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 The text describes the characteristics of “typical” business guests and leisure guests. 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 * The text provides an example of each characteristic applied to lodging industry. 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 Market Segmentation 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: 500 Transient Rooms 400 Number of Hotel Sleeping Rooms 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 Transient Guest Travel Mgmt Co or Travel Agent Via Internet Via Phone or Fax CRS GDS 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 cost-conscious 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 Room Demand Group Transient Association Pleasure SMERF Figure 3-4