summary slide zdetermining occupancy zdetermining availability factors zoverselling...

Summary Slide Determining Occupancy Determining Availability Factors Overselling Diagram–Overselling Yield Management Diagram–Yield Management Transient Yield Management Diagram–Spikes and Holes Yield Management Tools Group Yield Management Reservations Management Exercise

Figure 12-1

Summary Slide (cont.) Forecasting Factors Diagram–Transient Booking Cycle Analysis Diagram–Group Worksheet Forecasting Contract Rooms Reservation Sales Mgmt. Diagram–Prime Selling Time Reservation Call Mgmt. Reservation Sales Strategy

Figure 12-2

Determining OccupancyAvailability is determined by

considering a number of factors: Current Number of Reservations Historical Factors

Early Arrivals Early Departures Cancellations “No-Shows” StayoversOut-of-Order Rooms Walk-ins

Figure 12-3

Determining Availability Factors (Counted at the time of determining availability)

Factor AffectEarly Arrivals PlusCancellations MinusNo Shows MinusEarly Departures MinusStayovers PlusOther Factors Out of Order MinusCompression Plus or Minus

Figure 12-4

Each of these availability factors combine to positively or negatively affect the number of available rooms.

Overselling

Using the historical record, a hotel may oversell in order to offset the effect of the minus (or negative) factors that determine availability.

When a hotel aggressively oversells, and does not have enough rooms for confirmed reservations, it must “walk” the guest. A walked reservation is a guest who must stay somewhere other than where they were initially booked to be.

Figure 12-5

DAY WED THU FRI SAT SUN MON TUEDATE 10/1/00 10/2/00 10/3/00 10/4/00 10/5/00 10/6/00 10/7/00ROOMS ON THE BOOKS 331 247 126 211 200 290 422DUE TO ARRIVE 123 121 67 107 134 183 282NON GTD RESERVATIONS 2 0 6 12 1 3 15EST. NOSHOWS 6 6 3 5 7 9 14EST. EARLY DEPARTURES 10 11 9 8 8 6 9EST. STAYOVERS 4 4 4 2 3 4 5DUE TO DEPART 206 203 212 38 117 78 148REVISED ON BOOKS 317 234 111 188 188 276 389VARIANCE 14 13 15 23 12 14 33# ROOMS TO FILL 103 186 309 232 232 144 31OVERSELL # 434 433 435 443 432 434 453

OVERSELL ANALYSIS(This Sample Hotel Has 420 Rooms)

A perfect sell is reached when every room is occupied and no guest was walked

Figure 12-6

Yield ManagementIncorporating principles of opportunity cost,

and the simple laws of supply and demand, reservations maximizes the revenue for remaining rooms by using a pricing strategy called yield management.

Using the hotel’s rate structure, the reservations department can accelerate or slow down the pace of transient room sales based on need.

The need is most often dictated by the group room base.

Figure 12-7

M T W Th F Sa S

Days of the Week

Group& Transient Rooms“On Books”

Industry Rate 2Government Rate 1

AAA/AARP Rate 3Volume Rates 4Seasonal Rates 5Corporate Rate 6Rack Rate 7

Rat

e D

esig

nat

ion

Rat

e D

esig

nat

ion

Numerical ValueNumerical ValueYield Management Illustration

Figure 12-8

Transient Yield Management

Hotels use limiting criteria called rate restrictions to manage inventory. This incorporates two main restrictions into yield strategy: rate availability and length of stay. As availability changes, the director of

transient sales may input certain rate triggers that alter what rates are to be quoted.

Length of stay restrictions attempt to overcome spike and holes in availability.

Figure 12-9

M T W Th F Sa S

Days of the Week

Group& Transient Rooms“On Books”

Spike

Hole

Occ

upan

cy L

evel

s

Spikes and Holes

Figure 12-10

Yield Management ToolsA rate trigger is a signal programmed

into the reservation computer system that instructs the system to change the rate based on preset criteria. As rooms are booked and others cancelled, different rate triggers become active or inactive.

Length of stay restrictions include: Closed to Arrival (CTA) Minimum Length Stay (MLS) Modified Length Stay (also called Min/Max)

Figure 12-11

Group Yield ManagementGroups are generally booked in advance of

the transient booking cycle. If the reservations department has begun to

implement yield management strategies, the group sales effort should mirror them.

Displacement occurs when lower rated group rooms are booked in place of higher rated transient rooms. Hotels try to minimize displacement whenever possible.

Should groups ever be booked at rates lower than those dictated by yield mgmt.?

Figure 12-12

Reservations Management

The reservations department in any hotel is responsible for booking transient reservations and providing occupancy data.

The process of booking transient rooms involves sales management.

The process of gathering and determining the occupancy data is called forecasting.

Figure 12-13

ForecastingThe reservations forecasts

incorporate group and transient data.These forecasts are important to the

rest of the hotel because they help plan for: Asset allocation Staffing levels Inventory availability

The primary message of the forecast is occupancy percentage.

Figure 12-14

Forecasting FactorsForecasting is a time-sensitive process. The reservations forecast is quite

accurate in the short term, and less so long term.

History plays a big part in forecasting future occupancies. Historical transient data is best reflected in the transient booking cycle.

The transient booking cycle and group worksheet provide the basis for the forecast.

Figure 12-15

ACTUAL 15 DAYS 30 DAYS 45 DAYS 60 DAYS 75 DAYS 90 DAYSJANUARY 723 592 402 319 200 97 79FEBRUARY 1772 1451 1044 551 347 219 175MARCH 3324 3304 2706 2035 1602 1109 779APRIL 2912 2992 3010 2577 1723 1350 1009MAY 2383 2415 2292 1670 1176 831 545JUNE 2465 2356 1998 1920 1489 956 815JULY 4425 4479 4472 3384 2391 1386 1193AUGUST 4039 4060 3621 3054 2585 1940 1567SEPTEMBER 1624 1601 1697 1475 1050 766 602OCTOBER 1899 1842 1601 1221 873 625 466NOVEMBER 1796 1699 1385 581 307 199 92DECEMBER 1286 1201 1051 599 420 186 101TOTAL 28648 27992 25279 19386 14163 9664 7423

Days from Arrival

Transient Booking Cycle Analysis

Figure 12-16

Sat. 4/17 Sun 4/18 Mon 4/19 Tue 4/20 Wed 4/21 Thu 4/22 Fri 4/23 COMMENTS

Rooms GST Rooms GST Rooms GST Rooms GST Rooms GST Rooms GST Rooms GST

Group: SUNNY TOURS Blocked 10 10 10Code: SUN Booked 8 8 8 Total Rooms: 24

Start Date: 4/17 Forecast 7 14 7 14 7 14 Avg. Rate: $99.00

Res Meth: LIST Actual Total Revenue: $2,376

Salesp. JOHN Arrivals 7 14

Group: 123 TOOLS Blocked 30 30Code: TOOL Booked 30 30 Total Rooms: 60

Start Date: 4/18 Forecast 28 28 28 28 Avg. Rate: $125.00

Res Meth: IND Actual Total Revenue: $7,500

Salesp. SALLY Arrivals 28 28

Group: MODEL CLUB Blocked 10Code: MDL Booked 5 Total Rooms: 5

Start Date: 4/18 Forecast 5 10 Avg. Rate: $89.00

Res Meth: LIST Actual Total Revenue: $445


Group: SMITH GEARS Blocked 125 125 125Code: SMTH Booked 120 120 120 Total Rooms: 360




Group: MATH ASSOC. Blocked 55 55Code: MTH Booked 55 55 Total Rooms: 110



Salesp. BILL Arrivals 35 35

Group: JONES WEDDING Blocked 15Code: JNS Booked 7 Total Rooms: 7


Res Meth: IND Actual Total Revenue: $553


High outlet usage

Group of teachers

SMERF Group. High

no-show factor

Wedding On Saturday

Series group. Double Occ.

Repeat Group.

ABC Hotel Group Worksheet Week of: 4/17/00REVENUE

Figure 12-17

ForecastingSince short-term forecasts are the most

accurate, the time frames forecasted most often are: 3 Day 7 Day 10 Day 14 Day

Longer term forecasts are run: 30 day (or comparable cutoff date) 90 day 12 Month Rolling-Annual Budget/Marketing

Plan

Figure 12-18

Contract RoomsA variation of the group booking is called

the contract room. This block of rooms is set aside for the airline each and every night, whether they are occupied or not.

Based on the specific number of personnel in the flight crew, the airline can determine the number of contract rooms needed.

The rate is generally marginally above room cost. What is the benefit to the hotel?

Figure 12-19

Sat. 4/17 Sun 4/18 Mon 4/19 Tue 4/20 Wed 4/21 Thu 4/22 Fri 4/23 COMMENTS

Rooms GST Rooms GST Rooms GST Rooms GST Rooms GST Rooms GST Rooms GST

Blocked 10 10 10 10 10 10 10 Total Rooms: 70

Booked 10 10 10 10 10 10 10 Avg. Rate: $49.00

Group: SUNNY TOURS Blocked 10 10 10Code: SUN Booked 8 8 8 Total Rooms: 24


Res Meth: LIST Actual Total Revenue: $2,376


Group: 123 TOOLS Blocked 30 30Code: TOOL Booked 30 30 Total Rooms: 60




Group: MODEL CLUB Blocked 10Code: MDL Booked 5 Total Rooms: 5


Res Meth: LIST Actual Total Revenue: $445


Group: SMITH GEARS Blocked 125 125 125Code: SMTH Booked 120 120 120 Total Rooms: 360




Group: MATH ASSOC. Blocked 55 55Code: MTH Booked 55 55 Total Rooms: 110



Salesp. BILL Arrivals 35 35

Group: JONES WEDDING Blocked 15Code: JNS Booked 7 Total Rooms: 7


Res Meth: IND Actual Total Revenue: $553


Series group. Double Occ.

Repeat Group.

ABC Hotel Group Worksheet Week of: 4/17/00REVENUE

Contract

High outlet usage

Group of teachers

SMERF Group. High

no-show factor

Wedding On Saturday

Figure 12-20

Reservation Sales Mgmt.Proper staffing is crucial to maximizing

revenue and implementing yield management.

Reservations staff should be at peak levels during prime selling time.

Incoming reservation calls are routed to available agents via an Automated Call Distributor, which also provides call volume reports on regular intervals.

These reports aid in determining prime selling time.

Figure 12-21

Figure 12-22

= Prime Selling Time

Reservation Call Mgmt.The reservations department is often

viewed as an extension of the sales department. Knowledge of the product (the hotel) is vital.

Since the agent is often the first hotel employee a guest comes in contact with, he/she begin the guest satisfaction process.

“You can only make one first impression”

Figure 12-23

Reservation Call Mgmt.Hotel product knowledge should include:

Food and Beverage Outlet Information General Hotel Information General Vicinity of the Hotel (local area)

Since the agent is often the first hotel employee a guest comes in contact with, he/she begin the guest satisfaction process.

Crosstraining is a good way to allow the agents to learn and grow professionally, while expanding their hotel knowledge.

Figure 12-24

Reservation Call Mgmt.The ACD aids in managing

reservation calls by measuring: call length wait time dropped calls

These measurements help compute the conversion ratio of the number of transient bookings made vs. the number of calls received.

Figure 12-25

Reservation Call Mgmt.Proper phone voice, and verbiage used in

transient phone reservations include the following phrases: “How many people in your party?” “Are you a member of our frequent stay

program?” “Have you stayed with us before?” “Do you prefer smoking or nonsmoking?” “What is your estimated time of arrival?” “What credit card would you like to use?” “Let me reverify this information for you.”

Figure 12-26

Reservation Sales StrategyThe “top down” strategy is the most widely

used. This strategy has the agent quoting a rate for the hotel’s best room type (i.e., most expensive), and moving down to a lower rate, if not accepted. This strategy is used in situations where the hotel wants to drive the rate.

The “bottom up” strategy has the agent begin by quoting a rate corresponding to the lowest room type (least attractive or least expensive of the available rooms).

Figure 12-27

Reservation Sales Strategy

The “mid range” strategy suggests that the agent quote a rate from middle room type, going either up or down a tier based on the guest’s acceptance or opposition. Agents using this strategy have the flexibility to tailor their approach to the guest and the progress of the call. Experienced agents are best suited for this strategy, as it requires experience and the ability to implement either the top down or bottom up strategies as needed.

Figure 12-28

Forecasting Internet Exercise

Using the same hotels identified in the exercises of Chapters 3 and 7, use the Internet to monitor the rate availability of a specific hotel over time.

Using a fixed date in the future, monitor how the rate restrictions and offerings change.

What conclusions regarding occupancy and availability can you make from this data?

Figure 12-29

summary slide zdetermining occupancy zdetermining availability factors zoverselling...

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rate availability

rate restrictions

minus figure

rack rate

aaaaarp rate

corporate rate

government rate

holes figure