Incentive Compensation


IBM Cognos TM1

Business ChallengeChallenge

This well-known hotel chain has approximately 250 owned or managed properties throughout North America. It had a very simple problem that required a complex solution—the hotel company needed a more efficient and effective way to calculate and pay incentive compensation bonuses by sales representative. They wanted to be able to do this for all of the reps across all their properties. The biggest challenge was that they had numerous incentive compensation plans for different aspects of managing a hotel property—banquets, catering, room sales, transient sales and more. Each compensation plan was essentially a bonus calculation based on a number of different metrics and base salary. Base salaries are paid monthly, while the incentive compensation bonuses are paid quarterly.


Revelwood selected IBM Cognos TM1 to model the data and perform the calculations. The Revelwood team built a TM1 model that incorporates key metrics such as the number of nights per stay, associated food and beverage purchases for the room, revenue generated by group room sales, catering revenue, customer satisfaction surveys and new business development. Revelwood also built associated workflows with rule-based security that manage the submission and approval process on the bonuses. That data then feeds the payroll system.


Since deploying the TM1 incentive compensation solution, the hotel has seen significant process efficiencies, a reduction in calculation and payout errors and improved visibility for advanced analytics by rep, by property, by region and by area (catering, room sales, etc.)

The hotel chain can now ask questions such as:

  • Are there properties that are paying out more in commissions than projected?
  • Which properties are excelling in catering, banquets or group room sales?
  • Are SPIFFs driving actual revenue?
  • Where are there opportunities to drive more revenue?