Hotel Front Office Management, 3rd Edition

YIELD MANAGEMENT 141unpleasant scene can occur if an exhausted guest arrives at 3:00 a.m. with a guaranteedreservation and finds no vacancies.3. The predicted number of stayovers at this given time—based on historical records,with considerations for the season of the year, tourist attractions, nature of the currentguests (convention, tourist, or business traveler)—is 4 rooms. This number of roomsmust be subtracted from the number of rooms available for sale.4. The predicted number of understays at this given time, considering factors similar tothose applied to stayovers, is 5. This number of rooms is added to the number ofrooms available for sale.5. The predicted number of walk-ins for this given time period—using historical recordsand available information concerning tourist events, activity at other hotels, attractionsin nearby communities, and the like—is 8.The arithmetic for this example works out as follows:200 rooms available 71 confirmed reservations (75 [75 0.05]) 98 guaranteed reservations (100 [100 0.02]) 4 stayovers 5 understays 8walk-ins 24 number of additional room reservations neededto achieve 100 percent occupancyThe occupancy management formula indicates to the front office manager that 24additional rooms must be rented to achieve 100 percent occupancy. By predicting thisnumber in advance, the front office manager has reasonable flexibility in accepting 24additional reservations for the evening.Yield ManagementYield management is the technique of planning to achieve maximum room rates and mostprofitable guests. This practice encourages front office managers, general managers, andmarketing and sales directors to target sales periods and to develop sales programs thatwill maximize profit for the hotel. This topic is fully explored in Chapter 6. Yield managementis part of successful administration of a reservation system, because it forces thefront office manager to make a realistic attempt to produce a favorable income statement.Applying rate categories to specific time periods with minimum length of reservationsTLFeBOOK