Front office management

Front office management

Concept of revenue management

• Origin: Airline industry

• Based on : Supply and demand. Demand > Supply -Price reses and vice-versa

• Involves: Analysis, evaluation and strategy in addition to formulae and calculations

• Successful RM is to sell: Right product to right customer on the right day for the right price

Hotel Industry Applications

• Issue: Fixed perishable inventory to be sold by a specific time

• Forecast: Determine whether the room rates should be raised or lowered, whether the reservation request to be accepted or not

Poll

Room is a perishable product.

• True

• False

Basic tactics

• Capacity management

• Discount allocation

• Duration control

Capacity management

• Balances the risk of overselling the guest rooms against potential loss of revenue arising from room spoilage

• Determining the number of chance guest to be accepted given projected cancellation, no shows and early departures

• Varies by room type: It may be advantageous to overbook lower priced rooms than higher priced rooms

• Essential in case of group attrition

Poll

Why do you think that overbooking lower priced rooms may prove beneficial?

• It compensates for no shows

• In case of non availability for reserved guest upgrading is a viable solution

Discount allocation

• Theory: Sale of a perishable item is better than no sale at all

• Objective 1: Protect enough remaining rooms at higher prices to satisfy the projected demand for rooms at that rate and at the same time filling the rooms that would other wise go vacant

• Objective 2: Encourage upselling

Duration control

• Theory: Places time constraints on accepting reservations in order to protect sufficient space for multi day requests

• MLOS

• CTA

• ST

Poll

What according to you is room spoilage?

• Room as perishable product not getting reserved for a given date

• Room not getting sold after the hotel stooped taking reservations for a given date

MLOS: Minimum Length of Stay

• Reservation for at least a specific number of days in order to be accepted

• Advantage: Allows hotels to develop a relatively even occupancy

• It can be applied with discount rates

CTA: Close To Arrival

• Reservations to be taken for the date as long as the guest arrives before that date

• Used to manage strain of the front office department due to heavy check in on a particular date

ST: Sell Through

• Works like MLOS except the required stay can begin before the date the strategy is applied

• Effective when one day has a peak and the management does not want it to adversely affect the reservations on either side of the peak

Multiple Choice

A hotel has a peak season going on and Mr Sharma who wants a rooms for two days is denied the reservation due to the fact that the manager has implemented the duration control of minimum three days. What kind of strategy is being talked about here?

• Minimum length of stay

• Sell through

• Close to arrival

• Either Minimum length of stay or sell through

Multiple Choice

A hotel has 300 rooms and expecting a heavy check in of 295 rooms on Wednesday. Mr Verma was denied a booking from Wednesday to Saturday, however Mr Kapoor's reservation was accepted from Tuesday to Saturday. What type of strategy is applied here?

• Minimum length of stay

• Close to arrival

• Sell through

• Either Minimum length of stay or sell through

Multiple Choice

A famous OTA is bringing 25 rooms booking for a group for 10 nights. Due to communication errors the OTA forgot to mention to omit one day from the above mentioned duration and the group intended to stay only for 9 nights. Which of the following holds good here?

• Group attrition

• Wash down

• Displacement

• Denial

Elements of revenue management

• Group room sales

• Transient room sales

• Food and beverage activity

• Local and area wide activities

• Special events

Group room sales

• Group booking data

• Group booking pace

• Anticipated group business

• Group booking lead time

• Displacement

Group booking data

• Management should determine whether the group blocks are already recorded should be modified or not

• In case a group has pervious business profile and are known to book 5 percent extra rooms then the management should anticipate the unnecessary rooms and delete them from the block

• Wash down required careful anticipation as an error may lead to an overbooked situation

• 
  

• 
  

Group booking pace

• Rate at which the group business is booked

• 
  

• 
  

Multiple Choice

If a hotel has 300 rooms in group blocks it is scheduled for a function this year. If the hotel had 250 rooms in group blocks in the last year for the same function then how much percentage is the hotel ahead of previous years pace?

• 50%

• 40%

• 30%

• 20%

Poll

Do you think that this type of integrated mode of teaching while revising is beneficial for you

• Yes

• Can't say

• No