LESSON PROPER 13

Ø  Room Availability Forecasting – Hotel Front Office

Room availability forecasting are used to aid manage the reservations method and to consultant
entrance office staff in amazing rooms administration. It is priceless to the front administrative center
supervisor in scheduling the necessary quantity of workers for an expected volume of business. These
Room availability forecasting are useful to other lodge department managers as well.

Ø  The expertise which is beneficial in Room availability forecasting are:

 a radical advantage of the motel and its surrounding area.

 Market profiles of the constituencies the hotel services.

 Occupancy data for the earlier several months and for the same interval of the prior 12 months.

 Reservation traits, and a historical past of reservation lead times (how a ways upfront
reservations are made)

 a listing of distinct pursuits scheduled within the surrounding geographic subject.

 Industry profiles of distinctive organizations booked for the forecast dates.

 The number of non-guaranteed and warranted reservations and an estimate of the number of
anticipated no-indicates.

 The percent of rooms already reserved and the cut-off date for room blocks held for the forecast
dates

 The influence of metropolis large or multi motel corporations and their talents affect on the
forecast dates.

 Plans for reworking or renovating the motel that will change the quantity of on hand rooms.

 Developing or renovating plans for competitive motels within the field

Ø  Room availability forecasting data

The system of room availability forecasting as a rule relies on ancient occupancy knowledge. The next
every day occupancy information will have to be accrued to facilitate forecasting:

 number of expected room arrivals

 quantity of anticipated room stroll-ins

 quantity of anticipated room stayovers (rooms occupied on prior nights with a purpose to
continue to be occupied for the night time in query)

 number of expected room no-shows

 number of anticipated rooms understays (investigate-outs before the anticipated departure

date)
  number of anticipated rooms examine-outs

 number of anticipated rooms overstays (investigate-outs after the anticipated departure date)

Room availability forecasting Ratios

percent of No-suggests – This ratio helps the entrance place of business supervisor decide when and if
to sell rooms to stroll-in visitors. Percent of No-suggests =     number of Room No-shows / number of
Room Reservations

percent of walk-Ins: percentage of walk-Ins =  number of Room stroll-Ins /whole number of Room
Arrivals

percent of Overstays = quantity of Overstay Rooms /number of anticipated investigate-Outs

percent of Understays =quantity of Understay Rooms /quantity of anticipated verify-Outs

Room availability forecasting method – The quantity of rooms available for sale on any given date can
also be decided by way of the following formulation:

Total quantity of Guestrooms

– quantity of Out-of-Order Rooms

– number of Room Stayovers

– number of Room Reservations

+   quantity of Room Reservations x percent of No-shows

+   number of Room Understays

–   number of Room Overstays

= number of Rooms available for sale

pattern Forecast forms

The entrance place of job may just put together a couple of forecasts relying on its desires. Occupancy
forecasts are commonly developed on a month-to-month basis and reviewed by meals and beverage
and rooms division administration to forecast revenues, project bills, and improve labor schedules.
Nevertheless, the nearer the forecast is, the extra correct it is going to be. Given under are a couple of
patterns of forecast varieties:

1. Ten-Day room availability forecasting – The ten-day room availability forecasting at most lodges is
developed collectively by means of the front administrative center supervisor and the reservations
manager, almost certainly together with a forecast committee.

2. Day-to-day forecasted occupancy figures, including room arrivals, room departures, rooms bought,
and number of friends.

3. The number of crew commitments, with a listing of each and every team’s title, arrival and departure
dates, number of rooms reserved, quantity of friends and probably quoted room rates.

4. A comparison of the previous interval’s forecasted and actual room counts and occupancy
percentages.

The ten-day room availability forecasting must be completed and allotted to all department offices to
help plan their staffing for the upcoming period.

5. Three-Day room availability forecasting – a 3-day room availability forecasting is an updated report
that reflects a extra current estimate of room availability. It details any tremendous alterations from the
ten-day forecast. The three-day forecast is meant to advisor management in quality tuning labor
schedules and adjusting room availability understanding.

Under non-automated and semi-automated systems, number of rooms available for sale forecasts are
calculated upon demand and need and vary from three-day to ten-day forecasts. However, under fully
automated systems, forecasts can be done at any moment for any future period of time. For, computers
run forecasts on a room count considerations, hence eliminating tedious labor work and human error
margins.

Ø  9 Undeniable Benefits of Hotel Room Forecasting

·         Marketing Strategy

A reliable room forecast is critical in the effective execution of a hotel’s marketing strategy. As hoteliers
use forecasting mechanisms to plan their promotion offers (period, targeted territories, etc.), the
interrelation between room forecasting and marketing strategy is quite obvious. This is a key trigger for
the hotel’s Sales and Marketing team to activate sales & marketing initiatives to attempt and create
demand, at the same time promotions are introduced for the same effect. On this strategy table, hotels
identify the market segment that can be targeted to make up for the drop expected from the other
segment.

For example for a forecast of low occupancy for an upcoming period, hotels can decide to run a
promotion on all online channels to create an incremental demand as well hotel sales team can run
customized promotions for their offline customers to fill up the hotel.

 Yielding across various channels

An accurate forecast of occupancy and room revenue empowers a revenue manager to yield across
various channels.

For example, if a property is forecasted for a high occupancy owing to high unconstrained demand then
the revenue manager can choose to yield and sell on low cost/high rate channels to maximize profits. 

 The Rooms forecast is a forerunner to Financial Forecast

Hotel Financial Controller needs information on forecasted room revenue for multiple purposes; to
understand cash/credit flow for the hotel as that needs to be considered for multiple expenses that will
be generated in different departments including rooms.

For example for next month hotel revenue manager makes a  forecast that Corporate Groups &
Corporate FITs will be dominant in occupancies and Transient segment will be below expectations, a
financial controller will have to adjust the outflow of cash since most corporate bookings tend to be
realized much later than actual check out when payment from these corporate offices hits the hotel’s
bank.

Also, additional revenue that will be generated from other departments like F&B, Laundry, etc., is
proportional to room occupancy.

As discussed, Hotel Financial Controller creates a cash flow forecast (a forecast of cash coming into and
going out of business) on this forecast by revenue manager and this forecast is periodically compared
with the hotel budget to track deviation. 

 Forecast for other Revenue generating departments

Though hotel rooms might be the biggest contributors to revenue, but there are other revenue-
generating departments too which have their forecast dependent on room forecast, for example, room
occupancy will help F&B to know how many resident guests are expected at Breakfast and other meals,
similar forecast for other departments like Laundry, Mini Bar, etc.

 Purchase Decisions

The purchase of perishable as well as non-perishable improves by a good forecast. For Example during a
low occupancy period, a hotel may decide to cut down its buffet offerings in the coffee shop and thus
need to purchase a lot of perishable food items that will not be there.

 Action Plan for Near Future

This is base on which hotels plan their course of actions in all areas for the near future, say 3 months,
and move accordingly.
  Expansion Plans

Maybe not relevant for every forecast but a demand forecast of unconstrained demand might be
referred to by hotel management to plan an expansion if needed.

For Example, on a regular basis, the unconstrained demand forecast for a hotel is high which may lead
the management to a decision to expand the size of the hotel, if possible, and increase its inventory
owing to observed regular high unconstrained demand.

 Decision about staffing

Room occupancy forecast will also be referred by all departments for their staffing purposes as well as, if
needed, for hiring too.

For Example; hotels generally encourage their staff to take their annual leaves in the low season of
occupancy so that during their high occupancy period they have staff at full strength to ensure smooth
operations.

 Hotel Maintenance

Hotels tend to utilize low occupancy forecasted time for periodical maintenance.

For example; the annual renovation of rooms and other areas in a hotel is generally carried out when the
forecast is for a low occupancy for a long period.

A reliable forecast has a direct impact on the bottom line.

Ø  Overbooking

Overbooking in hotel management is widely practiced in hospitality, despite being a divisive topic. It’s
often seen as a necessary evil in the fight against cancelled reservations, but it discomforts most
managers, particularly during rush hour, if you have to turn away customers. Empty rooms thanks to
cancellations will have a significant negative impact on your profit margin, yet overbooking will have the
same effect on customer loyalty.

To minimize this, most hotel or revenue managers use an overbooking strategy to maximize their
revenue. In this article, we’ll discuss what overbooking means, why it’s a major hotel management
strategy, and suggest strategies to facilitate your overbooking practices in hotel revenue management.

Ø  What is a hotel overbooking strategy?

Overbooking occurs when a customers book more rooms than the actual number available in a hotel.
The hotel allows this to happen, anticipating that some will cancel.

This means that instead of turning a potential guest away when the hotel is at ‘capacity’, you still offer
them a booking so that if another customer fails to show up, there’s someone ready to fill their
position. It helps ensure you reach the maximum revenue and occupancy for your hotel.

Ø  Advantages of overbooking in hotels

Overbooking practices in hotel management can be a cost-effective strategy if applied correctly. Below

are some of its potential benefits. 
  Mitigating losses

Overbooking minimizes losses by creating a backup plan for cancelled reservations. Turning away a
potential customer at the booking stage because your hotel is at maximum capacity for those dates will
not only cause direct losses if you have last minute cancellations, but it could also prevent you from
acquiring new customers. 

With a detailed estimate of anticipated cancellations, something we will drill down on later, the CFO,
GM or Revenue Manager could make an informed decision on the number of overbookings required to
minimize the risks and possible losses.

 Achieving full occupancy

Overbooking, as its name indicates, means that guests will book more rooms than you have. This implies
that no financial potential is wasted because all the rooms will always be occupied, allowing you to
operate beyond your usual profit margin.

 Compensation is cheaper than having empty rooms

When a guest discovers that their room is occupied, you can offer them alternative accommodation with
a nearby hotel in the same star category. To ensure minimum inconvenience for your customers, you
could pre-arrange this with the alternative hotel to make the process as smooth as possible.

You can also provide these unlucky customers with a means of transportation, and a way to
communicate the change with their family and friends if need be. A discount for future reservations
might help to retain their loyalty, all of which is covered by having 100% occupancy at your hotel.

 Availability of prediction methods

Technology has brought many advantages to the hotel sector. Nowadays, it’s not necessary to follow
your intuition in order to create an overbooking strategy. Thanks to seamless connectivity between
a property management system and a hotel booking engine, it’s easy to develop an accurate
overbooking strategy using analytics software. 

 You can use cumulative data to predict the ideal number of overbookings that make maximum profit.
Consider seasonal variations in cancellations, customer loyalty and demographics, the average number
of walk-in visits and even overstays. This will help to keep your estimates as close as possible to the
actual figures, making it a minimal risk approach to maximizing your hotel revenues.

Ø  Disadvantages of hotel overbooking 

There are definitely some advantages to be had when it comes to overbooking hotel rooms. But what
about the other side of the coin?

 Negative guest experience

In many ways, this point speaks for itself. Imagine a scenario where a customer makes a reservation,
arrives at the hotel to find there’s no room, and then has a terrible experience of getting alternative
accommodation.
This can be a particularly bad scenario if it’s a large family or a guest whose special needs will not be
catered to by the alternative hotel. It could also be an irredeemable misstep if the customer you turn
away is a loyal one, someone who has used your services for years.

 Potential poor publicity

          In today’s world, a social media presence is critical to the success of a marketing plan. The
Internet’s power to connect service providers and consumers is one of its greatest contributions to
businesses, but it can also be one of the biggest drawbacks.

If your hotel overbooking strategy fails, you could get bad reviews. Many potential visitors to your hotel
will be sure to check reviews to know what people are saying about your hotel before they make
reservations.

Fortunately for managers who are interested in implementing an overbooking strategy, the presence of
a smart, cloud-based property management system makes it easy to organize guest bookings and
cancellations, ensuring accuracy and minimizing hazards.

Ø  How to create an overbooking strategy?

As mentioned above, overbooking is a tricky task that should be carefully managed. Here are some ideas
on how to cope with overbooking in a hotel to prevent loss of profits and guests.

 Take advantage of big data to make informed predictions

Big data analysis is one of the best predictive methods you can use. By looking at all your reservations
and customer activities, you may be able to accurately estimate the number of overbookings to allow.
You can also determine the ideal compensation for guests you have to turn away or redirect to retain
their loyalty.

You can easily look at how many average cancellations to expect in each season, and how many average
walk-in clients you get, and thus how many overbookings you can safely make. This scientific approach
makes overbooking more profitable by improving the accuracy of your predictions.

 Have a detailed list of guests for the day you plan on overbooking

It’s important to have a check-in list that shows all guests who have guaranteed their bookings. For
those who aren’t on the list, you need to remind them that their rooms are not assured as long as they
do not guarantee their arrival. This can be automated using Mews Hospitality Cloud to ensure accuracy
and minimize customer frustration.

 Choose potential book-outs wisely

Bookings that you select for book-outs also need to be carefully reviewed. It’s best not to include any
guaranteed reservations if possible, nor those of long-time, loyal customers who may have even brought
along guests for you in the past. This will give them the impression of being disposable and can lose you
considerable lifetime revenue. 

The highest-priced reservations also need to be kept. This is simply because having a guest paying top
dollar for a room means that they have probably set their mind to enjoy the experience at your hotel,
with the best you have to offer. Such clients are worth keeping close. Prioritize flagging the lowest-rated
reservations and those that have not been guaranteed.

 Have overbooking partnerships with neighboring hotels

This strategy allows you to always have a trustworthy alternative for any customer who has to be
offered alternative accommodation. When you are partnering, preferably with hotels in the same star
category, you will have the opportunity to ensure that they provide services that are in line with what
your clients would have expected of you.

It also makes it easy for you to always be assured that there are other options, even on short notice. 

Because the agreement will probably go both ways, you will also have the opportunity to take
advantage of surplus reservations from your partners. It is a great win-win strategy to maximize
revenue.

 Train staff on how to handle overbookings professionally

Even though your staff may have received hospitality training, you need to ensure that they know how
to handle this particular tricky situation. They should know the recommended alternatives and
compensations, offer the client a means of communicating with relevant people if necessary, and also
offer to have the transportation to their alternative accommodation paid.

Learning how to manage overbooking in a hotel is imperative to the success of the strategy.

Conclusion

Overbooking in hotel management is a confidence strategy which has maximized the occupancy rates
and profits per room of hotels for decades. Nevertheless, it can be a double-edged sword, because if
implemented without the right care, it can turn against you and lead to long-term economic and
reputational losses, damaging your business. 

With the right tools, such as Mews PMS software, hoteliers can easily keep their properties organized
and implement successful overbooking practices in managing their hotel’s revenue.

Lesson Proper for Week 14

LESSON PROPER

If your hotel is struggling to attract enough attention from travellers, or you aren’t attracting the right
type of guests, it might be worthwhile signing up to a global distribution system (GDS).

Don’t know what a global distribution system is or how to use one to win more bookings and revenue?
This topic will answer all the questions you have. Hint: it’s the best way to attract business travellers to
your hotel.

More than 600,000 travel agents plug into the GDS every day on behalf of companies to book flights,
hotels, car rentals and destination activities.
Despite the growth of third-party online travel agencies (OTAs) like Booking.com and Expedia, the GDS
remains the number one way to promote your hotel to the corporate travel market globally.

What is a global distribution system?

A global distribution system (GDS) links reservation inventory under one computer-based network. The
most common uses for GDSs is in the tourism industry, mainly for airlines, hospitality companies, and
car rental companies. In this way, service providers, such as travel agencies and online travel
agencies can all sell tickets for the same flight, hotel, or car rental.

Booking Travel Online: The History of the GDS

Before the 1960s, the fastest way to make a hotel reservation or book a flight was to pick up the phone
and call the hotel or the airline. This method was extremely inefficient; when a travel agent (or assistant
for business travel) would call an airline to make a booking, it could take the airline representative over
an hour to shuffle through the paper booking reports, find an available seat, and enter the new booking
manually. The growth of airlines’ reservations departments was limited to however many people could
access those files at one time.

To meet the growing demand for air travel, airlines developed their own reservation systems to
streamline the booking process. American Airlines was the first company, in partnership with IBM, to
implement an electronic reservation system for their reservations agents to use. This new technology,
called the Semi-Automated Business Research Environment (SABRE), allowed American Airlines to
greatly expand their reservations team beyond the number of people who could huddle around the
paper booking files.

Other airlines followed suit soon after, and by the early 70s, Delta, American Airlines, British Airways,
and United were all using electronic reservations systems. The first hotel company to implement an
electronic reservations system was Westin in 1970. Up until this point, the only people who could access
these distribution systems were airline or hotel employees, but that changed in 1976, when a travel
agency was granted access to SABRE for the first time. By 1985, more than 10,000 travel agencies used
SABRE. Over the next decade, many new companies popped up that offered travel agents a direct,
electronic connection to airline and hotel reservation systems. Finally, in 1992, owners of a North
America-based system and a Europe-based system joined forces to create the world’s first global
distribution system.

What is GDS in the hotel industry?

A GDS is a worldwide conduit between travel bookers and suppliers, such as hotels and other
accommodation providers. It communicates live product, price and availability data to travel agents and
online booking engines, and allows for automated transactions.

The GDS is often used to tap into the corporate travel market because it has the ability to present
hotels, flights, and car rentals in one simple interface which is convenient. Many companies organising
trips for their staff will use the GDS as their preferred booking method.

How does a global distribution system work?

Global distribution systems are an intermediary between vendors, such as hotels and airlines, and
service providers, such as online travel agencies. While most big GDSs are linked to the major travel
agencies, smaller, less expensive GDSs may offer a limited amount of travel agencies.

Vendors sign up and link their own inventory to a global distribution system. Once linked, customers can
use the different portals associated with the GDS to purchase from a vendor. To avoid overbooking,
each service provider receives real-time updated inventory from the airline or hospitality company
(vendor).

Not only do vendors show their inventory, but they can automatically update products and rates. This
allows vendors to use a dynamic pricing method that immediately changes over all of their portals.

How does the GDS work in travel?

The tangled web of databases has become even more of a labyrinth following the explosion of online
travel agencies (OTAs) like Booking.com, Expedia and Wotif. Hotels and other travel entities can use
technology solutions to capitalise on this trend, tapping into all GDSs, including the likes of Amadeus,
Galileo, Sabre, and Worldspan by Travelport.

Live rates and availability are sent from a hotel’s property management system (PMS) directly to the
GDS and online booking websites via a channel manager. As soon as a reservation is made on the GDS or
an online booking website, the channel manager instantly reduces inventory across all channels,
including the hotel’s own website, and automatically delivers the reservation details back into the PMS
or central reservation system (CRS).

Each GDS has its own set of connection fees and requirements to sign up if you do this independently,
rather than through a technology solution.

What Benefits Does the GDS Offer?

Besides the time savings, the GDS allows travel agents to tap into reservation systems for a world of
travel providers. Today you can book not only airfare and hotels via the GDS, but also rental cars,
cruises, rail tickets, and tours. For a travel agent who is booking a vacation package that might include all
of the above, they can complete the reservations in just a few clicks, rather than calling each individual
provider.

For hotels, airlines, and the like, the GDS offers massive marketing power. Before the GDS became
popular, hotels would need to undertake huge marketing efforts in order to be seen by travel agents.
The GDS effectively democratized this process, with chain hotels getting the same visibility on the GDS
as independent hotels. The GDS also gives hotels access to new segments of guests, such as corporate
travelers via companies like American Express and Carlson Wagonlit, who likely would not book direct.
While hotels do need to pay a fee per booking to use the GDS, that fee is often less than the average
OTA commission.

What are the major GDS systems?

There are several major global distribution systems that house and process the majority of data from
hotels, airlines, and other distributors. These include Amadeus, Sabre, Galileo, Worldspan, Apollo, and
Pegasus.
However, there are many technology providers that help hotels tap into these GDSs and by extension
the thousands of travel agents and travellers across the world.

Amadeus GDS

Amadeus has been operating for over 30 years, building critical solutions to help airlines, hotels,
railways, travel agencies, tour operators and more to run their business and improve the travel
experience.

Amadeus has the biggest global footprint of any of the GDSs, with a potential reach to millions of guests.
The company operates in over 190 markets and employs over 17,000 people.

Sabre GDS

Sabre is a leading technology and data-driven solutions provider helping airlines, hotels and travel
agencies grow their businesses and transform the traveller experience.

Sabre is seen as a pioneer for online travel agencies, corporate booking tools, revenue management,
and web and mobile itinerary tools, to name a few.

Sabre Travel Network is its global business-to-business travel marketplace and consists primarily of the
GDS and a broad set of solutions that integrate with the GDS.

This marketplace is used by travel suppliers including 400 airlines, 175,000 hotels, 200 tour operators,
50 rail carriers, 40 car rental outlets and 17 cruise lines.

Galileo GDS

Galileo traces its roots back to 1971 when United Airlines created its first computerised central
reservation system. Due to the high market penetration of the Sabre and Apollo systems, owned by
American Airlines and United Airlines, respectively, Worldspan and Galileo were created by other airline
groups in an attempt to gain market share in the computer reservation system market.

The Galileo system was moved from Denver, Colorado, to the Worldspan data centre in Atlanta,
Georgia, in 2008, following the merger of Travelport and Worldspan (although they now share the same
data centre, they continue to be run as separate systems).

Worldspan GDS

Worldspan is a Travelport platform, and is the technology leader in web-based travel eCommerce,
offering solutions for all facets of travel business online. As a leading GDS, Worldspan provides travel
distribution, technologies and services for thousands of travel companies worldwide, including travel
agencies, corporations, travel suppliers and travel websites.

Worldspan transforms global travel distribution and transaction processing with industry-first fares,
pricing, shopping and booking technologies, and a portfolio of interactive shopping tools that enable
travel companies to reduce costs, increase productivity and build revenues.

Apollo GDS
As a leading GDS, Apollo provides travel distribution, technologies and services for thousands of travel
companies worldwide, including travel agencies, corporations, travel suppliers and travel web sites.

The Apollo reservation system was used by United Airlines until 2012, when it switched to SHARES, a
system used by its former Continental Airlines subsidiary. Apollo is still used by Galileo International
(now part of Travelport GDS) travel agency customers in the United States, Canada, Mexico, and Japan.

Abacus GDS

Abacus was founded in 1988 and became a leading provider of travel solutions and services in the Asia
Pacific region. The company is headquartered in Singapore and owned by Sabre Holdings, after Sabre
acquired a full stake off 11 Asian airlines who were holding a majority share.

Abacus serves more than 100,000 travel agents across the Asia-Pacific region’s 59 markets and has both
global and uniquely local relationships with airlines and hotels, including the leading portfolio of low-
cost content and Chinese airline content.

Pegasus GDS

Pegasus strives to remove friction and create simplicity amidst an otherwise complicated environment.
Pegasus Solutions pioneered the hospitality reservations industry.

The company is a market leader in the electronic processing, management, distribution, sales and
marketing of hotel inventory, rates and content across different sales channels to include direct
bookings via hotels’ branded websites, voice, travel agents (GDS), OTAs and metasearch partners.

Benefits of connecting hotel to the GDS

Essentially, the GDS can increase hotel bookings and revenue by placing hotels on more ‘supermarket
shelves’ globally. This approach is particularly effective at capturing international corporate
travellers. You can gain lucrative international corporate business, particularly if you’re near a major
airport gateway or close to government or commercial enterprises.

 But there are many reasons why a hotel might need a GDS solution including:

 The number of bookings generated through a GDS generally outpaces that of direct bookings.
While direct bookings are rising, and they do represent a significant amount of revenue for hotel
operators, there are still more bookings being generated through the GDS than through hotel
websites.

 Hotels generate more revenue through a GDS because it places the hotel’s information,
availability and rates in prominent locations where it is easy for travel agents to find. It helps
hotels maximise their bookings during any given time period while also reaching powerful travel
markets that are willing to spend money in order to book the best room available.

 A lot of travel agents who specialize in corporate travel use a GDS to get their clients booked
quickly and efficiently.

 The GDS can help hotel managers uncover new market segments to promote their products to.
In many cases, hotel operators discover through the GDS that there are traveller market
segments interested in their products that they couldn’t previously reach.
  More travel agents are relying on the GDS to find the best places for their clients to stay. Every
year, more agents are realising that this is the best way to easily connect with hotel properties
from around the world. Through the GDS, the agents have access to live rates and availability,
and they can easily book rooms for their clients.

 When you complete your hotel description comprehensively, the GDS improves search
positioning and displays your brand messaging during the search and booking process, which
means travel agents are more easily able to source your hotel for their clients.

The GDS is indeed a unique and direct marketing tool for your hotel.

 Hotel management tips for the GDS 

To get the most out of a GDS connection, it’s important you connect in the right way. This means
choosing a provider that can offer a comprehensive range of GDS services.

Here’s a checklist to ensure you’re using the GDS to its full potential:

1. Pooled inventory

With a GDS connection that supports pooled inventory, you can market all of your rooms to all of your
distribution channels at one time. Without this feature available, you will be forced to separate your
inventory based on the distribution channel, which can prevent you from maximising your bookings and
increasing your revenue.

2. Commission-free structure

Your GDS should help you maximise your bookings and increase your revenue, not deplete you of the
revenue you should be earning per booking. Do not choose a partner that forces you to pay a
commission fee simply for delivering the booking to your hotel’s property management system (PMS).

3. Integration capabilities

It’s imperative you have the capability for the GDS to integrate completely with your existing
PMS, online booking engine and channel manager. This simplifies the process for you and allows you to
effectively implement and manage your distribution strategy.

 4. Comprehensive reporting

Your GDS software should help you make the best decisions regarding your marketing strategy and
distribution plan. Select a provider that offers comprehensive reporting tools that allow you to view and
evaluate your booking data.

5. Ability to target specific markets

A GDS gives you the opportunity to discover and tap into the most powerful and motivated market
segments. You should be able to filter your access based on the geographical location and also specific
types of travellers.

 6. No lengthy contracts

Look for a provider that allows you to trial the GDS for a short time and measure results before
continuing your subscription.

7. Simple and affordable connection

Each GDS has its own set of connection fees and requirements to sign up. By using the right provider,
you eliminate the frustration of signing up with each individual platform, and you can connect to all of
the top providers without paying the individual fees. In a matter of moments, you will be partnered with
Sabre, Travelport, Amadeus and many more!

You also need to get a few things right regarding the way you represent your hotel on the GDS. Most
prominent is your hotel description, which will act as your hotel’s electronic brochure. This provides
travel agents with your property description, hotel amenities and information about local attractions.

Make sure you do a good job of providing and describing:

§  A general overview of your hotel

§  Amenities, facilities, and services

§  Location and address

§  Directions and transportation

§  Area attractions

§  Room type names

§  Room type descriptions

No More GDS? The Future of Global Distribution

In 2006 the volume of internet reservations exceeded GDS reservations for the first time, thanks to the
growing popularity of online booking channels and the decline of brick-and-mortar travel agencies. Does
the GDS still serve a purpose when travelers can easily book directly with the airline or hotel? In many
cases, yes, the GDS still delivers value, especially for airlines and corporate travel companies. Airlines still
distribute their inventory to OTAs via the GDS, and corporate travel planners continue to use the GDS to
find corporate rates. However, with so much innovation happening in the travel space, the GDS’s legacy
technology definitely faces competition from other booking systems. 

With decades of history and an enormous user base of travel agents, using the GDS can be a great way
to expand your hotel’s marketing and distribution strategy. But the GDS doesn’t necessarily provide
value to every hotel; if you’re wondering how to use the GDS or why to add it as a distribution channel,
it’s important to weigh the pros and cons for your individual hotel.

LESSON PROPER 15

v Importance of Reservation
The role of reservation department is not limited to making reservation. It also maintains records of
the hotel occupancy, which helps in planning sales and marketing strategies.

1. Importance of reservation for guests:

 Ensures room on arrival – A guest who makes prior reservation is ensured of the required type
of room and number of rooms for his entire stay in the city. This saves him from the difficulty of
finding accommodation on arrival especially during peak seasons when most of the hotels are
full.

 Budgeting – As the guest is informed about the tariff of room reserved at time of booking, he is
able to budget his holiday or tour, taking in account the amount he spends on his stay, food,
entertainment etc.

 He is able to plan his holiday or tour without worrying about the basic needs of accommodation
and food.

 Other facilities – The guest is ensured of certain facilities offered by the hotel which can be
confirmed by making the reservation e.g. iron and ironing board on loan basis, laundry services
in hotel, Wi-Fi, tea and coffee maker, kids’ zone, provision of babysitter, etc.

 A business traveler is also able to give the hotel address to his associates for any meetings,
correspondence transfers to and from the hotel.

2. Importance for the hotel:

 Prior reservation gives the hotel an indication of the level of business likely to be encountered
during any particular period. The reservation manager knows the amount of business ensured
during that period from the confirmed reservations.

 Gives the first impression of the hotel to the guest.

 Sells the main product of hotel (accommodation).

 Generate customers for other departments.

 Provide important management information to the guest.

 Reservation department updates the room availability record and thus maximize the revenue
generated from room booking.

 Reservation department prepares the housekeeping and front desk for arrival by communicating
the arrival details taken at the time of reservation.

 Reservation department helps in planning the distribution of the staff at the front desk-the
roaster for the staff can be prepared according to the number of confirmed reservations for the
day.

 Reservation department provides reservation data to the finance department, which forecast
the volume of business on the basis of confirmed reservation.
  It generates the customer for the hotel-first time customer as well as repeat customer-by
handling the reservation queries and request politely.

 It maintains the hotel occupancy record, which helps the management to plan business
strategies-change in room rates, renovation of rooms, expansion program and opening a new
unit in the city.

v Types of Reservation

Tentative Reservation – It is a reservation request that a prospective guest makes on a tentative basis
for his particular stay dates. The hotel holds the room for the guest till a cut-off date, by which the guest
should confirm the reservation. Upon confirmation from the guest, the hotel changes the tentative
reservation to a confirmed reservation, and updates its records accordingly. If the confirmation is not
received from the prospective guest by cut-off date, the reservation is cancelled and the rooms’
inventory is updated.

Confirmed Reservation – Once a guest confirms a reservation request, the hotel blocks a room for
specified stay dates and sends a written confirmation of the same to the guest either through letter or
email. Confirmed reservation is of two types-

i)Non- guaranteed Reservation: When a guest confirms her reservation at a hotel but does not
guarantee it with an advance deposit, it is treated as a non-guaranteed reservation. In this type of
reservation, the hotel agrees to hold the room for the guest till the cancellation hour (which is usually 6
PM), unless the guest informs the hotel about his late arrival. If a guest does not arrive by cancellation
hour, the hotel is free to release the room and sell it to any walk-in guest. This enables the hotel to
cover the probable loss due to a no-show. Hotels nearing full occupancy might accept only guaranteed
reservations once a specified number of expected arrivals is achieved.

ii) Guaranteed Reservation: A guaranteed reservation is a confirmation that the hotel will hold the
reserved room for the guest and not release it to any other guest even if the guest doesn’t arrive on
time. This requires the guest to make an advance payment (part or full, depending on the hotel policy
and hotel occupancy for requested stay dates). The hotel has to hold the room for such guests even
beyond its cancellation hours, till next day’s check-out time in case of no-show of guest. The guest is
sure of desired accommodation ready for him even he arrives late without any prior information to the
hotel.

The guaranteed reservation can be obtained through one of the following ways-

 Prepayment and Advance Deposit - Prepayment requires payment in full be received from the
guest whereas Advance deposit requires payment of a specific amount of money as deposit
(generally one room night rent plus taxes) from the guests. A guaranteed reservation requires
the payment of the room rent or a specified amount in advance, known as pre-payment. As the
hotel holds the room for the guest even after cancellation hours, pre-payment protects the
hotel from any loss of revenue in case of last-minute cancellation or a no-show. Pre-payment
can be made by sending demand draft or depositing cash at the hotel. Cash deposit is the most
preferred mode of accepting guaranteed reservation by most of the hotels. Guests can
alternatively choose to pay the full amount in advance through their credit/ charge cards. A
guest should send a letter authorizing the hotel to charge payment to their credit cards account
 for obtaining guaranteed reservation, along with a copy of the front and back of the credit card.
The hotel staff must check the validity and authenticity of the card before using it as a
guarantee.

 Contractual Agreement – A hotel may have a contract with an individual or a company for
providing guaranteed reservations. According to such a contract, the hotel confirms the
reservation for the individual or a person referred by a company on guaranteed basis, and the
person or company agrees to pay for the reservation, even in case of no-show. Hotel may have
contractual agreement with the following.

Tour Operators and Travel Agencies: They make bulk purchases of rooms at a relatively low contracted
price. They guarantee the hotel a minimum number of room nights in a particular period and agree to
pay the room charges even if they are unable to fill the number of rooms as per their agreement with
the hotel. The hotel guarantee these reservations on the basis of vouchers issued by the travel agencies
or tour operators, by which they agree to pay for the room and service charges mentioned on the
voucher; other services are charged from the guest.

Companies or Corporate houses: In this case, a company may enter into a contract with a hotel,
whereby the company guarantees payment for its employees or sponsored guests and accepts the
financial responsibilities for any no-shows. Hotels guarantee these reservations on the basis of a letter
from the company, called a bill to company (BTC) letter, acknowledging the guest as its employee or
client and agreeing to pay his bills as per contract.

Allotment: Allotment is a set of rooms booked for a particular period of time for a company or for a
group. This type of reservation is made for training courses, conferences or for private parties. A guest
may be asked for a booking reference or for any other verification before they are provided a room.
Allotments are managed by the reservation’s manager or the group coordinator and the operational
issues are checked on a daily basis.

Miscellaneous Charge Order (MCO): The Airline Reporting Corporation (ARC) issues MCO and thus
guarantee payment to the hotel if the travel agency defaults on payment or if the guest is a no show.

iii)Waitlisted Reservation - A reservation is waitlisted when a requested category of room is not

available for the requested dates. A waitlisted reservation will be confirmed when a hotel receives a
request for room cancellation in the same category. The hotel does not guarantee a room in case of
waitlisted reservation, it is understood that the room will be assigned to the guest in case of a
cancellation or a no show.

v Modes of Reservation

The mode of reservation tells us HOW the reservation has reached the hotel. For example, a reservation
request may reach the hotel through a written mode such as – letter, fax, telex or email or through a
verbal mode like telephone or in person.

1. Written mode:
  Letter – this mode is commonly used by companies and corporate houses, travel agents and
tour operators who send in their reservation request to the hotel on their company letterheads.
The hotel will make the reservation as per details given in the letter.

 Fax – Fax or Facsimile transmission uses electronic scanning technique to send copies of a
document over an ordinary telephone line through a special machine that prints identical copies
of the document. This makes it possible to send a reservation request instantaneously. Hotel
processed the request as per details and send the confirmation letter to the guest.

 Telex or Tele Printer Exchange – involves the use of specialized telephone lines, where the
message is communicated in a written form.

 E-mail – It is the most common method of communication. E-mail or Electronic mail that makes
it possible to contact the hotel instantaneously. This is a fast and very convenient method of
reservation.

2. Verbal mode: Reservation requests may also reach the hotel through verbal mode or oral
communication, i.e. in person or over the telephone. The advantage of oral communication is that it
generates immediate response and feedback and is very fast and convenient.

 In person – if an individual or a representative goes to the hotel to book rooms for future, it is
termed as an in-person reservation.

 Telephone – the most common method of direct reservation communications, a prospective

guest may telephone the hotel directly. The reservationist takes the information sequentially as
per the script. Most of the hotels these days have high-end systems that record a call which can
be used later on, for training purpose.

 v Sources of Reservation

A hotel receives reservation requests from different sources like direct guests, central reservation
system, travel agencies, etc.

1. Direct Reservation or Property Direct – When a hotel receives a reservation request directly from a
guest without any mediator, it is termed as direct reservation. An individual or group can contact the
hotel directly.

2. Travel Agents and Tour Operator – Travel Agents are intermediary retail agents who sell rooms,
airline seats and other products and services to the travelers. On the other hand, Tour Operators are
wholesalers who purchase the rooms, airline seats and other travel products from the various principle
suppliers and form a package and finally sell the packages to a travel agent. Many guests make
reservations through a travel agent or a tour operator. The agent will normally take a pre-payment from
the guests and send a confirmation to the hotel, and issue a TAV (Travel Agent Voucher) on its behalf.
Travel agents generally receive a commission for their services to the guest, or to the hotel or both.

3. Companies and Corporate Houses – They may have special contracted rates, assigned to them on the
basis of volume of business they provide. Since these companies also provide bulk business to the
hotels, the hotel may decide to offer low rates.
4. Corporate Travel Departments – Most corporate organizations have a separate travel department
consisting of hired professional who arrange and cater for the travel and accommodation requirements
of the employees.

5. Hotel Sales and Marketing – Most of the hospitality properties have sales representatives who
approach various market segments and combine their efforts of selling products and services offered by
a hotel, thus generating a large amount of revenue for the hotel.

6. Intersell Agencies – These are multiple product handlers, i.e. they deal with multiple products, such
as hotel reservations, car rentals, travel arrangements, airline reservations and so on. Intersell agencies
such as Make My Trip, Yatra.com are rich source of reservation to the hotels.

7. Central Reservation System (CRS) – CRS is a computer-based reservation system, which enables a
prospective guest to make reservations in any of the properties of a single chain. The CRS office deals
with direct guests, corporate houses, travel agents and so on by means of toll-free telephone numbers.
Equipped with the necessary communication equipment, the CRS office works 7 days a week and 24
hours a day. They have accurate and up-to-date information of the number of rooms available for the
day of the member hotels, thereby, assisting the guests to make reservations in more than one hotel
through a CRS. In case rooms are not available, the reservationists can direct the reservation to the
other member hotel.

8. Global Distribution System (GDS) - It is a world-wide computerized reservation network, and is used
as a single point of access for reserving hotel rooms, airline seats, car rentals and various other travel
related services by travel agents, large corporations and online reservation sites. Being a link between
the producers and the end users of travel related products and services; GDS provides a bundle of
products to the prospective users across geographical boundaries. The most common GDS used around
the globe are Amadeus, SABRE, Galileo and Worldspan.

Lesson Proper for Week 16

LESSON PROPER

What is Night Audit?

It is the process of auditing where the night auditor reviews all financial activities of the hotel that has taken
place in one day.

The auditing process for the day is generally conducted at the end of the day during the following night, hence
the name ‘Night Audit’. It can be performed by the conventional method of using papers, receipts, vouchers,
coupons, and files. But performing audit using modern PMS systems is easy, fast, and efficient.

Basic Activities During Night Audit

The night auditor performs the following steps during night audit activity −

 Posting accommodation and tax charge

 Accumulating guest service charges and payments
 Settling financial activities of various departments
  Settling the account receivables
 Running the trial balance for the day
 Preparing the night audit report

The Need for Night Audit

The objective of night audit is to evaluate the hotel’s financial activities. Night audit not only reviews guest
accounts by checking credits and debits but also tracks the credit limits of the guests and tallies projected and
actual sales from various departments. Night audit reviews daily cash flow into and out of the hotel’s account.

Night audit has a large significance in hotel business operations. The management body refers night audit
report to plan future goals and control the expenses. The managers can react immediately on the acquired
information.

Responsibilities of a Night Auditor

Apart from the basic audit activities listed above, the night auditor carries out the following
responsibilities −

 Taking over from the last shift.

 Checking-in or checking-out the guests after 11:00 pm at night.
 Registering the guests.
 Allocating accommodations to the newly checked-in guests.
 Settling transactions in the newly created guest accounts.
 Verifying guest folios.
 Verifying room status report.
 Balancing all paperwork with the accounts in the PMS.
 Remaining liable for security of the premises.
 Handling guest accommodation keys.
 Taking backup of the PMS generated reports.
 Preparing lists of expected guest arrivals for the next day.
 Closing financial activities for a day.
 Starting financial activities for the next day.

 Receiving and recording bank deposits.

Types of Night Audit Reports

Today, the PMS helps night auditors to a great extent in auditing and generating accurate reports. Here are
some typical reports generated during night audit −

 Night Audit Accommodation Report − It gives a snapshot of the days when accommodations are
occupied, the days when the accommodations are available, check-ins, check-outs, no-shows, and
cancellations. This report can show further details for any of the items listed above.
 Night Audit Counter Report − It gives details on cash and credit card receipts and withdrawals.
 Night Audit Revenue Report − It delivers information on accommodation revenue, cancellation
and no show revenue, and other POS revenue. Revenue generated through various agencies and
 bodies such as travel agents, corporate organizations, internet booking. etc., is also listed in this
report.
 Night Audit Tax Report − Contains all the tax information on reservation revenue and other POS
revenues such as VAT, luxury tax, and service tax.
 Cashier’s report − It is the detailed list of cashier activity of cash influx and out flux, credit cards,
and PMS totals. Cashier’s report is very important part of the financial control system of a hotel.
The front office manager reviews the night audit and looks for any divergences between the actual
amount received and the PMS total.
 Manager’s Report − It is a statistical list of previous day’s occupancy. It includes details about
available accommodations, occupied accommodations, sold and vacated accommodations, rack-
rate, number of guests in the hotel, number of no-shows, and so on.
 General Manager’s Report − Each department in the hotel is required to send daily sales report
to the front office. Using their information, a departmental total report is generated for the
general manager’s assessment. The General Manager determines the profit-generating
departments and evaluates the success of sales and marketing.
 High Balance Report − This is a detailed report about the guests who have exceeded the credit
limit set by the hotel management.
 Ledger Balance Summary Report − It displays the opening and closing balances for the Advance
Deposit Ledger, Guest Ledger, and City Ledger.
 Room Rate Audit Report − It lists all rates that are applied to each guest and the difference from
the rack rate with the predetermined rack code.

Balancing Night Reports

Here are some formulae used to balance night audit −

Formula for Balancing Bank Deposit

The formula for balancing bank deposit is −

Total Bank Deposits

   - Total Cash Sales

   - Credit card received A/R

   – Cash received A/R

= 0

Formula for Balancing Guest Ledger

The formula for balancing guest ledger is −

Total Revenue

   - Paid-outs and non-collect sales

= Daily revenue

   - Total cash income

   - Today’s outstanding A/R income

=0
Formula for Balancing City Ledger

The formula for balancing city ledger is −

Yesterday's outstanding A/R

   + Today's outstanding A/R income

= Total outstanding A/R

   - Credit card received and applied to A/R

   – Cash received and applied to A/R

= balance of A/R