Chapter 5: Systemwide Reservations 1

Focus Points Importance of guest reservations to travelers and lodging establishments Overview of reservation system Sources of reservations Forecasting reservations Overbooking (occupancy management) Processing guest reservations 2

Classroom Presentations Introduction Reservations are a necessity for travelers Reservations are a necessary marketing tool for hotels to produce a profit Steady flow of guests to a property – 30% with a central reservation system Facebook, Twitter, corporate blogs, LinkedIn 3

Overview of reservation system Choice Hotels International 5900 franchises 30 countries; 479,000 rooms 4

Overview of reservation system (cont’d.) Brand names us/html/CorpBrandInformation?sid=rRPg.2c9UnKBu3.1 Comfort InnCambria Suites Comfort SuitesSuburban Extended Stay Hotel QualityAscend Collection Clarion Sleep Inn Econo Lodge Main Stay Suites Rodeway Inn 5

Overview of reservation system (cont’d.) InterContinental Hotels Group 3500 hotels and resorts 100 countries 535,000 guest rooms Hilton 3,000 hotels 500,000 rooms in 74 countries and territories Use a work-at-home program for its call center staff increase its quality of customer service decreasing call center costs 6

Overview of reservation system (cont’d.) Intercontinential Brands InterContinental Hotels & Resorts Crowne Plaza Hotels & Resorts Hotel Indigo Holiday Inn Hotels and Resorts Holiday Inn Express Staybridge Suites Candlewood Suites Park Inn Hotels Park Plaza Hotels & Resorts Regent International Hotels Experiences over 7 million visits to its web site each month. Marriott International 3,200 lodging properties in the United States and 66 other countries and territories Uses TravelCLICK Hotelligence® in 150 of its select service and extended stay properties including Courtyard, Residence Inn, Fairfield Inn,TownePlace Suites, and SpringHill SuitesHotelligence “Hotelligence not only helps our hotels make the right decisions, it also helps them make decisions more quickly—so they take advantage of opportunities before their competition." 7

Carlson Hospitality Worldwide Curtis-C (pronounced courtesy) reservation system 730 hotel locations and six cruise ships 8,900 reservations per day processed; over 3 million per year (2000) Overview of reservation system (cont’d.) 8

Carlson Brands Regent International Hotels Radisson Hotels & Resorts Park Plaza Hotels & Resorts Country Inns & Suites by Carlson Park Inn Hotels Radison Seven Seas Cruises Overview of reservation system (cont’d.) 9

Carlson - Connected to 455,000 travel agents Carlson - Data Interface HARMONY – the PMS of the hotels Customer KARE system ( Customer Knowledge and Relationship Enabling System) Harmony Database Manager – room inventory and room reservations Guest Communication Manager – manages guest satisfaction information KnowledgeNet – provides access to company policies, forms, reports, hotel procedures and newsletters Overview of reservation system (cont’d.) 10

Global Distribution System Global Distribution Systems (GDS) are distributors of hotel rooms to corporations such as travel agents that buy rooms in large volume. (115 million room nights = $20 billion in 2008) 1. Amadeus 2. Galileo 3. SABRE 4. Worldspan TravelCLICK, the source of hotel industry electronic distribution for many GDSs Promotional advertising and methodology for measuring advertising reach to a travel agent audience that yielded over $8 billion in hotel bookings in 2008 Insertion of Best Available Rate (BAR) for check-in date 11

Role of the Internet in Securing Reservations Intro – A buyers’ market place with the best rates on the Internet Social Media - Facebook, Linkedin, Twitter networking is going to be the second-most popular online activity by 2012, overtaking shopping and surpassing both communication— such as —and entertainment 12

Role of the Internet cont’d. Background on Room Rates offered via the Internet Dot.com mania hits consumers ->wholesalers decided to advertise free offers to entice consumers to use the Internet Leaves lasting impression on purchasing manner Wholesaler offers to take empty hotel rooms into inventory and offer on Internet -> hoteliers grateful to sell rooms at low sale prices Internet sales light; everything seems ok Other Internet sites offered similar models with their discounts guaranteed lowest price -> transparency of rates (guest can check room rates before check-in to see if their rate has been offered lower on the Internet) 13

Role of the Internet cont’d. Effect of Internet on Pricing Rooms – Muqbil % of Americans used Internet to research travel Real-time rate information availability causes re-book booking, if lower rates are posted Minus $1.27 billion to lower ADR because of increased transparency and price competition and increased revenues due to increased bookings stimulated by the lower rate Internet average rate is 17% less than non Internet rate 75 % were discount seekers and 25% were convenience bookers. Price transparency during low periods is a negative for hotels to increase rate; opposite during peak seasons. 14

Role of the Internet cont’d. - Customer Relationship Management (CRM), management of guest services with technology. It allows travel companies (travel suppliers and online travel agencies – OTAs) to engage customers in strong, personalized and mutually beneficial interactive relationships, increase conversions and sell more efficiently. 15

Role of the Internet cont’d. Consumers Response to Use of the Internet – Third-Party Websites (Expedia, Travelocity) serves 14,000 customers in more than 140 countries around the world GDS and Pegasus Hotel e-Commerce room night sales = 57,131,438 (46,510,434 sold by travel agents and 10,621,004 by consumer off the Internet) second quarter 2004 Over 65% of online hotel bookings will come from the direct online channel i.e. via the hotel’s own website (76% for the major hotel brands). The hotel website has become the first, main, only and in many cases last point of contact with past, current and potential guests. 16

Internet Effect on Pricing Lookers into Bookers Customize the online shopping experience. Guest Connect templates guide the flow of the booking process and enable the hotelier to incorporate the specific product elements that will best merchandise their property or chain from expanded property descriptions and rich images to dynamic packaging, promotional pricing (with “slash-through” pricing), room preference selection, upgrades or links to a virtual concierge for additional services. 17

Social Media Set goal communicate to, or communicate with your guests and prospective guests? seeking fleeting fans or are you out to build long-term, lasting relationships with your customers? enhance the credibility and reputation of your brand? Promotion of the week? CRM platform? Commitment to Social Media Marketing (SMM involves participation, interaction, resources, commitment, follow- through, and time. 18

Social Media cont’d. Social media should not be the anchor to your marketing plan Team effort Seek out the experts and observe 19

Start - Types of reservation systems Franchisee – hotel owner who leases a brand name and the benefits by: Management expertise Financial backing National advertising Group purchasing Reservation service 20

Types of Reservation Systems Referral Member of a Reservation Referral System - a worldwide organization that processes requests for room reservations at a particular member-hotel, is a hotel developer/owner who has access to the national reservation system 15%-30% of daily room rentals vs. independent status Hilton franchise fees example (2009): Initial fee of $85,000 for first 275 guest rooms or suites plus $300 for each additional room or suite (min. fee to $75,000) 5% monthly gross rooms revenue for royalty fee 4% of monthly gross rooms revenue = monthly program fee a monthly fee of 0.75 percent of hotel gross revenue is charged for use of OnQ proprietary business software and hardware system Plus other fees for participation in Frequent Traveler/Guest Reward program, training, and computer system 21

Sources of Reservations Corporate Clients Secretaries Club Toll-free Reservation Referral Chain Travel Agent Web sites (Expedia, Travelocity, Hotels.com) LinkedIn 22

Sources of Reservations cont’d. Social/Military/Educational/Religious/ Fraternal (SMERF) Provides opportunity to fill vacancies in low times These markets are price sensitive and time-relaxed and will travel accordingly. 23

Sources of Reservations cont’d. Meetings/Incentive/Conference/Event (MICE) Need to locate large group of conference attendees Details: airfares, hotel rooms, room rates, food and beverage, cultural activities, etc. Cooperation of local tourism and travel association necessary 24

Sources of Reservations (cont’d.) Group travelers Refer to various travel directories used by hotels and potential guests as listed in the text Group planner Bus association network –Virginia Bus Association –Pennsylvania Bus Association –National Bus Association Travel directories i.e. Hotel and Travel Index.com (refer to p. 139) Hotel Representative – member of hotel staff who seeks group activity planners Hotel Broker – person who sells hotel room prize packages to corporations, sweepstakes promoters, game shows, and other sponsors (with a discount) 25

Sources of Reservations (cont’d.) Leisure Traveler – people who travel alone or with others to visit points of interest or relatives, or for other personal reasons Travel agencies Toll-free numbers Reservation/referral systems Internet Social Media – Note Marriott’s effort on YouTube being incorporated into the marketing efforts of this segment – "Tweet Yourself to Hawaii" online campaign - best fan videos will be posted for public judging, Current Guests - an overlooked marketing opportunity 26

Forecasting Reservations Rooms forecast – refer to Figure (p. 141) Helps to preview the Income Statement house count – number of persons registered in a hotel full house – 100% occupancy Procedure to determine forecast – refer to Figure 5-3 (p. 142) 27

Overbooking (Occupancy Management) Overbooking – accepting reservations for more rooms that are available by forecasting the number of no-show reservations, stayovers, understays, and walk-ins, with the goal of attaining 100% occupancy 28

Overbooking (Occupancy Management) P. 138 Toh reports: “in many instances, overbooking to overcome the problem of no-shows and late cancellations may produce advantages by way of operating efficiencies that far outweigh the occasional inconveniences to guests and travelers.” Gould et al. could find no direct statutory or administrative law governing hotel overbooking with the exception of one Florida regulation. Hoteliers and front office managers who practice overbooking do so to meet an organization’s financial objectives. They do not intentionally overbook to cause problems for the traveler.” 29

Components of overbooking (need data) Confirmed reservations – 4 pm or 6 pm check in Guaranteed reservations – credit card required Stayovers Understays Walk-in guests Occupancy management formula as listed in Chapter (p. 145) (components) Overbooking (Occupancy Management) 30

Revenue Management Restate the role of revenue management in the reservation process (this topic will be covered in detail in Chapter 6) – “A management technique of planning to achieve maximum room rates and most profitable guests” Overbooking (Occupancy Management) 31

Processing Guest Reservations Systemwide Reservation Systems Operational procedure: Greeted by an operator Guest places of request for dates and accommodations Operator checks availability of request with room data bank Operator suggests alternatives 32

Outsourcing reservations (p. 148) – providers of central reservation systems that are not owned by the hotel operation Internet Global Distribution System (GDS) – Amadeus, Galileo, SARE, and World Span Web-enabled Application-Service Provider (ASP) Components of SynXis Agent (Allows hotel operators to consolidate and control hotel inventory from all booking sources. ) Central reservation system GDS connectivity Alternate-distribution system connectivity Book-A-Rez Processing Guest Reservations (cont’d.) 33

Processing Guest Reservations (cont’d.) w/ Outsourcing Use Descriptions That Allure and Entice Update Your Property Information Keep Room Inventories Loaded And Updated Keep The Lines of Communication Open 34

Processing Guest Reservations (cont’d.) Outsourcing reservations cont’d. Pegasus Solutions Real-time availability and pricing for property and room types Interfaces with key industry PMS, revenue systems, and loyalty program systems to approximately 7500 hotels 35

Confirmed reservation – a reservation that is held until 4pm or 6pm; discuss implications on profit and loss statement – note: this category has been generally discontinued in most hotels. Guaranteed reservation – a reservation that is held with a credit card until the guest arrives; discuss implications on profit and loss statement Processing Guest Reservations (cont’d.) 36

Reservation codes for confirmed or guaranteed reservations (See example, p. 149) Components I.D. number of property Initials of reservationist Date of arrival Date of departure Type of credit card Room rate Type of room Sequential reservation number Processing Guest Reservations (cont’d.) 37

Cancellation code (See example, p. 150) Components I.D. number of property Initials of person who processed the reservation Date of arrival date of departure Sequential number of cancellation Blocking procedure – removing rooms from the available room data bank for the dates involved –blocking on the horizon – in the distant future –daily blocking assigning guests to their particular rooms on a specific day of arrival Processing Guest Reservations (cont’d.) 38

Process of completing reservations through a PMS Figure 5-4 – Guest Data screen (p. 152) Figure 5-5 – Room Inventory screen (p. 152) Figure 5-6 – Guest Deposit screen (p. 153) Figure 5-7 – Special Requests screen (p. 153) Figure 5-8 – Blocking Report screen (p. 154) Figure 5-9 – Arrival Report screen (p. 155) Figure 5-10 – Departure screen (p. 156) Figure 5-11 – VIP Information screen (p. 156) Figure 5-12 – Projected Occupancy screen (p. 157) Figure 5-13 – Travel Agent screen (p. 157) Figure 5-14 – Guest Message screen (p. 158) Processing Guest Reservations (cont’d.) 39

Database Interfaces Transferring of computer information (captured at the time a reservation is made) between computers Examples –Marketing and sales office –Housekeeping staff –Maintenance crews –Food and beverage –Controller’s office Processing Guest Reservations (cont’d.) 40

Database interfaces (cont’d.) True Integration Integration of central reservation system and property management system sharing a database. Benefits: –Consumer can access real-time reservations –Less investment for data storage –Hotels can access data via Internet Processing Guest Reservations (cont’d.) 41