FRONT OFFICE HOTEL 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

21.8%are traveling for other reasons (for example, personal, family, or special event)

Emphasis on safety, cleanliness & service- Guests also consider “intangible” aspects of the purchase decision

Lodging Industry Characteristics

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 foreverRepetitiveness- Some operating procedures are routines

Labor Intensive- Much of a hotel’s daily work involves employees providing services

Various amenities (e.g., business centers) increase costs for hotel owners yet sometimes appeal to only a small segment of the hotel’s market.

Results in a more competitive selling environment for hoteliers (e.g., online room booking)

The more the number of brands increase, the harder consumers find it to differentiate between them.

Efforts to focus on a highly defined, smaller group of travelers.

Market segmentation is increasing

Current Issues confronting Hoteliers: Marketing Issues

Brands overlap

Increased sophistication of consumers

Increased number of amenities

Contents

Room Sales Differentiation 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:

200

300

400

500

100

Nu

mb

er

of

Hote

l S

leep

ing

Room

s

M T W T F S S

Transient Rooms

Group Rooms

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.agoda.com or www.hyatt.com the CRS can generate demand for a hotel through pricing OR 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

Hotel

Travel Mgmt Co or Travel Agent

CRS

GDSV

ia P

hon

e o

r Fax

Via

In

tern

et

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

Hotel

Guest

Room

Demand

Transient

Pleasure

Business

Group

SMERF

Association

Corporate

Figure 3-4