FRONT OFFICE OPERATIONS
MANAGEMENT
The Hotel Guest
Typical Lodging Guests
28.8%
are transient business travelers
25.3%
are attending a conference/group meeting
24.6%
are on vacation
21.8%
are traveling for other reasons (for example,
personal, family, or special event)
Lodging Industry Characteristics
Emphasis on safety, cleanliness & service
- Guests also consider “intangible” aspects of the
purchase
decision
Inseparability of manufacture & sales
- A room exists & is sold at the same site
Perishability
- If a room is not rented on a specific date, the revenue
is
lost forever
Repetitiveness
- Some operating procedures are routines
Labor Intensive
- Much of a hotel’s daily work involves employees
providing services
Current Issues confronting Hoteliers:
Marketing Issues
Market segmentation is increasing
Efforts to focus on a highly defined, smaller group of travelers.
Brands overlap
The more the number of brands increase, the harder
consumers find it to differentiate between them.
Increased sophistication of consumers
Results in a more competitive selling environment for hoteliers
(e.g., online room booking)
Increased number of amenities
Various amenities (e.g., business centers) increase costs for
hotel owners yet sometimes appeal to only a small segment of
the hotel’s market.
Contents
 Room Sales Differentiation
 Group Rooms
 Transient Rooms
 Transient Reservation Avenue
 Market Segmentation
 Group Market Segments
 Transient Market Segments
Room Sales Differentiation
 The group catering contribution plays an
important role in food and beverage revenue
and also impacts the sleeping room portion of
the hotel success triangle (see text)
 Occupancy is the measurement of room sales
verses available rooms
 The rooms that are sold fall into two
categories: group and transient
 The combination of these two groups makes up
the hotel’s occupancy
Group Rooms
 Group rooms originate from reservations that
are made to bring more than one guest to the
hotel
 Group rooms involve a series of bookings that
correspond to specific functions
 Most hotels consider bookings of 10 or more
rooms per night a group booking
 The purpose of the group room sales effort is
to seek group bookings and bring them to the
hotel
Group Rooms (Cont…)
 Groups sales is counted upon to fill a certain
number of hotel rooms per night
 The group base is the measurement of how
many group rooms are “on the books” on a
given night
 Because groups can be booked far in advance,
they are sought after
 It’s important to note that group rooms are
often offered at lower rates
Transient Rooms
 Transient rooms are rooms that originate from
individual reservations
 Transient rooms are non-group rooms
 These differ from group rooms as there is no
way to predict when these guests will arrive
 Predicting the level of individual reservations
on any given night is difficult
 Looking at historical data helps in determining
the most likely level
Transient Rooms (Cont…)
 The individual booking cycle is the time
between when the individual reservation is
made and when it is due to arrive
 Whereas the group base can be reserved far in
advance, the individual booking cycle can be
more short term
 Walk-in reservations are made by guests
arriving unannounced at a hotel and cannot be
measured as part of the booking cycle as they
are hard to predict
Group v Transient Rooms

The group and transient makeup of a hotel depends on many
factors including location type, service level, target market,
size and other factors
A sample relationship at a fictitious downtown hotel is as
follows:
Number of Hotel Sleeping Rooms

500
Transient
Rooms
400
300
200
Group Rooms
100
M
T
W
T
F
S
S
Figure 3-1
Transient Reservation Avenues
 Any hotel that wants to minimise the
opportunity cost associated with transient
sleeping room sales will incorporate as many
reservation avenues as possible
 A reservation avenue is defined as the means
by which a guest is able to make a reservation
at a hotel
 The greater the access guests have to specific
hotels, the more likely they are to book
Transient Reservation Avenues
(Cont…)
 The most common reservation
avenues are:
 GDS system (Global Distribution System)
 CRS (Central Reservation System)
 Direct travel agent or travel
management company contact
 Direct guest contract
GDS System
 The Global Distribution System (GDS) is a
network of travel and hospitality entities that
communicate via an integrated computer
system
 The computer systems were developed by
airlines to link their availability to travel agents
 Through fee agreements hotels and car rental
companies now also link their individual
products to the GDS systems
CRS
 A central reservation systems provides the
customer with an avenue to locate a hotel of
choice in a certain location
 Using an easy to find toll free number such as
1800-hotels-1 or Web site such as
www.hyatt.com the CRS can generate demand
for a hotel through brand loyalty
Travel Agent or Travel Management
Companies
 Within the transient reservation process, travel
agents and travel management companies act
as intermediaries, making money in one of two
ways:
1. They may charge a flat management fee
2. They are paid a commission
Direct Guest Contact
 The guests themselves can make a reservation
via phone, fax or internet
 Most hotels offer a direct booking capability on
their websites
Transient Reservation Avenues
GDS
Via Internet
Travel Mgmt Co or
Travel Agent
Via Phone or Fax
Transient Guest
CRS
Hotel
Figure 3-2
Market Segmentation
 A market segment is a portion or segment of
the actual or potential business mix at any
given hotel
 Grouping this business pool into segments with
similar characteristics is called market
segmentation
 The main group market segments are
corporate, association and SMERF
 The main transient market segments are
business and pleasure
Group Market Segments
 The corporate market segment consists of
for-profit companies and frequently pays
higher rates than other segments to ensure
quality programs
 The association market segment consists of
groups of individuals or companies that share
common purposes or goals, and is more costconscious than the corporate segment
Group Market Segments (Cont.)
 The SMERF segment consists of groups that have
characteristics that set them apart from the
previous two categories, and has five primary
components
Primary Component
Market
Social
Weddings, Proms, Fund Raisers, etc
Military
Reunions, Award Ceremonies
Educational
Continuing Education, Classes, Training
Religious
Revivals, Enlightenment Gatherings
Fraternal
Fraternities, Sororities
Transient Segments
 A business transient guest is one who stays
at a hotel because of its location in relation to
another organisation
 The business guest makes his/her hotel choice
based on many factors, but one of the most
common is brand loyalty
 Many hotels offer various incentives for guest
loyalty
Transient Segments (Cont…)
 The pleasure transient guest stays at hotel
because of its proximity to an attraction and/or
because of a signature attraction at the hotel
itself
 A signature attraction is an event, activity or
facility identified with a specific hotel
Guest Room Demand
 The following figure illustrates how both group
and transient market segments come together
to make up guest room demand
Corporate
Business
Hotel
Guest
Association
Group
Room
Transient
Demand
Pleasure
SMERF
Figure 3-4