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 Plus Cancellations Minus No Shows Minus Early Departures Minus Stayovers Plus Other Factors Out of Order Minus Compression 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

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

Group& Transient Rooms Yield Management Illustration Numerical Value Rack Rate 7 Corporate Rate 6 Seasonal Rates 5 Rate Designation Volume Rates 4 AAA/AARP Rate 3 Industry Rate 2 Group& Transient Rooms “On Books” Government Rate 1 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

Group& Transient Rooms Spikes and Holes Spike Hole Occupancy Levels 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

Figure 12-16

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

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

“You can only make one first impression” 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