1. 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

2. 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

3. 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

4. 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

5. 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

6. A perfect sell is reached when every room is occupied
and no guest was walked
Figure 12-6

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. Figure 12-16

17. Figure 12-17

18. 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

19. 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

20. Figure 12-20

21. 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

22. = Prime Selling Time
Figure 12-22

23. “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

24. 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

25. 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

26. 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

27. 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

28. 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

29. 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