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Chapter 04 Managing Front Office Operations HOT 333

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Chapter 04 Managing Front Office Operations HOT 333

  1. 1. Managing Front Office SQA I HOT 333
  2. 2. Reservations Reservations and Sales Types of Reservations Reservation Inquiries Group Reservations Reservation Availability Reservation Records Reservation Confirmation/ Cancellation Reservation Reports Other Reservation Considerations
  3. 3. Who is the Revenue Manager? Implement revenue management strategies & processes, in order to optimize & maximize its revenues At some point, revenue management started out as being in charge of reservations
  4. 4. Activities Associated with Reservation Process Formulating reservation inquiry Determining room & rate availability Creating reservation record Confirming reservation record Maintaining reservation record Producing reservation reports Research, Planning & monitoring
  5. 5. Reservations and Sales Prior to front office automation, reservations agents focused on basic room availability; they could not reserve specific types of rooms Automation provides accurate & current room & rate information Due to automation, much of responsibility for room sales, revenue projections, & profitability analyses has shifted to reservations department Reservations agents are now salespeople Many reservations are now made online; hotels need websites that are designed to make it easy for guests to make reservations
  6. 6. Role of the Sales Department Primary source of group reservations, typically from corporations & trade associations Go after social, military, educational, religious & fraternal groups (SMERF), business traveler, TA market Sales must familiarize distribution channels with hotel’s characteristics & surrounding areas Sales managers are often given financial or other incentives to meet or exceed sales goals
  7. 7. Reservation sales planning process Sales department can book business months or years in advance Groups may limit number of rooms to be sold Reservations Manager monitors group & non group business Reservations manager evaluates requests & reports potential financial impact
  8. 8. Types of Reservations Prepayment Payment card Advance deposit Voucher or MCO Corporate Non-Guaranteed Reservations
  9. 9. Guaranteed Reservations— Prepayment Requires payment in full be received prior to guest’s day of arrival Generally most desirable form of guaranteed reservation for hotel Commonly used at resort hotels
  10. 10. Guaranteed Reservations—Payment Card Common form of guaranteed reservation Properly canceled before stated cancellation hour, hotel charges one night’s room rate plus tax Resort hotels may charge for more since typical length of stay is longer
  11. 11. Guaranteed Reservations—Advance Deposit Specific amount prior to arrival (enough to cover 01 night) Failing to register or cancellation, retains deposit & cancels remainder Hotels apply deposit to last night of guest’s stay; to ensure revenue collection if guest depart earlier
  12. 12. Guaranteed Reservations—Voucher or MCO TA vouchers & miscellaneous charge orders (MCOs), guest prepays to TA TA forwards voucher or MCO to hotel as payment proof & guarantee payment on voucher returned for payment MCOs are issued by Airline Reporting Corporation (ARC) Hotels prefer MCOs over TA vouchers because ARC guarantees payment if travel agency defaults
  13. 13. Guaranteed Reservations—Corporate Corporation enters into agreement with hotel Corporation sponsors will pay for any no-show business travelers Popular in hotels catering large number of business travelers Corporation receive comprehensive invoice, simplifying billing
  14. 14. Non-Guaranteed Reservations Hold room until stated reservation cancellation hour on day of arrival (1500-1800) Hotel will not receive payment for no-shows If guest does not arrive by cancellation hour, hotel can release room for sale
  15. 15. Reservation Inquiries Handled by reservations agent or website Information collected • Guest’s name, address, e-mail address, telephone number; company or travel agency name, date of arrival & departure • Type & number of rooms requested; room rate; number of people in party, method of payment or guarantee; or any special requests
  16. 16. Distribution Channels Property reservations department Central reservations systems Cluster reservations office Global distribution systems Intersell agencies Internet distribution
  17. 17. Property Reservations Department Handles direct requests for rooms, monitors any communication links with central reservations systems & intersell agencies, maintains updated room availability information Direct requests can reach department in several ways: telephone, mail, property website, property-to-property, faxes, text messaging
  18. 18. Reservations Agent Sales Process Greet caller Identify caller’s needs Provide overview of hotel’s features & benefits, based on caller’s needs Propose room recommendation, adjust it according to caller’s response Close sale
  19. 19. Central Reservations Systems Responsible for maintaining room availability inventory for each property in system Affiliate Networks Hotel chain reservation system Typically, all participating hotels are contractually related Some affiliate networks allow non-chain properties in network as “overflow facilities” Overflow facilities pay commission for these referrals Non- Affiliate Networks Connect independent (non-chain) properties Examples: The Leading Hotels of the World, Preferred Hotels & Resorts Worldwide, Distinguished Hotels
  20. 20. Cluster Reservations Office Serves several hotels in geographic area Similar to CRS, except that it serves one specific destination area instead of entire hotel company Eliminates separate reservations departments in participating hotels Advantages: labor costs are reduced, cross-selling opportunities are created, room rates & availabilities can be coordinated Disadvantages: communication & coordination challenges
  21. 21. Global Distribution Systems Distribute hotel reservation information worldwide & provide platform for selling hotel reservations worldwide Support worldwide distribution of airline tickets, automobile rentals, & other traveler services Directly link reservation systems of hotels, airlines, car rental agencies, & travel agencies Examples of GDSs: SABRE, Galileo International, Amadeus, & Worldspan
  22. 22. Intersell Agencies Businesses that contract to handle reservations for more than one product line Handle reservation services for airline companies, car rental companies, & lodging properties Channel room reservation requests to hotel central reservations system, may also contact hotel directly
  23. 23. Internet Distribution Systems IDSs enable travelers from many different market segments to use desktop & mobile devices to reserve hotel rooms, book flights, select rental cars Examples include Expedia, Hotels.com, Orbitz, Hotwire, Priceline, Travelocity Individual hotel websites commonly feature user-friendly & secure procedures for making & paying for reservations Hotel websites also feature marketing tools such as links to hotel products & services, & photographs & virtual tours of property
  24. 24. Distribution Channel Revenues Revenues vary widely, depending on hotel (supplier) & agent (seller) relationship CRS charge affiliate properties either fixed rate per room /per night, or transaction fee based on reservation activity or both GDS systems & IDS receive revenues from hotels through commissions, by charging transaction fees or transmission fees by selling hotel Hotels sell rooms via distribution channels, goal is to offset associated commissions & other fees with increase in occupancy & overall room revenue
  25. 25. Group Reservations Involve variety of contacts: guests, meeting planners, convention, visitors bureaus, tour operators, travel agents Involve intermediary agents & require special handling Group’s representative deals with hotel’s sales or reservations department Agreed-upon number of rooms, called block, is set aside for group’s members Group members may be given special reservation identification code or reservation web address to use to reserve their rooms within group’s assigned block Un booked rooms in group block may be released to hotel’s available rooms inventory at predetermined date i.e. cut-off date
  26. 26. Creating a Group Block Contract created specifying number of rooms, rates, arrival & departure dates, special considerations (suites, comp rooms, group vs. individual billing arrangements, etc.), early arrival & late departure dates, & cut-off date Reservations manager should make sure availability before confirming block If group will absorb rooms from transient business, reservations manager should notify sales or GM of this non-group displacements Reservations manager should check group’s history with hotel (if available) before finalizing the block; it may be possible to reduce room block, based on group’s history (termed a “wash down” or a “wash”)
  27. 27. Creating a Group Block Reservations manager must monitor room availability in block as reservations come in & adjust room block as needed “Definite group” has signed sales contract; “Tentative group” contract sent, but not signed & returned Reservations manager make sure group is not allowed to remain in “tentative” status for too long, jeopardizing business Some groups allow attendees to make reservations directly with hotel, others do not; reservations agents must honor arrangements
  28. 28. Dealing with Convention Groups Review relevant hotel reservation policies with convention planner Inform agents that convention has scheduled & go over group’s reservation process Produce regular reports to update status of convention block Generate an up-to-date list of registrants at regular intervals Correct errors found by convention planner immediately
  29. 29. Convention and Visitors Bureaus Large conventions sometimes require use of rooms at more than one hotel In these cases, room requirements at various hotels often are coordinated by a separate convention & visitors bureau Convention & visitors bureaus may use special software to help monitor & coordinate room reservations in various hotels in city/local area
  30. 30. Dealing with Tour Groups Specify no & types of rooms in group block, including rooms for drivers & guides On or before cut-off date, tour operator supply guarantee on number of rooms, or rooming list if available Specify date tour operator will provide rooming list, if differ from cut-off date Monitor advance required & their due date Services & amenities will be provided as part of group package Contact details of tour operator include on reservation record Special arrangements (early arrival, baggage handling, registration, check-out procedures)
  31. 31. Attendee Management & Housing Systems Software Automates & simplifies group reservations & registration process Relies on Internet to communicate with potential attendees Provides information about group event & reservations availability Allows group leader to load e- mail & postal addresses so that leader can more quickly & easily send out e-mails & letters to prospective attendees Captures attendee details when attendee makes reservation Provide reports for manual processing by hotel, may interface with PMS
  32. 32. Reservation Availability Overbooking is strategy aimed at helping hotel achieve 100% occupancy by hedging against guests who do not arrive or cancel their reservations Reservations must be closely monitored to control overbooking Whenever a reservation is received, hotel can Accept reservation as requested Suggest alternative room types, dates, &/or rates Suggest alternative hotel
  33. 33. Reservation Systems Automated reservation management module in PMS can keep track of reservation activities PMS can tightly control room availability & automatically generate reports Advantage of automated system is improved accuracy of availability & rate Once all rooms in specific category are sold, PMS are programmed to refuse further reservations; automatically suggest to over book or alternative room types PMS can create waiting lists for high-demand periods
  34. 34. Reservation Record Guest name (group name, if applicable) Home/billing address E-mail address Telephone number Company name & telephone number Name of person making reservation (if not guest) Number in party Arrival date & time Number of nights required or expected departure date Type of reservation (GTD/Non GTD) Special requirements Additional information as needed late arrival, preference & so on
  35. 35. Reservation Confirmation/Cancellation Reservation confirmation, hotel acknowledges & verifies guest’s room request & personal information Written confirmation states intent of both parties & confirms important points of agreement (name, dates, rate, room type, etc.) Confirmed reservations may be guaranteed or non-guaranteed Confirmations are sent out via e- mail or letter soon after reservation Confirmations may also include request for deposit or prepayment, or request for updated information, depending on nature of reservation Confirmations are especially important for guests with disabilities Confirmation number helps assure guest that reservation record exists; cancellation number assures guest that cancellation has been properly processed Confirmation/cancellation numbers helps hotel to quickly reference specific reservation record Confirmation/cancellation numbers protect both guest & hotel, can reduce misunderstandings Confirmation/cancellation numbers should be stored in separate files for quick referencing
  36. 36. Modifying Non-Guaranteed Reservations When changing non-guaranteed reservation to guaranteed reservation, system would typically; Access correct non-guaranteed reservation record Capture guest’s payment card information Complete change from Non-GTD to GTD status Guests sometimes make Non-GTD reservations, later modify them (because of delayed flight, road-construction bottlenecks, bad weather conditions, etc.) to guaranteed reservations, to avoid cancellation at hotel’s reservation cancellation hour
  37. 37. Canceling a Reservation Guest does hotel a service when takes time to cancel reservation Canceled reservation allows hotel to return room to inventory Hotels make processing reservation cancellation as easy & efficient as possible for guests Canceling Non-GTD reservation: may require relevant details to verify (if available) Canceling payment card guaranteed reservation: must access correct reservation, assign cancellation Canceling advance deposit reservation: policies vary deposits normally returned if properly cancel reservations; assign & record cancellation number
  38. 38. Typical Reservation Reports Reservation transactions report Commission agent report Regrets & denials report Revenue forecast report Expected arrival & departure lists
  39. 39. Expected Arrival & Departure Lists Indicate number & names of guests expected to arrive, depart, or stay over Generated according to pre-determined schedule or on demand Displayed or printed in reservations department or via any connected device Facilitates guest registration & check-out
  40. 40. Processing Deposits Advance deposits for reservations should be processed by employees who do not have direct access to reservation records Designated employee endorse & record payments immediately Information recorded in deposits- received system file include: form of payment, amount , date received, guest name, arrival date, reservation confirmation; file should be accessible by reservations department Each reservation record should be updated with status of its deposit information Transaction report should verify that recorded deposits balance with total reservation deposits entered for day Guests should be discouraged from sending cash; checks are better, but payment card deposits are almost always preferred
  41. 41. Reservations Histories Include statistics on all aspects of reservations process: number of guests, occupied rooms, reservations organized by distribution channel, no- shows, walk-ins, overstays, under stays Helpful in tracking individual groups & their booking patterns
  42. 42. Other Reservation Considerations Legal implications Waiting lists Promotional packages Potential reservation problems E-commerce
  43. 43. Legal Implications Reservation agreement between hotel & guest begins at time of guest contact Agreement may be oral or written Confirming reservation by stating guest will be accommodated on particular date may constitute contract binding hotel If confirmation is response to reservation request from prospective guest, it may bind both hotel & guest to fulfill reservation
  44. 44. Waiting Lists Advise guest that no rooms are currently available for requested date(s) Offer to take guest’s name, telephone number, e-mail address Agree to notify prospective guest immediately if room becomes available Help guest find alternative dates or accommodations if no rooms become available
  45. 45. Promotional Packages Include guestroom plus other features, such as meals, golf, tennis, sports lessons, limousine service, sight-seeing or other activities in or near property Properties provide guests with discount for purchasing promotional package Guests consider promotional package, bargain & convenience Reservations personnel & website content must be very informative about all packages property offers
  46. 46. Potential Reservation Problems Errors in the reservation record Misunderstandings due to industry jargon Miscommunication with central reservations systems Online reservation failures
  47. 47. E-Commerce E-commerce is online commerce via Internet E-commerce extends reach of hotels far beyond traditional distribution channels of hotel reservations office, call center, & GDS Allows hotels access to multiple distribution channels Gives hotels direct access to consumers Guests can search for hotels & make reservations online Hotels assign manager to oversee online content & transactions (Revenue /E-Commerce Manager) E-commerce must be carefully monitored, to be sure that hotel information & pricing are properly presented Single image inventory: all online distribution channels draw from same room availability, pricing, rate rules, services, amenities information
  48. 48. E-Commerce Site Categories Merchant model Wholesaler model Opaque sites Transparent sites
  49. 49. Merchant Model Also called “markup model” Online intermediary negotiates discount for rooms, it will sell on its site (for example, 20 to 30 percent off the hotel’s lowest published room rate) Discounted rate is called “net rate” & represents amount intermediary will pay hotel for every room it sells at agreed-upon discount Intermediary marks up net rate to achieve room rate it will charge guests; this is termed “gross rate” Gross rate minus net rate represents profit intermediary makes on selling room on its site Merchant-model sites tend to rank hotels based on their discounts, from highest discounts to lowest Examples of merchant-model sites include Hotels.com & Travelocity
  50. 50. Wholesaler Model Hotel sets selling price for rooms it will give to the online wholesaler; receives agreed commission (% of price) for selling rooms Online sellers using wholesaler model typically earn less than sellers using merchant model Hotels favor wholesaler model, because they maintain control over rooms’ final price to guests; online sellers tend to favor merchant model, because they can earn more from per room sale
  51. 51. Opaque Sites Hotel rooms are marketed by online sellers by price &/or rating category; there is no reference to hotel brand or property specifics Brand of hotel & features are hidden from buyer until transaction is completed Hotel rooms are treated as commodity Examples of opaque sites include Priceline and Hotwire
  52. 52. Transparent Sites Hotel rooms are marketed by online sellers by price &/or rating category; however, unlike with opaque sites, transparent sites reveal identify of hotels before purchase Transparency allows buyers to select preferred brand or property among competing hotels Examples of transparent sites include Expedia, Hotels.com, Travelocity
  53. 53. E-Commerce Trends Hotels exercise caution in selecting e- commerce sites to partner & have developed distinct strategies for each Most hotel branded websites offer best rate guarantee Hotel websites become sophisticated in services they offer to groups, making it easier to process group room reservations & meetings More hotels & other online travel service providers are offering affinity or loyalty club points More hotels are offering dynamic package pricing, which allows online shoppers to select from a menu of hotel products & services & create their own custom package at special price Online booking sites can create “virtual” hotel brands by grouping proprietary set of preferred hotels at destination site (for example, Expedia’s Bargain Hotels)
  54. 54. ? Any Questions