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 Occupancy
Availability is determined by considering a
number of factors:
Current Number of Reservations
Historical Factors
Early Arrivals
Early Departures
Cancellations
“No-Shows”
Stayovers
Out-of-Order Rooms
Walk-ins
Figure 12-3
Determining Availability Factors
(Counted at the time of determining availability)
Each of these availability factors combine to positively or
negatively affect the number of available rooms.
Factor
Affect
Early Arrivals
Cancellations
No Shows
Early Departures
Stayovers
Other Factors
Out of Order
Compression
Plus
Minus
Minus
Minus
Plus
Minus
Plus or Minus
Figure 12-4
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
OVERSELL ANALYSIS
(This Sample Hotel Has 420 Rooms)
DAY
DATE
WED
THU
FRI
SAT
SUN
MON
TUE
10/1/00 10/2/00 10/3/00 10/4/00 10/5/00 10/6/00 10/7/00
ROOMS ON THE BOOKS
DUE TO ARRIVE
NON GTD RESERVATIONS
EST. NOSHOWS
EST. EARLY DEPARTURES
EST. STAYOVERS
DUE TO DEPART
REVISED ON BOOKS
VARIANCE
# ROOMS TO FILL
OVERSELL #
331
123
2
6
10
4
206
317
14
103
434
247
121
0
6
11
4
203
234
13
186
433
126
67
6
3
9
4
212
111
15
309
435
211
107
12
5
8
2
38
188
23
232
443
200
134
1
7
8
3
117
188
12
232
432
290
183
3
9
6
4
78
276
14
144
434
422
282
15
14
9
5
148
389
33
31
453
A perfect sell is reached when every room is occupied
and no guest was walked
Figure 12-6
Yield Management
Incorporating 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
Yield Management Illustration
Numerical Value
Rate Designation
Rack Rate
Corporate Rate
Seasonal Rates
Volume Rates
AAA/AARP Rate
Industry Rate
Government Rate
7
6
5
4
3
2
1
Group& Transient Rooms
“On Books”
M
T
W
Th
F
Sa
S
Days of the Week
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
Spikes and Holes
Spike
Occupancy Levels
Hole
Group& Transient Rooms
“On Books”
M
T
W
Th
F
Sa
S
Days of the Week
Figure 12-10
Yield Management Tools
A 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 Management
Groups 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
Forecasting
The 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 Factors
Forecasting 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
Transient Booking Cycle Analysis
ACTUAL 15 DAYS 30 DAYS
JANUARY
723
592
402
FEBRUARY
1772
1451
1044
MARCH
3324
3304
2706
APRIL
2912
2992
3010
MAY
2383
2415
2292
JUNE
2465
2356
1998
JULY
4425
4479
4472
AUGUST
4039
4060
3621
SEPTEMBER
1624
1601
1697
OCTOBER
1899
1842
1601
NOVEMBER
1796
1699
1385
DECEMBER
1286
1201
1051
TOTAL
28648
27992
25279
Days from Arrival
45 DAYS 60 DAYS 75 DAYS 90 DAYS
319
200
97
79
551
347
219
175
2035
1602
1109
779
2577
1723
1350
1009
1670
1176
831
545
1920
1489
956
815
3384
2391
1386
1193
3054
2585
1940
1567
1475
1050
766
602
1221
873
625
466
581
307
199
92
599
420
186
101
19386
14163
9664
7423
Figure 12-16
ABC Hotel Group Worksheet
Sat.
4/17
Sun
4/18
Mon
4/19
Tue
Week of: 4/17/00
Wed 4/21 Thu
4/20
4/22
Fri
4/23
REVENUE
COMMENTS
Rooms GST Rooms GST Rooms GST Rooms GST Rooms GST Rooms GST Rooms GST
Gro up:
SUNNY TOURS
Blocked
Co de:
SUN
Booked
Start Date:
4/17
Forecast
Res M eth:
LIST
Actual
Salesp.
JOHN
Arrivals
Gro up:
123 TOOLS
Blocked
Co de:
TOOL
Booked
Start Date:
4/18
Forecast
Res M eth:
IND
Actual
Salesp.
SALLY
Arrivals
Gro up:
MODEL CLUB
Blocked
Co de:
MDL
Booked
Start Date:
4/18
Forecast
Res M eth:
LIST
Actual
Salesp.
JOHN
Arrivals
Gro up:
SMITH GEARS
Blocked
Co de:
SMTH
Booked
Start Date:
4/20
Forecast
Res M eth:
IND
Actual
Salesp.
SALLY
Arrivals
Gro up:
MATH ASSOC.
Blocked
Co de:
MTH
Booked
Start Date:
4/22
Forecast
Res M eth:
IND
Actual
Salesp.
BILL
Arrivals
Gro up:
JONES WEDDING Blocked
Co de:
JNS
Booked
Start Date:
4/23
Forecast
Res M eth:
IND
Actual
Salesp.
JOHN
Arrivals
10
8
7
14
7
14
10
8
7
14
10
8
7
Total Rooms:
14
Avg. Rate:
Total Revenue:
30
30
28
28
10
5
5
28
30
30
28
Total Rooms:
28
$2,376
Double Occ.
60
Avg. Rate:
$125.00
Total Revenue:
$7,500
Repeat
Group.
28
Total Rooms:
10
Avg. Rate:
Total Revenue:
5
24
$99.00 Series group.
5
$89.00
$445
10
125
120
120 135
125
120
120 135
125
120
120 135
Total Rooms:
Avg. Rate:
Total Revenue:
SMERF
Group. High
no-show
factor
360
$109.00
$39,240
High outlet
usage
120 135
55
55
35
35
35
35
55
55
35
Total Rooms:
35 Avg. Rate:
Total Revenue:
15
7
6
Total Rooms:
12 Avg. Rate:
Total Revenue:
6
110
$118.00
$12,980
Group of
teachers
7
$79.00 Wedding On
$553
Saturday
12
Figure 12-17
Forecasting
Since 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 Rooms
A 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
ABC Hotel Group Worksheet
Sat.
4/17
Sun
4/18
Mon
4/19
Tue
Week of: 4/17/00
4/20 Wed 4/21 Thu
4/22
Fri
4/23
REVENUE
COMMENTS
Rooms GST Rooms GST Rooms GST Rooms GST Rooms GST Rooms GST Rooms GST
Contract
Blocked
Booked
10
10
10
10
10
10
10
8
7
10
8
7
10
8
7
Gro up:
SUNNY TOURS
Blocked
Co de:
SUN
Booked
Start Date:
4/17
Forecast
Res M eth:
LIST
Actual
Salesp.
JOHN
Arrivals
Gro up:
123 TOOLS
Blocked
Co de:
TOOL
Booked
Start Date:
4/18
Forecast
Res M eth:
IND
Actual
Salesp.
SALLY
Arrivals
Gro up:
MODEL CLUB
Blocked
Co de:
MDL
Booked
Start Date:
4/18
Forecast
Res M eth:
LIST
Actual
Salesp.
JOHN
Arrivals
Gro up:
SMITH GEARS
Blocked
Co de:
SMTH
Booked
Start Date:
4/20
Forecast
Res M eth:
IND
Actual
Salesp.
SALLY
Arrivals
Gro up:
MATH ASSOC.
Blocked
Co de:
MTH
Booked
Start Date:
4/22
Forecast
Res M eth:
IND
Actual
Salesp.
BILL
Arrivals
Gro up:
JONES WEDDING Blocked
Co de:
JNS
Booked
Start Date:
4/23
Forecast
Res M eth:
IND
Actual
Salesp.
JOHN
Arrivals
14
14
10
10
10
10
10
10
10
10
Total Rooms:
Avg. Rate:
Total Rooms:
14
Avg. Rate:
Total Revenue:
7
70
$49.00
24
$99.00 Series group.
$2,376
Double Occ.
14
30
30
28
28
28
10
5
5
28
5
10
30
30
28
Total Rooms:
28
$125.00
Total Revenue:
$7,500
Total Rooms:
10
Avg. Rate:
Total Revenue:
125
120
120 135
125
120
120 135
125
120
120 135
60
Avg. Rate:
Total Rooms:
Avg. Rate:
Total Revenue:
5
$89.00
$445
Repeat
Group.
SMERF
Group. High
no-show
factor
360
$109.00
$39,240
High outlet
usage
120 135
55
55
35
35
55
55
35
Total Rooms:
35 Avg. Rate:
Total Revenue:
35
110
$118.00
$12,980
Group of
teachers
35
15
7
6
Total Rooms:
12 Avg. Rate:
Total Revenue:
6
7
$79.00 Wedding On
$553
Saturday
12
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
= Prime Selling Time
Figure 12-22
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 Strategy
The “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