1. Forecasting Availability and Overbooking
Chapter 4

2. Chapter 4 Objectives Define basic hotel terms
Learn to calculate available rooms for sale using two methods
Simple, Unadjusted Room Count
Adjusted Room Count
Impact of overstays, no-shows, and cancellations
Identify solutions to forecast more accurately
Understand the concept of overbooking and why hotels practice it

3. Hotel Terms

4. Hotel Terms Arrival Departure Early Arrival Stayover
A guest scheduled to arrive on a particular day
Departure
Current guest who is scheduled to check out on a particular day
Early Arrival
Guest who arrives earlier than their reservation date
Stayover
Current in-house guest who is staying another night

5. Hotel Terms (cont.) Understay or Early Departure Overstay No Show
Guest who checks out earlier than their departure date
Overstay
Guest who stays longer than their original departure date
No Show
Guest with a reservation who does not check-in on their arrival date and has not cancelled reservation

6. Hotel Terms (cont.) Walk-In Forecast Overbooking Walk
Guests who come to check-in without a reservation
Forecast
Future projection of business volume
Overbooking
Committing to more rooms than what is available
Walk
Sending a guest to another hotel due to not having a room available for them

7. Forecasting Available Rooms
The Reservation Process cannot begin without an available room.

8. Forecasting Available Rooms
Simple, Unadjusted Room Count
Only considers stayovers and arrivals in count
If Available Rooms is positive (+) then you have rooms to sell
If Available Rooms is negative (-) then you are overbooked
Available Rooms = Total Rooms – Stayovers + Arrivals

9. Forecasting Available Rooms (cont.)
Adjusted Room Count
Considers historical data
Considers impacting factors
Considers type of reservation
Available Rooms = Total Rooms – Out of Order Rooms – Adjusted Stayovers (includes understays and overstays) + Adjusted Arrivals (includes cancellations, no shows and early arrivals)

10. Forecasting Available Rooms (cont.)
Total number of rooms in the hotel
Does not include rooms that are out of use
Out of Order (OOO) Rooms
Room temporarily unavailable due to a fixable problem
Can be fixed quickly if room is needed
Can be sold at a discount “as-is”
Out of Inventory (OOI) Rooms
Room unavailable for long term due to unfixable problem
Cannot be sold today due to unacceptable condition

11. Forecasting Available Rooms (cont.)
Automated Inventory Tracking Systems
Property Management System (PMS)
Computer updates reservations in real time
Shows projections weekly, monthly
Shows todays arrivals by name, room type, group
Shows reservations by quality
Show room availability by room type and status
Daily Meetings
Time in which Management evaluates inventory

12. Forecasting Available Rooms (cont.)
Reservation Quality
What is the likeliness of the room cancelling?
Guaranteed vs. Non-guaranteed
Does it have a form of payment to guarantee room or is it on a courtesy hold?
Advance Deposit
Did the guest pay in advance?
Type of reservation
3rd party website
Is it part of a group or convention?
Is it a business traveler?

13. Factors that Impact Forecasting
Guest’s plans change or emergency
Weather related
Cancellation Policy
Is it strict and enforced?
Early Departure Fees
Require a credit card to guarantee
Payment in advance

14. Simple, Unadjusted Example
Forecasting Practice
Simple, Unadjusted Example
Total Rooms
(A)
Given
1000
Occupied Rooms
(B)
950
Expected Check-outs
(C)
300
Stayovers
(D)
(B) – (C)
650
Arrivals
(E)
325
Rooms Committed
(F)
(D) + (E)
975
Rooms Available
(G)
(A) – (F) 25
Occupancy %
(H)
(F/A)
97.5%

15. Forecasting Practice (cont.)
Adjusted Example
Total Rooms
(A)
Given
1000
Arrivals
(E)
325
Occupied Rooms
(B)
950
Cancellations (2%)
(-)
(E) * 2% -7
Expected Check-outs
(C)
300
No-Shows (5%)
(E) * 5%
-16
Understay (6%)
(+)
(C) * 6%
+18
Early Arrivals (1%)
(E) * 1% +3
Overstay (2%)
(C) * 2% -6
Adjusted Arrivals
(E1)
305
Adjusted Departures
(C1)
312
Rooms Committed
(F)
(D) + (E1)
943
Adjusted Stayovers
(D)
(B) – (C1)
638
Rooms Available
(G)
(A) – (F) 57
Occupancy (H) (F/A) %

16. Forecasting Practice (cont.)
Which formula (simple or adjusted) would you
prefer to use as a General Manager to ensure
a perfect fill or 100% occupancy?
This will be our discussion topic!

17. Just because the airlines practice overbooking, why do we?

18. Overbooking Widely common practice in Hotels
Way to protect hotel from a loss of revenues
Goal is to have a “perfect fill” or 100% occupancy
Hotels know the following will occur on any given night:
No Shows
Early Departures
Cancellations

19. Overbooking (cont.) Reservations are legal contracts
If a contract is breached, then the innocent party should be compensated
If the guest is a no-show, then the hotel should be compensated by means of a no show fee
If the hotel does not have a room to accommodate the guest, then the hotel will compensate them by means of a Walk
Hotel pays for comparable room at another hotel as well as some other associated costs

20. Overbooking (cont.) Ways to minimize the need to overbook
Accuracy in room counts
Well Trained Employees
No Show Fees
Cancellation Policy and Penalties
Early Departure Fees
Require all reservations to be guaranteed
Advance Deposits

21. Forecasting Exercise Simple, Unadjusted
Total Rooms
(A)
Given
350
Occupied Rooms
(B)
292
Expected Check-outs
(C) 78
Stayovers
(D)
(B) – (C) ?
Arrivals
(E)
129
Rooms Committed
(F)
(D) + (E)
Rooms Available
(G)
(A) – (F)
Occupancy %
(H)
(F/A)

22. Forecasting Exercise Adjusted
Total Rooms
(A)
Given
350
Arrivals
(E)
129
Occupied Rooms
(B)
292
Cancellations (3%)
(-)
(E) * 3% ?
Expected Check-outs
(C) 78
No-Shows (5%)
(E) * 5%
Understay (3%)
(+)
(C) * 3%
Early Arrivals (1%)
(E) * 1%
Overstay (2%)
(C) * 2%
Adjusted Arrivals
(E1)
E--+
Adjusted Departures
(C1)
C+-
Rooms Committed
(F)
(D) + (E1)
Adjusted Stayovers
(D)
(B) – (C1)
Rooms Available
(G)
(A) – (F)
Occupancy
(H)
(F)/(A)

23. Which Method would you select?
Forecasting Exercise
Which Method would you select?
WHY?