
U.S. Air Force & Walt Disney awarded the 2017 INFORMS Prize For Operations Research & Advanced Analytics
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Key Lessons Learned
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Investment Profile
Evangelizing Analytics
Speed to Market
Talent
Importance of Integration
Flaw of Averages
You Are Never Finished
18
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© Disney19
People Express Route
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© Disney20
January 17, 1985
American Airlines announces Ultimate Super Saver fares.
The “Birth” of Revenue Management
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© Disney21
Investment both expands the company’s revenues
as well as keeps it successful
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© Disney
Investment Profile
Evangelizing Analytics
Speed to Market
Talent
Importance of Integration
Flaw of Averages
You Are Never Finished
22
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There will come a time when you will be
in a situation with the right decision,
wrong outcome.
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Adam SavageFormer Co-HostMYTHBUSTERS
Stephen DubnerBestselling Author of
FREAKANOMICS SERIES
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© Disney
Investment Profile
Evangelizing Analytics
Speed to Market
Talent
Importance of Integration
Flaw of Averages
You Are Never Finished
25
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© Disney29
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© Disney
Investment Profile
Evangelizing Analytics
Speed to Market
Talent
Importance of Integration
Flaw of Averages
You Are Never Finished
27
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© Disney
Recognize you are never right and you’re never done.
- Dr. Adam Grant, University of Pennsylvania
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Manual RM
Science Based
RM
Availability Server
CCRM
1995
2002
2004 2007
Probabilistic Upgrading
Promotion Manager
2011
2014
2013
Pre
1995
Demand Tracking System
2015
2016
Hotel Revenue Management Model
CCRM/DTS Online
Personalization
Hybrid HROS
Rules Based RM
StrategicValue
Group & Space
Optimization
Itinerary Planning
Tool
Enhanced Optimization
Rate Category Realignment
2017
29
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© Disney30
“Let your past inspire you, let it motivate you, but never let it hold you back.”
- Walt Disney
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© Disney
Investment Profile
Evangelizing Analytics
Speed to Market
Talent
Importance of Integration
Flaw of Averages
31
You Are Never Finished
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© Disney32
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© Disney33
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© Disney34
“If you can’t explain it simply,
you don’t understand it well enough.”
- Albert Einstein
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© Disney
Investment Profile
Evangelizing Analytics
Speed to Market
Talent
Importance of Integration
Flaw of Averages
You Are Never Finished
35
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© Disney36
Ability to produce results and the
ability to consume results
- Professor Sam Ransbotham,
Boston College
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© Disney
Investment Profile
Evangelizing Analytics
Speed to Market
Talent
Importance of Integration
You Are Never Finished
Flaw of Averages
40
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“Flaw of Averages”
- Sam Savage, author
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When U.S. Air Force discovered the . . .
flaw of averages
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© Disney43
ROOM TYPE
Standard Preferred
RATE $100 $110
CAPACITY 10 5
AVERAGE DEMAND 15 4
Cost of Being Wrong
Often, a resort will have sufficient or excess demand to fill its capacity; however, it will not always be a perfect fit to the mix of
room categories.
How many of the preferred rooms should be “protected” for Guests willing to pay a preferred rate versus over-selling
additional standard rooms?
Capacity = 15 rooms
Demand = 19 rooms
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© Disney44
$10 $100VS.Under Protect Over Protect
Cost of Being Wrong
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$110
$101
$78
$55
$32
Prob Rate EMRR Prob Rate EMRR
1 100% $100 $100 1 100% $110 $110
2 100% $100 $100 2 92% $110 $101
3 100% $100 $100 3 71% $110 $78
4 100% $100 $100 4 50% $110 $55
5 100% $100 $100 5 29% $110 $32
6 100% $100 $100
7 100% $100 $100
8 100% $100 $100
9 100% $100 $100
10 99% $100 $99
11 98% $100 $98
12 90% $100 $90
13 83% $100 $83
14 66% $100 $66
15 50% $100 $50
Preferred Demand
Capacity
Stan
dar
d C
apac
ity
Exce
ss S
tandar
d
Dem
and
Standard Demand
Capacity
Pre
ferr
ed
Dem
and
45
Only protect 2 preferred room types and oversell the standard room type by 3;
a $40 gain ($1,481 vs. $1,441 in expected revenue)
Cost of Being Wrong
Comparing
EMRRs
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© Disney
“Any organization that is not amath house now or is unable to become one soon is already a legacy company.”
- RAM CHARAN, AUTHOR
The Attacker’s Advantage:
Turning Uncertainty Into Breakthrough Opportunities
46
In today's global analytics arms race, YESTERDAY'S STRATEGIC ADVANTAGE CAN QUICKLY BECOME TOMORROW'S INDUSTRY STANDARD.
To stay competitive, we must continue to invest and evolve at an ever increasing rate.
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© Disney47
THANK YOU!