Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved Chapter 5: Systemwide Reservations

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved 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

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved 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

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved Overview of reservation system Choice Hotels International 5000 franchises 42 countries Received 32,000 phone calls at one of its two reservation call- centers per day.

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved Overview of reservation system (cont’d.) Brand names us/html/CorpBrandInformation?sid=rRPg.2c9UnKBu3.1 Comfort Inn Comfort Suites Quality Clarion Sleep Inn Econo Lodge Main Stay Suites Rodeway Inn Technology applications of Palm VII or Palm VIIx (p. 131)

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved Overview of reservation system (cont’d.) InterContinental Hotels Group 3500 hotels and resorts 100 countries 535,000 guest rooms

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved 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.

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved 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.)

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved Carlson Brands Regent International Hotels Radisson Hotels & Resorts Park Plaza Hotels & Resorts Country Inns & Suites by Carlson Park Inn Hotels Radisson Seven Seas Cruises Overview of reservation system (cont’d.)

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved 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.)

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved Global Distribution System Global Distribution Systems (GDS) are distributors of hotel rooms to corporations such as travel agents that buy rooms in large volume. Amadeus Galileo SABRE Worldspan

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved Role of the Internet in Securing Reservations Intro – A buyers’ market place with the best rates on the Internet

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved 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)

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved 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.

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved Role of the Internet cont’d. Consumers Response to Use of the Internet – Third-Party Websites (Expedia, Travelocity) 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

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved 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

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved 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 (2005): 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 franchise fee 4% of monthly gross rooms revenue = monthly program fee Plus other fees for participation in Frequent Traveler/Guest Reward program, training, and computer system

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved Sources of Reservations Corporate Clients Secretaries Club Toll-free Reservation Referral Chain Travel Agent Web sites (Expedia, Travelocity, Hotels.com)

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved Sources of Reservations cont’d. Social/Military/Educational/Religious/Fra ternal (SMERF) Provides opportunity to fill vacancies in low times These markets are price sensitive and time-relaxed and will travel accordingly.

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved 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

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved 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 (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)

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved 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 Current Guests - an overlooked marketing opportunity

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved Forecasting Reservations Rooms forecast – refer to Figure 5-2 (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)

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved 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

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved 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.”

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved Components of overbooking 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) Overbooking (Occupancy Management)

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved 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)

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved 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

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved 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 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 Processing Guest Reservations (cont’d.)

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved Confirmed reservation – a reservation that is held until 4pm or 6pm; discuss implications on profit and loss statement 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.)

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved 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.)

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved 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.)

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved 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.)

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved 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.)

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved Database interfaces (cont’d.) True Integration Integration of central reservation system and property management system sharing database. Benefits: –Consumer can access real-time reservations –Less investment for data storage –Hotels can access data via Internet Processing Guest Reservations (cont’d.)