Chapter 4 Front Office Operations: Reservations 59
Rates are usually advertised "subject to availability" to allow flexibil- ity. Chapter 10 shows that a range of prices is quoted in reference ma- terials, thus allowing for such price changes.
Occupancy rates, which are used to formulate forecasts, are the tools of yield management. Occupancy rates are derived from divid- ing the number of rooms available for rent into the number of rooms occupied. For example 100 rooms available, divided into 70 rooms rented, equals a 70 percent occupancy rate. This must be established in order to create forecasts, which are estimates of the number of guests/rooms populated, thus occupancy rates for the future. A fore- cast is formulated by taking historic occupancy figures over several years and adding new data, such as physical improvements, event oc- currences, and intensified advertising campaigns. Projected occu- pancy can then be forecasted, and if lower than desired, rate changes can be made to fill more hotel rooms.
Room rate changes may be made on an annual basis. For example, raising corporate and government rates when annual occupancy per- centages are expected to lise may occur. Convention and tour group rates may be changed according to projected occupancy rates in a given time frame.
Other considerations that may be accounted for in yield man- agement are the percentage of double- versus single-room sales and commissions paid to travel agent bookings. Nonrevenue (nonrev) rooms, which are free or complimentary, must be included in for- mulas. These may be occupied by conference planners or frequent- user program guests.
On the short-term side, a 10-day or 3-day forecast enables the front-desk manager to adjust prices. On a daily basis the front desk might be alerted to reduce rates to walk-ins when occupancy is lower than expected. Forecasts enable the front-desk manager to notify other departments, such as housekeeping and food and beverage for staffing and purchasing.
Yield management systems allow rates to vary continually ac- cording to supply and demand. The purpose is to maximize profits. Airlines use the same theory in setting their multileveled fares.
Figure 4-2 shows selected cities across the United States that re- flect highest and lowest average room rates.
60 Chapter 4 Front Office Operations: Reservations
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Highest Average Room Rates of Selected Citites
New York, NY $168.33
New Orleans, LA 123.98 San Francisco, CA 118.09
Boston, MA 116.01
Honolulu, HI 111.52
Charleston, SC 103.67
Baltimore, MD 102.82
San Antonio, TX 102.11
Chicago, IL 101.39
West Palm Beach, FL 100.18
Lowest Average Room Rates of Selected Cities
Bismark, ND $ 42.81
Las Cruces, NM 44.01
Billings, MT 45.10
Sioux Falls, SD 47.64
Reno, NV 50.95
jackson, MS 51.53
Little Rock, AK 51.89
Charleston, WV 52.57
Oklahoma City, OK 52.75
La Crosse, WI 53.98
FIGURE 4-.2
Sample room rates.
Source: American Hotel Foundation, .1999.
TYPE OF RESERVATION
There are two basic types of reservations, regular or guaranteed. A reg- ular reservation or nonguaranteed reservation is not paid in advance and the room is held until a specified time (usually 6 P.M.) on the date of arrival. If the guest does not arrive by the specified time, the reser- vation is released and the room is sold to a walk-in (a person with no reservation who appears at a property desiring a room). To secure a guaranteed reservation, the client pays for the first night prior to his or her arrival. This may be in the form of a credit card number or re- ceipt of the first day's payment. Guaranteed reservations are essential for late arrivals, when guests know they will arrive after the specified
Chapter 4 Front Office Operations: Reservations 61
time. A guaranteed room is usually held until checkout time the fol- lowing day.
SOURCE OF RESERVATIONS
Sources of reservations include reservation centers, property-to-property, third parties, and direct. Technology allows thousands of property chains to have a central reservation center situated at one location. To reserve a room in Paris, a person might speak with someone in North Dakota. Computers and 1-800/1-888 telephone numbers convey reservation demands and confirmations to the chain's establishments all over the world. Through the same technology a chain-affiliated property in one city can contact another affiliate elsewhere to con- clude property-to-property reservations.
Third patties make reservations for individuals or groups. Hotel representatives serving independent hotels have reservation centers that book rooms. Travel agents reserve rooms for clients. In both of these incidences, fees or commissions are paid by the lodging estab- lishment. Tour operators make group bookings for their tour partici- pants, as do meeting planners reserving multiple rooms for their con- ference attendees.
Direct reservations are made by individuals who book rooms per- sonally with the property. The reservation method used may be via mail, telephone, fax, e-mail, through a Web site, or face to face.
PROCESSING RESERVATIONS
Upon receiving a reservation request, the reservation clerk checks the availability of rooms on the dates requested. A computer can show the availability of different types of rooms for any given date. Figure 4-3 is a standard computer printout showing the types of rooms and the number available for each day of the week. The computer can give space availability for years in advance. The reservation clerk keys in the new reservation and the computer reflects one less room available.
Figure 4-4 shows a handwritten availability chart which demon- strates the basis of the computer printout. Note that the chatt covers an entire month. Counting backwards, crossing off figures as reserva- tions are received shows the number of rooms yet available. Note that this chart covers an entire month. The numbers do not indicate room numbers but only show how many rooms are available. Reservations might also be posted by hand in a calendar-type book.
62 Chapter 4 Front Office Operations: Reservations
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