R E V E N U E M A N A G E M E N T 153

and may be available for sale. The policy of the hotel may or may not allow the sale of these 2 rooms. If the hotel knows of other hotels in the immediate area that have available rooms for that particular night, the front office manager might be willing to walk a guest with a guaranteed reservation to another hotel if all the guests with guaranteed reservations arrive. It is important to be extremely cautious in this category. An unpleasant scene can occur if an exhausted guest arrives at 3:00 a.m. with a guaranteed reservation and finds no vacancies.

3.The hotel’s predicted number of stayovers at this time—based on historical records, with considerations for the season of the year, tourist attractions, nature of the current guests (convention, tourist, or business travelers)—is 4 rooms. This number of rooms must be subtracted from the number of rooms available for sale.

4.The hotel’s predicted number of understays at this time, considering factors similar to those applied to stayovers, is 5. This number of rooms is added to the number of rooms available for sale.

5.The hotel’s predicted number of walk-ins for this period—using historical records and available information concerning tourist events, activity at other hotels, attractions in nearby communities, and the like—is 8.

The arithmetic for this example works out as follows:

200 rooms available

271 confirmed reservations (75 2 [75 3 0 05])

298 guaranteed reservations (100 2 [100 3 0 02])

24 stayovers 1 5 understays

28 walk-ins

524 number of additional room reservations needed to achieve 100 percent occupancy

The occupancy management formula indicates to the front office manager that 24 additional rooms must be rented to achieve 100 percent occupancy. In predicting this number, the front office manager can reasonably accept 24 additional reservations for the evening.

Revenue Management

Revenue management is the technique of planning to achieve maximum room rates and the most profitable guests. This practice encourages front office managers, general managers, and marketing and sales directors to target sales periods and to develop sales programs that will maximize profit for the hotel. This topic is fully explored in chapter 6. Revenue management is part of the successful administration of a reservation system