BSCHMCTT 501

Punjab Technical University
World over Distance Education is fast growing mode of education because of the unique benefits it provides to
the learners. Universities are now able to reach the community which has for so long been deprived of higher
education due to various reasons including social, economic and geographical considerations. Distance Education
provides them a second chance to upgrade their technical skills and qualifications.
Some of the important considerations in initiating distance education in a country like India, has been the
concern of the government in increasing access and reach of higher education to a larger student community.
As such, only 6-8% of students in India take up higher education and more than 92% drop out before reaching
10 + 2 level. Further, avenues for upgrading qualifications, while at work, is limited and also modular programs
for gaining latest skills through continuing education programs is extremely poor. In such a system, distance
education programs provide the much needed avenue for:
• Increasing access and reach of higher education;
• Equity and affordability of higher education to weaker and disadvantaged sections of the society;
• Increased opportunity for upgrading, retraining and personal enrichment of latest knowledge and know-
how;
• Capacity building for national interests.
One of the important aspects of any distance education program is the learning resources. Learning material
provided to the learner must be innovative, thought provoking, comprehensive and must be tailor-made for
self-learning. It has been a continuous process for the University in improving the quality of the learning
material through well designed course materials in the SIM format (Self-instructional material). While designing
the material, the university has researched the methods and processes of some of the best institutions in the
world imparting distance education.
About the University
Punjab Technical University (PTU) was set up by the Government of Punjab in 1997 through a State Legislative
Act. PTU started with a modest beginning in 1997, when University had only nine Engineering & thirteen
Management colleges affiliated to it. PTU now has affiliated 43 Engineering Colleges, 56 colleges imparting
Management and Computer Application courses, 20 institutions imparting Pharmacy education, 6 Architecture
Institutions, 2 Hotel Management and 12 Regional Centers for imparting M.Tech and Ph.D programs in different
branches of Engineering and Management. During a short span of nine years, the University has undertaken
many innovative programs. The major development during this period is that University has restructured its
degree program and upgraded syllabi of the courses in such a way as to increase the employability of the
student and also to make them self-reliant, by imparting Higher Technical Education. We at Punjab Technical
University are propelled by the vision and wisdom of our leaders and are striving hard to discharge our duties
for the overall improvement of quality of education that we provide.
During a short span of nine years, the University has faced various challenges but has always kept the interest
of students as the paramount concern. During the past couple of years, the University has undertaken many
new initiatives to revitalize the educational programs imparted within the colleges and Regional centers.
Though Knowledge and skills are the key factors in increasing the employability and competitive edge of
students in the emerging global environment, an environment of economic growth and opportunity is necessary
to promote the demand for such trained and professional manpower. The University is participating in the
process of technological growth and development in shaping the human resource for economic development of
the nation.
Keeping the above facts in mind Punjab Technical University initiated the distance education program and
started offering various job oriented technical courses in disciplines like Information Technology, Management,
Hotel Management, Paramedical, Media Technologies and Fashion Technology since July 2001. The program
was initiated with the aim of fulfilling the mandate of the Act for providing continuing education to the
disadvantaged economically backward sections of the society as well as working professionals for skill up-
gradation.
The university has over the years initiated various quality improvement initiatives in running its distance
education program to deliver quality education with a flexible approach of education delivery. This program
also takes care of the overall personality development of the students. Presently, PTU has more than 60 courses
under distance education stream in more than 700 learning centers across the country.
About Distance Education Program of PTU
Over the past few years, the distance education program of PTU has gained wide publicity and acceptance due
to certain quality features which were introduced to increase the effectiveness of learning methodologies. The
last comprehensive syllabus review was carried out in the year 2004-05 and the new revised syllabus was
implemented from September 2005. The syllabus once reviewed is frozen for a period of 3 years and changes,
if any, shall be taken up in the year 2008. Various innovative initiatives have been taken, which has increased
the popularity of the program. Some of these initiatives are enumerated below:
1. Making a pyramid system for almost all courses, in which a student gets flexibility of continuing higher
education in his own pace and per his convenience. Suitable credits are imparted for courses taken during
re-entry into the pyramid as a lateral entry student.
2. Relaxed entry qualifications ensure that students get enough freedom to choose their course and the basics,
necessary for completing the course is taught at the first semester level.
3. A comprehensive course on “Communications and Soft Skills” is compulsory for all students, which ensures
that students learn some basic skills for increasing their employability and competing in the globalized
environment.
4. Learning materials and books have been remodeled in the Self-Instructional Material format, which ensures
easy dissemination of skills and self learning. These SIMs are given in addition to the class notes, work
modules and weekly quizzes.
5. Students are allowed to take a minimum of 240 hours of instruction during the semester, which includes
small group interaction with faculty and teaching practical skills in a personalized manner.
6. Minimum standards have been laid out for the learning centers, and a full time counselor and core faculty
is available to help the student anytime.
7. There is a wide network of Regional Learning and Facilitation Centers (RLFC) catering to each zone,
which is available for student queries, placement support, examination related queries and day to day
logistic support. Students need not visit the University for any of their problems and they can approach the
RLFC for taking care of their needs.
8. Various facilities like Fee Waiver for physically challenged students, Scholarship scheme by the government
for SC/ST candidates, free bus passes for PRTC buses are available to students of the university.
The university continuously aims for higher objectives to achieve and the success always gears us for achieving
the improbable. The PTU distance education fraternity has grown more than 200% during the past two years
and the students have now started moving all across the country and abroad after completing their skill training
with us.
We wish you a marvelous learning experience in the next few years of association with us!
Dr. R.P. Singh

Dean
Distance Education
Dr. S.K. Salwan
Vice Chancellor
Dr. S.K. Salwan is an eminent scientist, visionary and an experienced administrator. He is a doctorate in
mechanical engineering from the IIT, Mumbai. Dr. Salwan brings with him 14 years of teaching and research
experience. He is credited with establishing the Department of Design Engineering at the Institute of
Armament Technology, Pune. He was the founder-member of the integrated guided missile programme of
defence research under His Excellency Honorable Dr. A.P.J. Abdul Kalam. He also established the high-
technology missile centre, RCI at Hyderabad. He has been instrumental in implementing the Rs. 1000-crore
National Range for Testing Missiles and Weapon Systems at Chandipore, Balasore in a record time of three
years. He was Director of the Armament Research and Development Establishment, Pune. Dr. Salwan has
been part of many high level defence delegations to various countries. He was Advisor (Strategic Project) and
Emeritus Scientist at the DRDO. Dr. Salwan has won various awards, including the Scientist of the Year 1994;
the Rajiv Ratan Award, 1995, and a Vashisht Sewa Medal; 1996, the Technology Assimilation and Transfer
Trophy, 1997 and the Punj Pani Award in Punjab for 2006.
Dr. R.P. Singh

Dean, Distance Education
Dr. R.P. Singh is a doctorate in Physics from Canada and has been a gold medalist of Banaras Hindu University
in M.Sc. Dr. Singh took over the Department of Distance Education in November 2004 and since then the
University has embarked on various innovations in Distance Education.
Due to combined efforts of the department the RLFC’s and Centers, and with active support of the Distance
Education Council headed by Dr. O.P. Bajpai, Director, University College of Engineering, Kurukshetra
University, the distance education program of PTU is now a structured system which empowers the learner
with requisite skills and knowledge which can enhance their employability in the global market. Dr. R.P. Singh
is promoting distance education at the national level also and is a founder member of Education Promotion
Society of India and is member of various committees which explores innovative ways of learning for the
disadvantaged sections of society. The basic aim of the distance education program has been to assimilate all
sections of society including women by increasing the access, reach, equity and affordability of higher
education in the country.
Contents
1. Planning and Front Office Evaluating Operations 1 – 27

• Introduction 1
• Management Functions 1
• Establishing Room Rates 4
• Room Tariff Card 22
• Sample Tariff Card 26
2. Forecasting 28 – 49
• Room Availability 28
• Forecasting Data 29
• Forecast Formula 35
• Sample Forecast Forms 37
• Forecasting Rooms Revenue 42
• Estimating Expenses 46
• Refining Budget Plans 48
• Daily Operations Report 49
3. Yield Management 50 – 105
• A Yield Management Definition 50
• When is the Use of Yield Management Appropriate? 52
• Systems and Structures in Place for Yield/Revenue Management 52
• Yield Managements Formula 53
• Tools and Strategies 53
• A Room Assignment Scenario 55
• Sales Strategies 56
• Feedback 57
• The Yield Management Team 57
• Training Development and Organization Culture 58
• The Customer 59
• The Future Now 60
• What is a Yield Management Software System? 60
• How does the Yield Revenue Management System Work? 61
• Differential Room Rates 63
• Occupancy Ratio 64
• Statistics 74
4. Reservation Sales Management 106 – 135
• Reservations Management 106
• Reservation Sales Management 118
• Staffing 118
• Room Inventory 121
• Availability Factors 122
• Overselling 125
• Call Management 127
• Sales Strategy 132
• Industry Perspective 133
5. Hotel Sales 136 – 185
• Merchandising 136
• Elements of Marketing 139
• Features and Benefits 149
• Close 151
• Front Office Selling Tips 156
• Salesman’s Bye Laws 159
• Service and Service Selling 162
• Code of Quality Services 162
• The Service Pyramid 165
• Discounts and Discounts Fixation Policy 169
• Upselling 172
• Downsell 175
• Substitute Selling 175
• Direct Sales with Whom Hotel Deals 181
6. The Role of Government Agencies 186 – 221
• Federation of Hotel & Restaurant Association of India 186
• Hotel Membership 194
• Restaurant Membership 194
• Star Classification 202
• Hotel Classification 206
• Application Form Detailing 206
7. Managing Human Resources 222 – 266
• Introduction 222
Internal Assignment 267 – 273
UNIT-V Hotel Sales
 Merchandising.
 Direct Sales – Travel Agents, Tour Operators, Hotel Booking Agencies and Tourist Information
Centre.
UNIT-VI The Role of Government Agencies

 Organizations – esp. directly associated to hospitality industry.
 Star Rating System – Committees and recommendations.
 Taxes applicable to hotel industry.
UNIT-VII Managing Human Resources

 Internal and External Recruitments.
 Evaluation and Selection.
 Developing HR – skills training.
 Appraisals & evaluation of front office staff.
Practical Schedule:
 Assignments and Projects
 Yield Management – Calculations.
SYLLABUS
BSCHMCTT-501: FRONT OFFICE MANAGEMENT-I

SEMESTER V
UNIT-I Planning and Evaluating Front Office Operations

 Room rate structure.
 Criterion of establishing room rates.
 The Rule of Thumb Approach.
 The Hubbart Formula – introduction.
 Room rate designations – Rack rate, Corporate rate, Volume account rates, Government
rates, Seasonal rates, Weekend rates, Membership rates, Industry rates, Walk-in rates,
Premium rates, Advance purchase rates, Package rates, FIT/GIT rates, etc.
UNIT-II Forecasting
 Room availability.
 Room Revenue – weekly, monthly, yearly, long term.
 Daily operation reports.
UNIT-III Yield Management

 Introduction and concepts covered.
 Differential rates.
 Forecasting bookings.
 Rate availability restrictions.
 Statistical representations–threshold curves.
 Displacement.
UNIT-IV Reservation Sales Management

 Adequate staffing.
 Rooms inventory.
 Call management.
 Motivation.
 Reservation map.
 Sales strategies.
© All rights reserved. No part of this publication
may be reproduced in any form without
the prior written permission of the publishers.
Published by Neeraj Govil for Frank Bros. & Co. (Publishers) Ltd.,
4675-A, Ansari Road, 21 Daryaganj, New Delhi-110 002
FRONT OFFICE MANAGEMEN T - I
(SEMESTER-V)
BSCHMCTT-501
This SIM has been prepared exclusively under the guidence of Punjab Technical University (PTU) and reviewed
by experts and approved by the concerned Statutory Board of Studies (BOS). It conforms to the syllabi and
contents as approved by the BOS of PTU.
PLANNING AND FRONT OFFICE EVALUATING OPERATIONS
Notes
PLANNING AND FRONT OFFICE

1 EVALUATING OPERATIONS
INTRODUCTION
Most Front office managers will readily admit that they rarely have all the
resources they feel are necessary. Resources available to managers include
people, money, time, materials, energy, and equipment. All these resources
are in limited supply. An important part of a front office manager’s job involves
planning how to apply these limited resources to attain the department’s
objectives. An equally important part of a front office manager’s job is
evaluating the success of front office activities in meeting the department’s
objectives.
MANAGEMENT FUNCTIONS
The process of front office management can be divided into specific
management functions. Exhibit 1 illustrates how management functions fit
into the overall process of management. Although specific front office
management tasks vary from one hotel to another, fundamental management
functions are similar in scope.
Planning
Planning is probably the most important management function performed in
any business, yet managers often give it less attention than it requires or
overlook it entirely. Without competent planning, the front office would be
chaotic. Without the direction and focus planning provides, the front office
manager may become overly involved with tasks that are unrelated to or
inconsistent with accomplishing the department’s goals. A front office
manager’s first step in planning what the front office will accomplish is to
define the department’s goals.
Managers should identify both near-term goals and long-term goals, and
develop a plan to meet them. An example of a near-term goal might be to
raise occupancy to 85 percent for the month. A long-term goal might be to
Self-Instructional Material 1
FRONT OFFICE MANAGEMENT–I
Notes improve guest satisfaction scores. The front office manager should use these
general goals as a guide to planning more specific, measurable objectives.
Planning also includes determining the strategies that will be used to attain
the objectives.
Organizing
Using the planned goals as a guide, a front office manager organizes the
department by dividing the work among front office staff. The manager should
distribute work so that everyone gets a fair assignment and all work can be
completed in a timely manner. Organizing includes determining the order in
which tasks are to be performed and establishing completion deadlines for
each group of tasks.
Exhibit 1: Overview of the Management Process
Initial Pre-operating Operating Appraisal

Activities Activities Activities Activities
Organizing Leading
Planning Evaluating
Coordinating Controlling
Staffing
Change in Procedures
Revision in Plans
Coordinating
Coordinating involves bringing together and using the available resources to
attain planned goals. A front office manager must be able to coordinate the
efforts of many individuals to ensure that they perform the work efficiently,
effectively, and on time. Coordinating may involve working with other
departments, such as sales, housekeeping, and accounting. Many front office
goals may depend upon other departments to help achieve them. For example,
the goal of improving guest satisfaction scores may partially depend upon
the housekeeping staff promptly notifying the front desk of clean and vacant
rooms for awaiting guests. A manager’s ability to coordinate is closely related
to his or her other management skills, such as planning and organizing.
2 Self-Instructional Material
Staffing Notes
Staffing involves recruiting applicants and selecting those best qualified for
positions. Staffing also involves scheduling employees. Most front office
managers develop staffing guidelines. These guidelines are usually based on
formulas for calculating the number of employees required to meet guest and
operational needs under specified conditions.
Leading
Leading is a complicated management skill that is exercised in a wide variety
of situations, and is closely related to other management skills such as
organizing, coordinating, and staffing. For a front office manager, leadership
involves overseeing, motivating, training, disciplining, and setting an example
for the front office staff, For example, to direct the work of others, a front
office manager must first analyze the work to be done, organize the tasks in a
logical order, and consider the environment in which the tasks will be
performed. In addition, if the department is behind in getting the work done,
the front office manager steps into the situation and assists until the work-
load is under control again.
Leading often extends beyond the front office. With so much of the hotel’s
business activity flowing through the front desk, other department heads count
on the front office manager to provide leadership. Senior managers at a hotel
often depend on the strong leadership skills of the front office manager to
ensure that assignments are completed successfully.
Controlling
Every front office has a system of internal controls for protecting the assets of
the hotel. For example, a form of internal control is requiring a witness’s
signature when a cashier makes a deposit at the end of the shift. Internal
control systems work only when managers believe in the systems’ importance
and follow the established procedures for their use. The control process ensures
that the actual results of operations closely match planned results. The front
office manager also exercises a control function when keeping front office
operations on course in attaining planned goals.
Notes Evaluating
Evaluating determines the extent to which planned goals are, in fact, attained.
This task is frequently overlooked in many front office operations, or is
performed haphazardly. Evaluating also involves reviewing and, when
necessary, revising or helping to revise front office goals.
This chapter focuses on elements of two front office management functions:

planning and evaluating front office operations. It begins by examining three
important front office planning functions:
• Establishing room rates
• Forecasting room availability
• Budgeting for operations
It concludes by examining various methods by which a front office

manager may evaluate the effectiveness of front office operations.
ESTABLISHING ROOM RATES

A front office will almost always have more than one room rate category for
each of its guestrooms. Room rate categories generally correspond to types of
rooms (suites, two beds, one bed etc.) that are comparable in square footage
and furnishings. Differences are based on criteria such as room size, location,
view, furnishings, and amenities.
In commercial hotels, each room rate category is assigned a rack (standard

or retail) rate based on the number of persons occupying the room. Resorts,
on the other hand, often have the same rate for one or two persons in the
room, and use room size, view, and location as part of the room pricing
structure. The rack rate is the standard price determined by front office
management. The rack rate is listed on the room rate schedule to inform front
desk agents of the selling price of each guestroom in the hotel. The term “rack
rate” dates back before computers were used at front desks. Employees
identified the retail room rate from a manual filing system at the front desk
caked a “room rack,” hence the name “rack rate.” Today, front office
employees usually use a computer terminal to access rack rate data during
the reservations or registration process. Often, rack rates must be reported to
local and state authorities. Therefore, they must accurately reflect the
appropriate accommodation charge for each room rate category.
Front office employees are expected to sell rooms at the rack rate unless a Notes
guest qualifies for a discounted room rate. Although rack rates are important,
more often than not, guests may ask for and qualify for discount rates. For
example, special rates are often quoted to groups and certain guests for
promotional purposes during low occupancy periods. Special room rate
categories include.
• Corporate or commercial rate. The rate offered to companies that

provide frequent business for the hotel or its chain.
• Group rate. The rate offered to groups, meetings, and conventions

using the hotel for their functions.
• Promotional rate. The rate offered to individuals who may belong to

an affinity group such as American Automobile Association or
American Association of Retired Persons to promote their patronage.
The rate may also be extended during special low occupancy periods
to any guest to promote occupancy.
• Incentive rate. The rate offered to guests in affiliated organizations

such as travel agencies and airlines because of potential referral
business. The rate may also be offered to promote future business; it
is often extended to group leaders, meeting planners, tour operators,
and others capable of providing the hotel with additional room sales.
• Family rate. A rate reserved for families with children.
• Package plan rate. A rate that includes a guestroom in combination

with other events or activities, such as breakfast, golf, tennis, or
parking.
• Complimentary rate. A room rate provided to special guests and/or

important industry leaders. The term complimentary rate usually
means the guest will not be charged for the room during the stay.
However, the guest may receive other charges for dining, telephone,
etc.
The front office manager must be sure that the sale of rooms at special
rates is rigidly controlled. Special rates represent discounts from the rack rate
Notes and therefore may adversely affect the average room rate and room revenue.
The front office manager should examine the circumstances under which
special rates are granted to ensure that front office staffs are adhering to
prescribed policies. All policies should be clearly explained to front office staff,
who should obtain proper approval when applying a special room rate. For
example, a complimentary room (provided at no charge) does not increase
room revenue, but it may or may not decrease the average room rate,
depending upon the front office accounting system. Most hotels require the
general manager or other senior member of the management team to approve
complimentary rates before guests arrive.
Establishing rack rates for room types and determining discount categories
and special rates are major management decisions. To establish room rates
that will ensure the hotel’s profitability, management should carefully consider
such factors as operating costs, inflationary factors, and competition.
Room rates often serve as a market positioning statement since they

directly reflect service expectations to the hotel’s target market. Room rate
positioning can be critical to a hotel’s success. For example, a property offering
economy facilities and limited guest services will most likely not be successful
if its rates are positioned in the mid-price or upscale levels.
The following sections examine three popular approaches to pricing rooms:

the market condition approach, the rule-of-thumb approach, and the
Hubbart Formula.
Market Condition Approach

This approach is the common sense approach. Management looks at
comparable hotels in the geographical market and sees what they are charging
for the same product. These properties are often called the Competitive Set. A
competitive set usually is made up of 6 to 10 properties in a market that are
the most important competition for a property. The competition can be based
on location, property ratings, property type, brand identification, or other
factors. Not every lodging property in a particular location is a direct
competitor. Guests who look for moderately priced lodging will generally limit
their research to properties in that price range.
The thought behind this approach is that the hotel can charge only what Notes
the market will accept, and this is usually dictated by the competition. This
information is available through various public domain sources, including a
periodic blind call to competing hotels. A blind call does not identify the hotel
making the call, and simply asks for availability and rates on specific dates. A
competitive analysis usually focuses on these questions:
• How do our rates compare to those of our competition?
• Are our rates much lower or higher than those of the competition?
How are our rates affecting our revenue and our share of the business?
• What is our occupancy percentage? What is the occupancy

percentage of the competitive set?
• Have any trends emerged during the past six months?
Most of the answers to those questions can not be determined from blind
calls. Two well-known commercially available reports providing this
information from neutral sources are the TIMS and Phaser Reports. Future
occupancy and rate trends can be determined by logging the quoted rates
and availability for the competitive set. The TIMS report lists one month’s
rate information for a property and five local competitors. The rates are broken
down daily and include information on sold-out nights, low rate, low rate
variance from the subscribing property, low corporate rate, low corporate
rate variance, special rate date available, high-low comparisons, and an index
of room types and rates for the period. Exhibit 2 shows a sample TIMS report.
Another, more reliable, way of determining historical market conditions

is to subscribe to industry reports that provide this information from neutral
sources. The best-known historical report is the Smith Travel Accommodations
Research (STAR) Report. The STAR Report provides historical information
on occupancy average room rate, RevPAR, and market share. Exhibit 3 shows
a sample STAR trend report and Exhibit 4 shows a sample STAR summary
report. Unlike the blind call, which looks into the future, historical reporting
shows what happened in the past. However, by tracking this information
over a period of months and years, the rates and occupancy of the competitive
set can be reasonably determined.
Notes
Exhibit 2: Sample TIMS Report
TIMS Competitive Rate Analysis Report for the

Sample TIMS Report
TIMS Code: Sample Reporting Period: Nov 10:00 thur Dec 7:00 Date Captured : Nov 8:00
High - Low Rate
Comparison Fri Sat Sun Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu
SHERATON 11/10 11/11 11/12 11/13 11/14 11/15 11/16 11/17 11/18 11/19 11/20 11/21 11/22 11/23 11/24 11/25 11/26 11/27 11/28 11/29 11/30 12/01 12/02 12/03 12/04 12/05 12/06 12/07
High Rate 209 209 209 209 209 MLS 209 209 209 209 209 209 209 209 209 209 209 209 209 209 209 209 209 209 209 MLS 209 209
Low Rate 135 135 125 169 169 MLS 155 69 125 89 125 125 125 79 79 79 89 129 129 129 89 89 89 89 129 MLS 129 89
Variable 74 74 54 40 40 54 120 84 120 64 84 84 130 130 130 120 80 80 80 120 120 120 120 80 80 120
EMBASSY SUITES
High Rate 129 129 169 169 XXX 169 169 169 XXX 169 169 169 99 99 129 129 149 149 149 149 149 129 129 129 149 149 149 XXX
Low Rate 89 89 89 169 XXX 169 169 169 XXX 169 169 169 99 99 89 89 89 149 149 149 149 89 89 89 149 149 149 XXX
Variable 40 40 80 0 0 0 0 0 0 0 0 0 40 40 60 0 0 0 0 40 40 40 0 0 0
HILTON
High Rate 104 104 184 184 194 XXX 184 164 214 184 184 184 184 184 104 164 184 184 184 184 184 164 224 184 194 194 194 194
Low Rate 69 69 69 139 139 XXX 139 79 189 59 69 69 59 59 59 59 59 139 139 139 139 89 184 139 139 139 138 139
Variable 35 35 115 45 55 45 85 25 125 115 115 125 125 45 105 125 45 45 45 45 75 40 45 55 55 55 55
MARRIOT
High Rate 172 172 172 XXX XXX 172 172 172 172 172 172 172 172 172 172 172 172 172 172 172 172 172 172 172 172 172 172 172
Low Rate 84 84 159 XXX XXX 172 169 84 154 159 159 159 69 69 69 69 159 159 129 129 129 84 84 129 129 129 129 129
Variable 88 88 13 0 3 88 13 13 13 13 103 103 103 103 13 13 43 43 43 88 88 43 43 43 43 43
RADISSON
High Rate 139 139 139 139 139 139 139 XXX XXX XXX XXX 139 139 139 139 139 139 139 139 139 139 139 139 139 139 139 139 139
Low Rate 89 89 89 99 99 99 99 XXX XXX XXX XXX 99 99 99 89 89 89 99 99 99 99 89 89 89 99 99 99 99
Variable 50 50 50 40 40 40 40 40 40 40 50 50 50 40 40 40 40 50 50 50 40 40 40 40
WESTIN
High Rate XXX XXX 255 255 255 XXX XXX 255 255 255 255 255 255 255 255 255 255 255 255 255 255 255 255 255 255 255 255 255
Low Rate XXX XXX 169 189 179 XXX XXX 119 159 129 169 169 119 79 79 79 79 169 169 169 169 85 85 179 179 230 179 179
Variable 86 66 76 136 96 126 86 86 136 176 176 176 176 86 86 86 86 170 170 76 76 25 26 26
There are many problems with this approach, although it is used very Notes
often. First, if the property is new, construction costs will most likely be higher
than those of the competition. Therefore, the hotel cannot be as profitable as
the competition initially. Second, this approach does not take the value of the
property into consideration. With the property being new, and perhaps having
newer amenities, the value of the property to guests can be greater. The market
condition approach is really a marketing approach that allows the local market
to determine the rate. It may not take fully into account what a strong sales
effort may accomplish. It can, in effect, allow the competition to determine
the rates and this could significantly affect the profitability of a hotel’s operation.
Exhibit 3: Sample STAR Trend Report
Sample – October STAR Trend Report
Occupancy Average Room Rate Reve
% Comp % OCC % % Comp % ADR % % Comp
Year Month Prop CHG Set CHG Index CHG Prop. CHG Set CHG Index CHG Prop CHG Set
1995 May 62.4 2.0 60.2 8.5 103.7 11.5 90.89 18.3 104.40 4.6 87.1 14.4 56.74 16.6 62.87
1995 June 72.5 20.4 68.2 8.3 106.3 11.2 94.69 3.3 105.97 4.4 89.4 1.0 68.67 24.4 72.24
1995 July 71.7 5.4 64.9 3.6 110.5 9.4 93.82 .3 96.50 7.2 97.2 7.0 67.27 5.1 62.67
1995 August 65.8 1.5 60.3 2.6 109.1 4.2 92.34 .8 94.52 3.7 97.7 2.8 60.80 2.4 56.99
1995 Sept. 68.2 4.4 64.9 5.7 105.1 10.7 110.07 1.6 116.46 5.6 94.5 6.8 75.07 2.8 75.57
1995 October 83.3 4.9 80.7 6.0 103.2 1.1 128.09 22.3 131.06 20.6 97.7 1.5 106.69 28.4 105.71
1995 Nov. 67.6 3.0 64.6 2.4 104.6 .7 116.17 7.6 116.95 9.1 99.3 1.4 78.52 4.3 75.58
1995 December44.6 2.0 43.1 6.1 103.5 4.4 95.48 9.8 96.04 6.7 99.4 2.9 42.59 7.7 41.35
1996 January 70.7 3.5 68.5 2.0 103.2 1.6 114.20 9.8 112.13 7.3 101.8 2.2 80.71 5.9 76.83
1996 February 84.1 14.1 83.1 10.9 101.2 2.8 129.90 21.0 134.90 25.2 96.3 3.4 109.22 38.1 112.09
1996 March 81.1 4.7 74.9 3.1 108.3 1.6 118.20 5.6 126.33 13.7 93.4 7.1 95.90 .7 94.75
1996 April 67.7 1.6 65.1 .5 104.0 2.1 106.50 7.2 117.00 .8 91.0 7.9 72.11 8.7 76.12
1996 May 69.5 11.4 64.3 6.8 108.1 4.2 106.07 16.7 118.23 13.2 89.7 3.0 73.68 29.9 76.06
1996 June 73.6 1.5 59.8 12.3 123.1 15.8 111.34 17.6 112.26 5.9 99.2 11.0 81.93 19.3 67.19
Exhibit 4: Sample STAR Summary Report

Sample Inns and Suites Executive Summary Report July
Operating Performance Sample Inns and Suites Opes
July Monthly Room Rooms Rooms
Occupancy Percent Average Room Rate Revenue Avail Sold Occupancy Percent A
Segment 1996 1995 % CHG 1996 1995 % CHG % CHG % CHG % CHG 1996 1995 % CHG 199
United States 81.8 83.3 1.8 69.53 63.90 8.8 16.0 8.5 6.6 73.9 74.3 5 70
Region
New England 82.7 84.3 1.9 69.79 67.86 2.8 14.3 13.3 11.1 75.1 74.3 1.1 83
Midde Atlantic 84.4 85.0 .7 69.23 64.82 6.8 7.3 1.2 .4 75.7 74.3 1.9 87
South Atlantic 82.1 84.3 2.6 69.17 58.88 17.5 25.9 10.1 7.2 73.1 73.2 .1 70
East North Central 85.1 85.2 1 62.39 58.80 6.1 9.3 3.1 3.0 73.4 75.1 2.3 67
East South Central 84.8 87.3 2.9 60.76 55.20 10.1 16.4 8.9 5.7 74.4 75.2 1.1 57
West North Central 83.4 83.9 .6 64.84 61.85 4.8 3.9 .4 .9 73.5 76.2 3.5 57
West South Central 75.0 81.7 8.2 64.79 61.80 4.8 34.0 39.1 27.8 69.9 71.3 2.0 59
Mountain 81.5 81.2 .4 76.19 71.37 6.8 14.6 6.9 7.3 75.0 76.1 1.4 61
Pacific 79.6 79.5 .1 79.35 74.44 6.6 13.0 5.9 6.0 75.9 75.1 1.1 80
Price
Luxury 81.0 80.5 .6 97.65 84.71 15.3 21.2 4.4 5.1 75.2 74.9 4 117
Upscale 81.7 83.3 1.9 80.09 74.67 7.3 14.5 8.8 6.8 76.0 76.8 1.0 87
Notes A hotel’s management must not determine the rates of other hotels through
direct discussion with competitors. Such discussion would be considered a
violation of U.S. anti–trust laws. That is the reason for the blind call to the
competition mentioned above. Rates can also be found in many public sources,
such as global distribution systems, published rate brochures, directories from
the American Automobile Association, the Internet, and many others.
Rule–of–Thumb Approach
The rule-of-thumb approach sets the rate of a room at $1 for each $1,000 of
construction and furnishings cost per room, assuming a 70 percent occupancy.
For example, assume that the average construction cost of a hotel room in
$80,000. Using the $1 per, $1,000 approach results in an average selling price
of $80 per room. Singles, doubles, suites, and other room types would be
priced differently, but the minimum average room rate would be $80.
The emphasis placed on the hotel’s construction cost fails to consider the
effects of inflation. For example, a well-maintained hotel worth $100,000 per
room today may have been constructed at $20,000 per room 40 years ago.
The $1 per $1,000 approach would suggest an average selling price of $20
per room; however a much higher rate would appear to be appropriate. The
suggested rate of $20 per room does not take into account inflation and
increased costs of labor, furnishings, and supplies. In these cases, management
might consider the current replacement cost of the hotel, rather than its original
construction and furnishings cost, as a basis for the rule–of–thumb application.
Another way of accounting for inflation would be to index current costs
against original costs. For example, if a hotel was built five years ago and
inflation has increased at an annual rate of 3 percent, the $1 per $1,000 five
years ago would require $1.16 per $1,000 today.
The rule-of-thumb approach to pricing rooms also fails to consider the
contribution of other facilities and services toward the hotel’s desired
profitability. In many hotels, guests pay for services such as food, beverages,
telephone, and laundry. If these services contribute to profitability, the hotel
may have less pressure to charge higher room rates.
The rule-of-thumb approach should also consider the occupancy level of
the hotel. As pointed out, the rule-of-thumb approach assumes 70 percent
occupancy when determining the appropriate average room rate. However,
if a lower occupancy percentage is expected, the hotel will have to capture a
higher average rate to generate the same amount of room revenue. Hotels
tend to have a very high level of fixed expenses (especially depreciation and
mortgage expenses). For example, a mortgage payment is the same every Notes
month, regardless of the hotel’s occupancy level. The front office manager
must understand the effects of room rate and room occupancy on room
revenue to ensure that the hotel meets its revenue goals and financial
obligations.
Hubbart Formula Approach

Another approach to average room rate determination is the Hubbart
Formula. To determine the average selling price per room, this approach
considers operating costs, desired profits, and expected number of rooms sold.
In other words, this approach starts with desired profit, adds income taxes,
then adds fixed charges and management fees, followed by operating overhead
expenses and direct operating expenses. The Hubbart Formula is considered
a bottom–up approach to pricing rooms because its initial item–net income
(profit)–appears at the bottom of the income statement. The second item —
income taxes — is the next item from the bottom of the income statement,
and so on. The Hubbart Formula approach involves the following eight steps:
1. Calculate the Hotel’s desired profit by multiplying the desired rate of
return (ROI) by the owner’s investment.
2. Calculate pretax profits by dividing desired profit (Step 1) by 1 minus
the hotel’s tax rate.
3. Calculate fixed charges and management fees. This calculation
includes estimating depreciation, interest expense, property taxes,
insurance, amortization, building mortgage, land, rent, and
management fee.
4. Calculate undistributed operating expenses. This calculation includes
estimating administrative and general, data processing, human
resources, transportation, marketing, property operation and
maintenance, and energy costs.
5. Estimate non-room operated department income or loss, that is, food
and beverage department income or loss, telephone department
income or loss, and so forth.
6. Calculate the required room’s department income. The sum of pretax
profits (Step 2), fixed charges and management fees (Step 3),
undistributed operating expenses (Step 4), and other operated
department losses less other operated department income (Step 5)
equals the required rooms department income. The Hubbart formula,
Notes in essence, places the overall financial burden of the hotel on the
rooms department.
7. Determine the rooms department revenue. The required rooms
department income (Step 6), plus rooms department direct expenses
of payroll and related expenses, plus other direct operating expenses,
equals the required rooms department revenue.
8. Calculate the average room rate by dividing rooms department
revenue (Step 7) by the expected number of rooms to be sold.
Illustration of the Hubbart Formula. The Casa Vana Inn, a 200-room
property, is projected to cost $9,900,000 inclusive of land, building, equipment,
and furniture. An additional $100,000 in needed for working capital, bringing
the total cost of construction and opening to $10,000,000. The hotel is financed
with a loan of $7,500,000 at 12 percent annual interest and cash of $2,500,000
provided by the owners. The owners desire a 15 percent annual return on
their investment. A 75 percent occupancy is estimated; thus, 54,750 rooms
will be sold during the year (200 × 75 × 365). The income tax rate is 40 percent.
Additional expenses are estimated as follows:
Property tax expenses $250,000
Insurance expenses 50,000
Depreciation expenses 300,000
Administrative and general expenses 300,000
Data processing expenses 120,000
Human resources expenses 80,000
Transportation expenses 40,000
Marketing expenses 200,000
Property operation and maintenance expenses 200,000
Energy and related expenses 300,000
The other operated departments’ income (losses) are estimated as follows:
Food and beverage department $150,000
Telephone department (50,000)
Rentals and other departments 100,000
The rooms department estimates direct operating expenses to be $10 per Notes
occupied room.
Exhibit 5 contains the calculations used in the Hubbart Formula and reveals
an average room rate of $67.81.
Exhibit 6 contains the formula for calculating room rates for single rooms
(x) and double rooms (x + y) , where the price differentials between single
and double rates is represented by the variable y. Assume that the Casa Vana
Inn has a double occupancy rate of 40 percent ( that is, two out of every five
rooms sold at the double rate ) and a room rate differential of $10. Applying
the formula from Exhibit 6, single and double rates would be calculated as
follows:
Double Sold Double Occupancy Number of Occupancy

Daily = Rate × Rooms × Percentage
= .4 (200) (.75)
= 60
Singles Sold
Daily = Rooms Sold Daily – Doubles Sold Daily
= (200 × .75) – 60
= 90
Using the required average rate of $67.81 calculated on Exhibit 5, the
required single and double rates can be determined as follows:
 Doubles Sold ×  Average Daily Number

Singles Sold (x) +  ( x + Rate Differential  = Room Rate × of Rooms Sold
 
90x + 60(x + $10) = ($67.81) (150)
90x + 60x + $600 = $10,171.50
150x = $9,571.50
$9, 571.50
x =
150
x = $63.81
Single Rate = $63.81
Double Rate = $63.81 + $10.00
= $73.81
Notes Exhibit 5: Calculating Average Room Rate: Hubbart Formula

Item Calculation Amount
Desired net income Owners’ Investment ROI
$2,500,000 × .15 = $375,000
net income
Pretax income =
1–t
$375, 000
Pretax income =
1 – .4
Pretax income = $625,000

Plus: Interest expense Principal × interest rate
= interest expense
$7,500,000 × .12 = + 900,000
Income needed before interest expense and taxes 1,525,000
Plus : Estimated depreciation, property taxes, + 600,00
and insurance
Income before fixed charges 2,125,000
Plus: Undistributed operating expense 1,240,000
Required operated departments income $3,365,000
Departmental results excluding rooms
Less: Food and beverage department income (150,000)
Rentals and other department income (100,000)
Plus: Telephone department loss 50,000
Rooms department income 3,165,000
Plus: Rooms department direct expense 54,750 × $10 = $547,500 547,500
Rooms revenue ÷ 3,712,500
Number of rooms sold ÷ 54,750
Required average room rate $ 67.81
Exhibit 6: Determining Single and Double Room Rates from an Average

Room Rate
Singles sold (x) + Doubles Sold (x + y) = (Average Rate) (Rooms Sold)
where: x = Price of singles
y = Price differential between singles and doubles
x + y = Price of doubles
Alternatively, the double rate could be set as a percentage of the single

rate. When this is the case, the formula is slightly altered:
 Doubles Sold ( x) ×  Average Daily Number

Singles Sold (x) +  (1 + Percentage Differen tial)  = Room Rate × of Rooms Sold
Notes
 
The percentage differential is simply the percentage difference of the double

rate over the single rate. To illustrate this approach, we will call again on the
Casa Vana Inn example. Assume a 40 percent double occupancy and a price
differential of 15 percent.
 Doubles Sold ( x) ×  Average Daily Number

Singles Sold (x) +  (1 + Percentage Differential)  = Room Rate × of Rooms Sold
 
90x + 60(x)(1.15) = ($67.81) (150)
90x + 69x = $10.171.50
159x = $10,171.50
$10,171.50
x =
159
x = $63.97
Single Rate = $63.97
Double Rate = $63.97 (1.15)
= $73.57
The Hubbart Formula is most useful in setting target average prices as
opposed to actual average prices. It is important to note that the Hubbart
Formula generates an average room rate as a target price at the hotel’s point
of profitability. It relies on management’s best estimates of total rooms occupied
and the single/double occupancy mix to determine target rates. If these
estimates are incorrect, the targets will be incorrect.
Suppose a hotel company is planning to build a new property. Using the
Hubbart Formula, management computes an average target room rate of $75.
Knowing the current average rate for competing hotels in the area is only
$50, management ponders whether the proposed hotel, opening in two years,
has too high a targeted room rate.
To evaluate its potential, management assumes the competitor’s average
price will increase at five percent per year to $55.13 (that is $50 × 1.05 × 1.05).
Since the proposed hotel would be new, management reasons that a price
premium may be acceptable. A difference of nearly $20, however, appears to
be too great. A more reasonable average room rate might be $65, after three
years of successive five per cent price increases, the hotel’s daily average room
Notes rate would be increased to just over $75 as follows:

Annual increase Seeling
at 5% Price
Initial room rate (new hotel) $65.00
At the end of year 1 $3.25 $68.25
Considering this situation, hotel developers will have to finance the
additional deficit in the first year ($75 for the targeted average rate versus
$65 expected average rate when the hotel opens). In order to operate, the
hotel will need to devise some method of financing the shortfall. As stated
before, most hotels do not generate profits during the first few years of
operation. In this respect, operating deficits should always be included in the
hotel’s financing plan.
Planned Rate Changes

Rack room rates many change during a year, depending on market factors.
Rates may change due to seasonality or to a major event in the area. Knowing
this, hotels may publish a rack rate range instead of a specific rack rate. For
example, resorts may have several different rack rates during a year, reflecting
peak, shoulder, and off–peak (or value) seasons. Rack rates may vary 50 percent
or more between these seasons for the same room and amenities. Another
example of a planned rate change was the 1996 Summer Olympics in Atlanta,
Georgia. Hotels planned their rates for the two weeks of the Summer Olympics
several years in advance. These rates were submitted to governmental and
Olympic authorities for their planning and approval. Opening and closing
rates takes careful planning. Discounts should not be left open when strong
demand will fill rooms at rack rates. At the same time, quoting only rack rates
may not be desirable when demand is low.
A Modified Formula for Calculation of Room Tariff

(i) Formula
(a) All operating and overhead expenses under appropriate heads
including depreciation (excluding initial depreciation on hotel
building, if any) calculated either by the written down value
method as allowed by the Income Tax Act, 1961 or straight line
method as permitted by Section 205 (2) (b) of the companies
Act, 1956 subject to the condition that the method once adopted Notes
is consistently followed in the subsequent years.
+ Actual interest accrued for the period on all borrowings.
+ A net return of 15% on the net fixed assets (without
revaluation).
+ Net working capital.
– Loans, both short term and long term.
– Investment in other activities, after allowing for the national
income tax liabilities.
+ A pre–tax return of 10% on long–term borrowing only.
Note: National income–tax liability will be calculated on the basis
of the rate of income–tax prescribed for the year for which tariff
is being calculated. For example, if tax rate for a financial year
for which the tariff is being calculated is 50% of income, the
gross return on the basis of 15% pre–tax return will be 30%.
(b) Less total gross revenue from all sources other than guestroom
sales, such as shop and rentals, food and beverages sales, cigarette
and cigar sales, laundry and valet sales, telephone charges and
miscellaneous income. The sales from suites and deluxe rooms
not to be covered by the approved tariff will also be excluded.
(c) Balance: The balance is the amount to be realised from guest-
room sales.
(d) Compute: Number of guestrooms multiplied by 365 days and
assuming an occupancy ratio of 60% or any other presumed
percentage. However, in the case of hotels at hill stations and
seaside resorts, occupancy ratio may be taken as the actual
average annual room occupancy for the past two years or 60%
(or any other presumed percentage) whichever is less.
(ii) Option
(a) Hotels more than 5 years old can claim:
– Depreciation based on the replacement value of all the assets
of the entire property, and certified by a government approved
value.
– The fair market rental value is certified by a Government
approved value in the case of rented property as an expense.
Notes (b) The replacement value of the property/market rental value once
adopted will remain in force for a minimum period of 5 years.
(iii) Provided that
(a) Hotels which follow the uniform system of accounts and can
thus account for the operation of each department separately,
may work out their room tariff by completely deleting the
expenditure incurred and revenue earned on food and beverage
operation.
(b) Hotels receiving management/consultancy fees may delete the
amount so earned from gross hotel revenue while computing
the hotel room tariff provide the expenditure incurred on
rendering such a service is also deleted from the operating and
overhead expenses.
(iv) Determination of Single and Double occupancy Rate
This shall be determined with reference to:
(a) Double occupancy ratio i.e. the percentage of rooms occupied
by two or more than two persons in relation to the total number
of rooms occupied, for the year for which the figures are
furnished, and
(b) The difference in rupees as desired between the single occupancy
and double occupancy rates as related to the average room rate
worked out.
(v) Certification of Figures
The figures furnished for purposes of fixing the tariff will be supported
by the following certificate from a chartered accountant/cost
accountant.
“We have verified the above statement prepared for the purpose of
fixing the tariff, for the various single and double rooms in the hotel,
from the books of account and certify that they are correct based
upon the assumptions set out in the annexure to the statement.
Further certified that wherever allocation of common expenses and/
other funds are involved they are in accordance with the guidelines
set in the tariff formula if any, prescribed by the Government of India
or otherwise in accordance with normal accounting practices.”
(vi) Explanatory Note Notes

(a) The operating and overhead expenses other than depreciation
will include
– Consumable supplies including cost of food and beverage sales.
– Payroll and related expenses.
– Entertainment, band, music, cabaret, laundry, etc.
– Rent, rates, taxes, and insurance.
– Heat, light, power, gas.
– Repairs, maintenance and replacement.
– Commissions and discounts.
– Advertising and promotion expenses.
– Office and administrative expenses.
– Directors’ remuneration and meeting fees.
– Directors’ traveling expenses.
– Auditors’ remuneration.
– Any other related expenses.
(b) Room Sales: The term “room sales” in the formula denotes guest-
room rent only.
(vii) Allocation of Common Overheads
The overhead expenses of an entity that engages in activities other
than hoteliering should be allocated in the proportion the gross
revenue from each such activity bears to the total turnover of the
entity. The overhead expenses of an entity owning more than one
unit of hotel should be distributed on the various operating units in
the proportion. The turnover of each unit has to the total combined
turnover of all operating units controlled by that entity.
(viii) Allocation of Common Loan
In case where the long term loan for each hotel is not specifically
identifiable, the total long term loan would be allocated in proportion
to the next fixed assets of each hotel.
In general, we can say that there are two fundamental methods of
approaching the problem of accommodation tariff fixation.
Notes (a) Cost based pricing: Which include method such as

(i) Rule of Thumb, and
(ii) Hubbart formula.
Basically in cost based pricing system the emphasis is on
covering cost of operation of service and to this a given rate
of return is added.
(b) Market based pricing: Here what the customer is ready to pay
becomes the starting point of the fixation of tariff and the hotel
management then works to build the cost of the product/service
in such a way that the hotel receives a reasonable rate of return
on that basis. Under this heading we can put the following tariff
fixation method:
(i) Competitors price/price taking/price follower ship method
(already explained)
(ii) Upside down/Top down method: This is also called as “Market
Tolerance Method”. In this case, the hotels in competition sit
to call each other to see what rate each is offering each night.
The process is called “shopping” or “call around”. It is
important that before meeting hotels don’t disclose their
identity because then it will be against the ethics and the
process can be called as ‘price fixing’.
(iii) Rate cutting: Reducing rate (usually during off season). The
lowering of rate is expected to bring an increase in the
occupancy. Here one point is important that to cover the loss
of revenue due to the reduction in rate, a very high
percentage of increase in occupancy will be required.
(iv) Inclusive and non Inclusive rates.
(v) Guest characteristic: Usually tariff will also vary with the guest
requirements. For example
1. If guest arriving late, staying overnight and leaving next
morning after breakfast would opt for M.A.P.
2. Long term staying guests usually eat their meals in hotel
and ask for A.P.
(c) SPA hotels: Here the residents usually in addition to all meals
also takes other services such as laundry etc. and hence may be
on special tariff such as residential/contract tariff.
(d) Airport Hotel. Usually, transit guests who stay for few hours or a Notes
very short time stay here and opt for either an European plan or
day rate only.
(e) That class of guests who are adventurous types and
experimenting type and who may want to experiences food and
its quality of various restaurants of the hotel may stay on
European plan.
(f) Guests of a remotely situated resort who usually have no choice
but to eat meals in the hotel may stay in the resort on airport.
(g) An airport hotel usually offers table d’hote menu (same price
range) i.e. standard means. Usually, the menus are low cost and
hence low budget guest (spending power of the guest). Both the
hotel and guest can budget their expenses in advance.
(vi) Hotel characteristics. Some hotels prefer to operate on inclusive tariff.
The main characteristics are:
(a) Grade. The guest and staff ratio is the main considerations. A
five star hotel will have a higher staff guest ratio then a lower
category because extra staff is needed in providing direct guest
services. In such cases, itemized bills are more useful.
(b) Size. The larger the hotel, it is possible that it will have a more
modern and computerized costing system and this is another
reason that it should have itemised bills. The number of staff
does not depend upon the size, it mainly depends upon the
systems for example a hotel on computer system would have
low ratio of staff and guest.
(c) Length of stay. Another important consideration. A long stay
guest on itemized bill will be a long one, for example, let us
consider he makes only four charge purchases (room, breakfast,
lunch and dinner) per day and stays for a week, then there will
be minimum 28 entries in a week and if we say that we
accommodate him on a per day charge basis, then only one entry
per day will be made (i.e.) seven entries per week.
(d) Marketing consideration. When the guest is on full board plan
(meals inclusion) and suppose does note want to eat meal, then
he may expect a reduction in the rate (which usually is not given).
Many hotels offering inclusive rates allow guests to choose either
Notes the standard table d’hote menu or to set off the cost against an
a’la carte meal. This often encourage guests to take advantage
of the latter’s wider choice because they feel they are getting a
substantial allowance towards the cost and thus helps to increase
restaurant sales figures.
ROOM TARIFF CARD

Room tariff (card) is a document published by the hotel for use by the travel
trade, organization and individual prospective guest and the list includes
prices of rooms classified into different categories, such as single room, double
room, twin room, suites, etc. and meal plans such as American, European,
and Continental, etc.
Group Rate
A published tariff price given to group operators which is commissionable
only to retail travel agents, tour operators and wholesalers. Generally,
commissionable at 10% of the published rack rate.
Volume Rate
These may be based on production of business for entire year or for selected
time periods coinciding with seasonal rate. Also called preferred rate. Usually,
a further discount rate on corporate rate and is given when a guaranteed
number of room nights within a specific time frame is required. Usually, those
companies which have a certain level of transient business volume which
they want to be accommodated to the hotel are given this ratio. It is important
that the company ensures that the room night production level is maintained.
Rack Rate
Rack rate is a term which refers to the normal room rate of the hotel. This is
the rate of the room which is published in the room tariff card. This is also the
rate which is written on the Shannon slip which is slipped in room rack of
those hotels which operate on whitney system. This rate is usually negotiable
and many types of discount can be given to various categories of guests such
as travel agents, tour operators, corporate companies, Airlines groups students,
conference organizers FHRAI member. IAAI members and so on, the list is
endless. Normally, FIT guests are those guests who are not sponsored by any Notes
company or organization and come to the hotel directly for getting their rooms.
It is also the highest published rate of the rooms. Usually given to walk–in
and in that case it is called walk–in rate.
Executive Business Service Rates

Special rates available to preferred business accounts.
Tour Group (Series Group) Wholesale Rates

A tariff rate, discounted in advance (and inclusive of tax and services)
applicable to wholesalers who operate a series of tours with group arriving
and departing together.
Government Rate
Usually government employees are given per day allowance for their travelling
and accommodation and food by their office and some hotels offer them a
rate which give them room and accommodation within that price.
FIT Wholesale Net Rates

These rates are applicable to a wholesaler travel agent who publishes packages
whereby an individual guest may arrive any day and stay as long as he wishes.
Since these packages are normally sold through retail travel agents, they are
normally constructed at 15% off the individual rate.
Discounted Rates
Airlines, travel agent discounts; discount rates should be fixed in competition
to other hotels of the area.
Seasonal Rate
Season and resort hotels which usually have fluctuating demand change their
rate usually as per the seasonalty and offer different rates for in season and
off season.
Crib Rate
A special rate applicable to children below 12 years of age and accompanying
their parents.
Extra Bed Rate

Generally, one fourth of the published room rate.
Notes Family Rate

Special rates for families—for example, one couple and a child below 5 years,
then the rate may be for one double room. One couple with two children below
12 years, the rate may be of one double room plus one extra bed rate etc.
Crew Rates
Special rates for airlines crew, depending upon the total room night on
consistent and continuous basis given by the airlines over a period of generally
one year.
Week Day/Weekend Rates

Another factor on which the rate fixation can be done for example on a hill
station where the guest are more on Friday to Sunday the rates may be higher
and from Monday to Thursday the rate may be lower. Similarly, the rates of
a down town hotel during weekdays (i.e.) from Monday to Thursday may be
higher and from Friday to Sunday may be lower. Traditionally, hotel location
types see their week days and weekend demands levels differently and fix
their rates accordingly.
Membership Rates
Some hotels give special rates to the members of various esteemed organizations
such as esteemed clubs etc. These may vary from 50% to complementary on
accommodation only. Some rebate may also be given on food and Beverage
service also. This is called “Industry Rate” when it is offered to hospitality
trade organization such a FHRAI and TAAI etc.
Executives of the Other Units of the Same Chain

Under the programme usually a 50% discount on accommodation and 30%
discount of food and soft drink and on alcoholic beverages may be given to
executives of the other units of the same chain.
Corporate Rate Programme

This programme covers corporate offices and usually 10–15% discount (on
the rack rate) can be given to the officers coming from corporates. The corporate
rate is widely accepted as the transient target rate for most hotels. This is
simply an average rate goal, a hotel fixes achieve for a certain day or market
segment.
Students–Faculty Programme Notes

A very special programmer run by some hotel offering discounted rates to
students and faculty members of various educational institutions etc. These
are negotiable.
Special discounted rates are also given usually to U.N. employees, FHRAI
members, TAAI members and travel writers, executives of travel agents and
airlines, etc. The discounts may be on accommodation, accommodation and
food and soft drinks or on alcoholic beverages etc.
Commercial Rate
A rate agreed upon by a travel agent and the hotel for all individual room
reservation.
Advance Purchase Rate

Some hotels have started using the new concept of charging. Under this more
and more discounted rate may be given depending upon the factor that how
early the booking is made, for example a hotel may give more discount to a
booking which is done one month before as compared to a booking which
may be only one week in advance.
Package Rate
A package offered by the hotel of a combination of one or more hotel product
or services. Also called as Bundling. A bundling entails pricing the package
below the cost of purchasing the items separately. When the bundling includes
meals it becomes an American plan or MAP depending upon the meals offered
and is called ‘meal package’. Further a package will be called an meeting
package’, (which is usually offered to meeting planner) where the CPM
(complete meeting package) would include, coffee breaks, lunch, dinners, and
or/audiovisual equipment, meeting room charges, and the room charges.
Similarly, a vacation package will include alongwith room rate, the airlines
tickets transportation charges, tickets to local attraction or shows and themed
amenities, for example a themed beach vacation bundle in addition to the above
may include sun glasses, suntan lotions, beach umbrella, snacks on beach and
other such amenities which may be necessary for a vacationer. Similarly, many
other such special vacation packages/bundles may be organized.
Notes SAMPLE TARIFF CARD

HOTEL ABC
F.I.T. Tariff Group Tariff Fixed Menu Meals
European Plan (Room Only) (For 15 persons or more) (For Groups only)
Indian Rupees European Plan American Breakfast Rs. 70/-
Single Room 1150/- Single Room 900/- Lunch 135/-
Double Room 1250/- Double Room 1000/- Dinner 135/-
Double Suites 1800/- For MAP & AP application add
Executive Suites 2500/- as per meal rates quoted below:
Deluxe Suites 3000/-
Luxury Suites 3500/-
Group tariff is applicable for groups of 15 paying members or more. After every 15 paying
members, one person accommodated complimentary.
LOCATION: Situated in an elite residential area of New Delhi. Hotel is 8 kms from Palam
Airport, 6 kms from the main city shopping centre and 8 kms from New Delhi Railway
Station. All rooms are centrally air conditioned with attached bath and shower, direct dial
telephone; 4 channel music, refrigerators and close circuit televisions.
SERVICE AND FACILITIES: 4 Restaurants, 3 conference/Banquet rooms to accommodate
upto 500 persons; 24 hour room service; same day Laundry and Dry Cleaning Services;
Barber Shop and Beauty Parlour; Swimming Pool, Business Centre and Secretarial Services;
Travel Agency, Pastry Shop, Shopping Arcade; Safe Deposit Lockers; Currency Exchange;
Doctor on Call; Baby Sitters on request. Extensive Car Park; Credit Cards—American Express,
Dinners Club; Visa and Mastercharge.
DINING & ENTERTAINMENT
A RUSTIC HIGHWAY THE 10th CENTURY

ROAD SIDE STOPOVER: Treat your EATERY EATERY: Truly English
palate to the delicacies of the tradition is at its best here.
‘rugged roadside’ cuisine. Situated at the lobby level,
This Indian restaurant, one our 24-hour eatery offers the
of its kind, is reminiscent of choicest snacks and meals.
the cherished rural folklore.
IN HIGH SPIRITS: Make A TASTE OF DIFFERENCE:
GOVERNER spirits soar in this regal bar, CHINA Set your mood in the midst
overlooking the sprawling GARDEN of a bamboo grove with
green lawns. emerald leaves, and savour
A HUNTING CAMP: Enter the exotic Szechwan and
JUNGLE the world of wild-life and Cantonese cuisine.
VIEW hunting camps, brought to

you in a specially created
jungle atmosphere. The food
is bar-be-que, served in a
setting of log-huts, pit-fires,
and flowing streams.
SWIMMING POOLS: Situated amidst spacious lawns. Take a dip or sunbathe along the pool
side. Also a mini pool for the kids.
HEALTH CLUB: Equipped on modern lines with sauna, steam bath and gym.
CONFERENCE AND BANQUET FACILITIES
Reception Banquet Sit-down Conference
Buffet Style Theatre Style
500 150 350
Three Banquet Halls with the above accommodation: Notes

Equipment and facilities include microphones, public address system and blackboards.
Tape recorders, carousel projectors and 16 mm projectors available on request.
1. Rate effective from .................. to ...................... .
2. Rates subject to change without notice.
3. Central and State taxes will be charged extra as and when applicable.
4. All the above rates are commissionable at 10% to recognised travel agents.
5. RESERVATIONS ARE HELD TILL 6 P.M. UNLESS HOTEL IS NOTIFIED OF LATE ARRIVAL.
6. WE LEVY NO SERVICE CHARGE.
FORECASTING
• Hotel income statement Notes

• Rooms division income statement
• Rooms division budget reports
• Operating ratios and ratio standards
DAILY OPERATIONS REPORT

The daily operations report, also known as the manager’s report, the daily
report, the daily revenue report, contains a summary of the hotel’s financial
activities ring a 24 hour period. The daily operations report provides a
means of reconciling cash, bank accounts, revenue, and accounts
receivable. The report is also yes as a posting reference for various
accounting journals and provides important data that must be input to
link front and back office computer functions. Daily operations reports
are uniquely structured to meet the needs of individual hotel properties.
Exhibit 8 presents a sample daily operations report for a hotel with food
and /beverage service. Rooms statistics and occupancy ratios form an
entire section of a typical daily operations report. Enriched by comments
and observations from the accounting staff, statistics shown on the daily
operations report may take on more meaning. For example, statistics about
the number of guests using the hotel’s valet parking services take on added
significance when remarks indicate that valet sales are down while
occupancy is up. The front office manager may assume that the front
office staff is not properly promoting available guest valet parking services.
The information provided by the daily operations report is not restricted
by the front office manager or hotel general manager. Copies of the daily
operations report are generally distributed to all department and division
managers in the hotel.
Exhibit 8: Sample Daily Operations Report

Payroll Laundry Commissions
and Related Linen and and Reservation Other
Year Expenses Guest Supplies Expenses Expenses
19 × 1 16.5% 2.6% 2.3% 4.2%
Notes REFINING BUDGET PLANS

Departmental budget plans are commonly supported by detailed
information gathered in the budget preparation process and recorded
on worksheets and summary files. These documents should be saved
to provide an explanation of the reasoning behind the decisions
made while preparing departmental budget plans. Such records may help
resolve issues that arise during the budget review. These support
documents may also provide valuable assistance in the preparation of
future budget plans.
If no historical data are available for budget planning, other sources

of information can be used to develop a budget. For example, corporate
headquarters can often supply comparable budget information to
its chain-affiliated properties. Also, national accounting and consulting
firms usually provide supplemental data for the budget development
process.
Many hotels refine expected results of operations and revise operations

budgets as they progress through the budget year. Reforecasting is
normally suggested when actual operating results start to vary significantly
from the operations budget. Such variance may indicate that conditions
have changed since the budget was first prepared and that the budget
should be brought into line.
Evaluating Front Office Operations

Evaluating the results of front office operations is an important
management function. Without thoroughly evaluating the results of
operations, managers will not know whether the front office is attaining
planned goals. Successful front office managers evaluate the results of
department activities on a daily, monthly, quarterly/ and yearly basis.
The following sections examine important tools that front office managers
can use to evaluate the success of front office operations.
These tools include:
• Daily operations report
• Occupancy ratios
• Rooms revenue analysis
FORECASTING
occupied room is often expressed in dollars and as a percentage. Notes

Exhibit 7 presents expense category statistics of the ABC Hotel. Year
19 × 1 to 19 × 4, expressed as percentages of each year’s rooms revenue.
Based on this historical information and management’s current objectives
for the budget of 19 × 5, the percentage of rooms revenue for each expense
category may be projected as follows: payroll and related expenses 17.6
percent; laundry, linen and terry, and guest supplies 3.2 percent;
commissions and reservation expenses 2.8 percent; and other expenses-
4.7 percent.
Using these percentage figures and the expected rooms revenue

calculated previously; the ABC Hotel’s rooms division expenses for the
budgeted year are estimated as follows:
Payroll and related expenses
$1,997,280 × .176 = $351,521.28
Laundry, linen, terry, and guest supplies
$1,997,280 × .032 = $ 63,912.96
• Commissions and reservation expenses
$1,997,280 × .028 = $ 55,923.84
• Other expenses
$1,997,280 × .047 = $ 93,872.16
In this example, management should question why costs continue to

rise as a percentage of revenue. If costs continue to rise (as a percentage,
not in real dollars) profitability will be reduced. Therefore, one of the
outcomes of the budget process will be to identify where costs are rising
as a percentage of revenue. Then, management can analyze why these
costs are increasing disproportionately with revenue and develop a plan
to control them.
Since most front office expenses vary proportionately with rooms

revenue (and therefore occupancy), another method of estimating these
expenses is to estimate variable costs per room sold and then multiply
these costs by the number of rooms expected to be sold.
Notes assumes that all till rooms will be available for sale each day of the year.
This will probably not be the case, but it is a reasonable starting point for
projection.
Exhibit 7: Expense Categories as Percentages of Rooms Revenue

for ABC hotel
Payroll Laundry Commissions
and Related Linen and and Reservation Other
Year Expenses Guest Supplies Expenses Expenses
19 × 1 16.5% 2.6% 2.3% 4.2%
19 × 2 16.9% 2.8% 2.5% 4.5%
19 × 3 17.2% 3.0% 2.6% 4.5%
19 × 4 17.4% 3.1% 2.7% 4.6%
This simplified approach to forecasting rooms revenue is intended

to illustrate the use of trend data in forecasting. A more detailed
approach would consider the variety of different rates corresponding to
room types, guest profiles, days of the week, and seasonality of business.
These are just a few of the factors that may affect rooms revenue
forecasting.
ESTIMATING EXPENSES
Most expenses for front office operations are direct expenses in that
they vary in ‘ed proportion to rooms revenue. Historical data
can be used to calculate an aproximate percentage of rooms
revenue that each expense item may represent. These percentage
figures can then be applied to the total amount of forecasted
revenue, resulting in dollar estimates for each expense category for the
budget year.
Typical rooms division expenses are payroll and related expenses; guest
room laundry (terry and linen); guest supplies (bath amenities, toilet tissue,
matches); hotel merchandising (in-room guest directory and hotel
brochures); travel agent commissions and reservation expenses; and other
expenses. When these costs are totaled and divided by the number of
occupied rooms, the cost per occupied room is determined. The cost per
FORECASTING
Exhibit 6: Rooms Revenue Statistics for the ABC Hotel Notes

Rooms Average Net Rooms Occupancy
Year Sold Daily Rate Revenue Percentage
19 × 1 30,660 $50 $1,533,000 70%
19 × 2 31,974 52 1,662,648 73%
19 × 3 32,412 54 1,750,248 74%
19 × 4 32,850 57 1,872,450 75%
yearly increase. If future conditions appear to be similar to those of the

past, the rooms revenue for 19 × 5 would be budgeted at $l,464,100 a 10
percent increase over the 19 × 4 amount.
Another approach to forecasting rooms revenue bases the revenue

projection on past room sales and average daily room rates. Exhibit
6 presents rooms revenue statistics for the 120-room ABC Hotel
from 19 × 1 to 19 × 4. An analysis of the statistics shows that occupancy
percentage increased three percentage points from 19 × 1 to 19 × 2,
one percentage point from 19 × 2 to 19 × 3, and one percentage from
19 × 3 to 19 × 4. Average daily room rates increased by $2, $2,
and $3 respectively over the same periods. If future conditions are
assumed to be similar to those of the past, a rooms revenue forecast for 19
× 5 may be based on a one percent increase in occupancy percentage
(to 76 percent) and a $3 increase in the average daily room rate (to $60).
Given these projections, the following formula can be used to forecast
rooms revenue for the year 19 × 5 for the ABC Hotel:
Forecasted Rooms Revenue
= Rooms Available × Occupancy Percentage × Average Daily Rate
= 43,800 × .76 × $60
= $1,997,280
The number of rooms available is calculated by multiplying the 120

rooms of the ABC Hotel by the 365 days of the year. This calculation
Notes • If a reservation was made through the reservation manager,

sales manager, or someone in the executive office and the property
is close to full, call that staff person. Often, such guests are
personal friends and are willing to help out by staying somewhere
else.
• Close to the property’s cut-off time, consider placing a

person-to-person phone call to any guest with a no
guaranteed reservation who hasn’t arrived. If the person accepts
the call, confirm whether or not he or she will arrive yet that
night.
• After the property’s cut-off time, if it becomes necessary, pull any

reservation that were not guaranteed or prepaid.
• If any rooms are out-of-order or not presently in use, check to see

if they can be made up. Let housekeeping know when a tight day
is expected, so that all possible rooms are made up.
• Before leaving work, convey in writing all pertinent information

to the oncoming staff. Good communication is essential.
For example, Exhibit 5 shows yearly increases in net rooms revenue

for the XYZ Hotel. For the years 19 × 1 to 19 × 4, the amount of rooms
revenue increased from $1,000,000 to $1,331,000, reflecting a 10 per cent.
Exhibit 5: Rooms Revenue Summary for the XYZ Hotel

Increase over Prior Year
Year Rooms Revenue Dollar Percentage
19 × 1 $1,000,000 —— ——
19 × 2 1,100,000 $1,000,000 10%
19 × 3 1,210,000 1,100,000 10%
19 × 4 1,331,000 1,21,000 10%
FORECASTING
Exhibit 4: Sample Daily Checklist for Accurate Room Counts Notes

• Make counts of the rack and reservations. On tight days, a
count should be made at 7:00 a.m., noon, 3:00 p.m., and
6:00 p.m. On normal days, a 7:00 a.m. and 6:00 p.m. count will
suffice.
• Check room rack against the folio bucket to catch sleepers and
skippers.
• Check housekeeping reports against the room rack to catch sleepers

and skippers.
• Check for rooms that are due out, but still have balances on their
folios, especially where credit cards are the indicated sources of
payment.
• Check reservations for any duplications.
• Call the reservation system to make sure all cancellations were

transmitted.
• Check the switchboard, telephone rack, and/or alphabetical room

rack to make sure that the guest is not already registered.
• Call the local airport for a report on cancelled flights.
• Check the weather reports for cities from which a number of

guests are expected.
• Check reservations against convention blocks to catch

duplications.
• Check with other hotels for duplicate reservations if a housing

or convention bureau indicated the reservation was a second
choice.
• Check arrival dates on all reservation forms to be sure none were

misfiled.
• Check the room cancellation list.
Notes the actual results of operations. In most hotels, room revenues are greater
than food, beverage, banquets, or any other source of revenue. In addition,
rooms division profits are usually greater than those of any other
department. Therefore, an accurate rooms budget is vital creating the
overall budget of the hotel.
The budget planning process requires the closely coordinated

efforts of all management personnel. While the front office manager
is responsible for room revenue forecasts, the hotel accounting
division will be counted on to supply department managers with
statistical information essential to the budget preparation process.
The hotel accounting division is also responsible for coordinating
the budget plans of individual department managers into a comprehensive
property-wide operations budget for top management’s review. The
hotel general manager and controller typically review departmental
budget plans and prepare a budget report for approval by the hotel’s
owners. If the budget is not satisfactory, elements requiring change
may be returned to the appropriate division managers for review and
revision.
The primary responsibilities of the front office manager in budget

planning are forecasting rooms revenue and estimating related expenses.
Rooms revenue is forecasted with input from the reservations manager
while expenses are estimated with input from all department managers
in the rooms division.
FORECASTING ROOMS REVENUE

Historical financial information often serves as the foundation on which
front office managers build rooms revenue forecasts. One method of rooms
revenue forecasting involves an analysis of rooms revenue from past
periods. Dollar and percentage differences are noted and the amount of
rooms revenue for the budget year is predicted.
FORECASTING
1. Previous night occupied rooms is determined from either the actual number Notes
of rooms occupied last night or the forecasted number of rooms from the
previous night.
2. Unoccupied rooms equals the total number of rooms in the hotel and less
than the number of rooms occupied.
3. Expected house count equals the forecasted occupied rooms times the multiple
occupancy percentage for the day (found on the computer report).
Distribution: General Manager, Front Desk, Housekeeping, All Food and

Beverage, Accounting, Sales, Banquets, Security
Room Count Considerations

Control book, charts, computer applications, projection, ratios, and
formulation can be essential in short and long-range room count planning.
Each day, the front office performs several physical counts of rooms
occupied, vacant, reserved, and due to check out, to complete the
occupancy statistics for that day. A computerized system may reduce the
need for most final counts, since the computer can be programmed to
continually update room availability information.
It is important for front desk agents to know exactly how many rooms
are available, especially if the hotel expects to operate nearly 100 percent
occupancy. Once procedures for gathering room count information are
established, planning procedures can be extended to longer periods of
time to form a more reliable basis for revenue, expense, and labor
forecasting. The checklist in exhibit 4 may be applicable to non-automated
and semi-automated operations alike.
Budgeting for Operations

The most important long-term planning function performed by front office
managers is budgeting front office operations. The hotel’s annual
operations budget a profit plan that addresses all revenue sources and
expense items. Annual budgets are commonly divided into monthly plans
which, in turn, are divided in weekly (and sometimes daily) plans. These
budget plans become standards against which management can evaluate
Notes Three-Day Forecast

A three-day forecast is an updated report that reflects a more current
estimate of room availability. It gives details of any significant change
from the ten-day forecast. The three-day forecast is intended to guide
management in fine-tuning labour schedules and adjusting room
availability information. Exhibit 3 presents a sample three-day forecast
form.
Exhibit 3: Sample Three-Day Forecast Form
Three-Day Forecast
Date of Forecast: _______________ Forecast Completed By: _______________
Total Rooms In Hotel _______________
Tonight Tomorrow Third Night
Day
Date
Previous Night Occupied

Rooms 1
– Expected Departures
– Early Departures
+ Unexpected Stayovers
= Rooms Available For Sale
+ Expected Arrivals
+ Walk-ins & Same Day

Reservations
– No-shows
= Occupied Rooms
= Occupancy %
= Expected House Count 3
FORECASTING
2. Estimated Departures Notes

3. Reservation Arrivals-Group
(taken from log book)
4. Reservation Arrivals-individual
(taken from log book)
5. Future Reservations (estimated
reservations received after forecast
is completed)
6. Expected Walk-ins (% of walk-ins

based on reservations received
and actual occupancy for past
two weeks)
7. Total Arrivals
8. Stayovers
9. TOTAL FORECASTED ROOMS
10. Occupancy Multiplier (based on

number of guests per occupied
room for average of the same day
for last three weeks)
11. FORECASTED NUMBER OF

GUESTS
12. Actual rooms occupied (taken

from daily report for actual date
to be completed by front office
supervisor)
13. Forecasted variance (difference

between forecast and rooms
occupied on daily report)
14. Explanation (to be completed

by front office supervisor and
submitted to general manager;
attach additional memo if necessary)
APPROVED: ______________________ Date: ___________________________

General Manager’s Signature
Notes period. This forecast can be especially helpful to the housekeeping

department. A ten-day forecast form, as shown in Exhibit 2, is typically
developed from data collected through several front office sources.
First, the current number of occupied rooms is reviewed. The estimated

number of overstays and expected departures are noted. Next, relevant
reservation information is evaluated for each room (and guest) by date of
arrival, length of stay, and date of departure. These counts are then
reconciled with reservation control data. Then, the actual counts are
adjusted to reflect the projected percentage of no-shows, anticipated
understays, and expected walk-ins. These projections are based on
the hotel’s recent history, the seasonality of its business, and the known
history of specific groups scheduled to arrive. Finally, conventions and
other groups are listed on the forecast to alert various department
managers to possible periods of heavy, or light, check-ins and check-outs.
The number of rooms assigned each day to each group may also be noted
on the sheet.
Most computer systems provide the data on the books in a report format
for the front office manager to use. However, most computer systems do
not “forecast” business. Programming to successfully analyze historical
trends and market conditions has been tried in the past with little success.
Therefore, while the computer system can assist in forecasting, it is the
knowledge and skill of the front office manager that determines how
accurate the forecast is.
Exhibit 2: Sample Ten-Day Forecast Form
Ten-Day Occupancy Forecast
Location _____________ # _________________ Week Ending ________________
Date Prepared: _____________________Prepared By _______________________
To be submitted to all department heads at least one week before the first day
listed on forecast.
1. Date and Day (start week and end F S S M T W T F S S

week the same as the payroll r a u o u e h r a u
schedule) i t n n e d u i t n
s r
FORECASTING
SAMPLE FORECAST FORMS Notes

The front office may prepare several different forecasts depending on its
needs. Occupancy forecasts are typically developed on a monthly basis
and reviewed by food and beverage and rooms division management to
forecast revenues, project expenses, and develop labour schedules. A ten-
day forecast, for example, may be used to update labour scheduling and
cost projections and may later be supplemented by a more current three-
day forecast. Together, these forecasts help many hotel departments to
maintain appropriate staff levels for expected business volumes and
thereby help to contain costs.
Ten-Day Forecast
The ten-day forecast at most lodging properties is developed jointly by
the front office manager and the reservations manager, possibly in con-
junction with a forecast committee. A ten-day forecast usually consists of:
• Daily forecasted occupancy figures, including room arrivals, room

departures, rooms sold, and number of guests.
• The number of group commitments, with a listing of each group’s

name, arrival and departure dates, number of rooms reserved,
number of guests, and perhaps quoted room rates.
• A comparison of the previous period’s forecasted and actual room

counts and occupancy percentages.
A special ten-day forecast may also be prepared for food and beverage,
banquet, and catering operations. This forecast usually includes the
expected number of guests, which is often referred to as the house count.
Sometimes, the house count is divided into group and non-group
categories so that the hotel’s dining room managers can better understand
the nature of their business and their staffing needs.
To help various hotel departments, plan their staffing and payroll

levels for the upcoming period, the ten-day forecast should be completed
and distributed to all department offices by mid-week for the coming
Notes Note that the above formula does not include walk-ins. They
are not included because the number of walk-ins a hotel can accept is
determined by the number of rooms available for sale. If a hotel is full
due to existing reservations, stayovers, and other factors, it cannot accept
walk-ins.
As an example, consider the Holly Hotel, a 120-room property, where

on April 1 there are three out-of-order rooms and 55 stayovers. On that
day, there are 42 guests with reservations scheduled to arrive. Since the
percentage of no-shows has been recently calculated at 18.06 percent, the
front office manager calculates that as many as eight guests with
reservations may not arrive (42 × 0.1806 = 7.59, rounded to eight). Based
on historical data, six understays and fifteen overstays are also expected.
The number of rooms projected to be available for sale on April 1 can be
determined as follows:
Total Number of Guest rooms 120
– Number of Out-of-Order Rooms – 3
– Number of Room Stayovers – 55
– Number of Room Reservations – 42
+ Number of Room Reservations x No-Show Percentage +8
+ Number of Room Understays +6
– Number of Room Overstays – 15
Number of Rooms Available for Sale 19
Therefore, the Holly Hotel is considered to have 19 rooms available for

sale on April 1. Once this figure is determined, front office management
can decide whether or not to accept more reservations and can determine
its level of staffing. Front office planning decisions must remain flexible;
they are subject to change as the front office learns of reservation
cancellations and modifications. It should also be noted that room
availability forecasts are based on assumptions whose validity may vary
on any given day.
FORECASTING
before or the morning of the scheduled day of the registered guest’s Notes
departure.
• Review group history. Many groups, especially associations,

hold large closing events for the entire group on the last day of
the meeting. Reservations may be made by guests to include
attending the event. However, changes in plans or other priorities
may require guests to leave early. While it is difficult for the
hotel to hold guests to the number of nights they reserved,
managers can plan for an early departure, based on the group’s
history.
• Contact potential overstay guests about their scheduled departure

date to confirm their intention to check-out. Room occupancy data
should be examined each day; rooms with guests expected to check
out should be flagged. Guests who have not left by check-out time
should be contacted and asked about their departure intentions.
This procedure permits an early revised count of overstays and
allows sufficient time to modify previous front office planning,
if necessary.
FORECAST FORMULA
Once relevant occupancy statistics have been gathered, the number of
rooms available for sale on any given date can be determined by the
following formula:
Total Number of Guest rooms
– Number of Out-of-Order Rooms
– Number of Room Stayovers
– Number of Room Reservations
+ Number of Room Reservations × Percentage of No-Shows
+ Number of Room Understays
– Number of Room Overstays .
= Number of Rooms Available for Sale
Notes Percentage of Understays

Understays represent rooms occupied by guests who check-out
before their scheduled departure dates. Understay guests may have
arrived at the hotel with guaranteed or non-guaranteed reservations or
as walk-ins.
The percentage of understays is calculated by dividing the number of

under-stay rooms for a period by the total number of expected room check-
outs for the same period. Using figures from exhibit 1, the percentage of
understays for the Holly Hotel during the first week of March can be
calculated as follows:
Number of Understay Room

Percentage of understays =
Number of Expected Check- outs
33
= 346 – 33  47
= 0.0917 or 9.17% of Expected Check-outs
Guests leaving before their stated departure date create empty

rooms that typically are difficult to fill. Thus, understay rooms tend
to represent permanently lost room revenue. Overstays, on the other
hand, are guests staying beyond their stated departure date and
may not harm room revenues. When the hotel is not operating at
full capacity, overstays result in additional, unexpected room revenues.
In an attempt to regulate understay and overstay rooms, front office staff
should:
• Confirm or reconfirm each guest’s departure date at registration.

Some guests may already know of a change in plans, or a mistake
may have been made in the original processing of the reservation.
The earlier erroneous data are corrected, the greater the chance
for improved planning.
• Present an alternate guestroom reservation card to a registered

guest explaining that an arriving guest holds a reservation for his
or her room. A card may be placed in the guest’s room the day
FORECASTING
Percentage of Overstays Notes

Overstays represent rooms occupied by guests who stay beyond their
originally scheduled departure dates. Overstay guests may have arrived
with guaranteed or non-guaranteed reservations or as walk-ins. Overstay
should not be confused with stayovers. Stayover rooms are rooms occupied
by guests who arrived to occupy a room before the day in question
and whose scheduled departure date isn’t fixed until after the day in
question.
The percentage of overstays is calculated by dividing the number of

overstay rooms for a period by the total number of expected room check-
outs for the same period. The number of expected room check-outs equals
the number of actual check-outs on the books minus understays plus
overstays. Stated another way, the number of expected room check-outs
is the number of rooms shown by the front office computer or the manual
count of occupied rooms as due for departure. Using figures from exhibit
1, the percentage of overstays for the Holly Hotel during the first week of
March can be calculated as follows:
Number of Overstay Room

Percentage of overstays =
Number of Expected Check-outs
47
= 346 – 33  47
= 0.1306 or 13.06% of Expected Check-outs
To help regulate room overstays, front office agents are trained to verify
an arriving guest’s departure date at check-in. Such verification can be
critical, especially when the hotel is at or near full occupancy and there
are no provisions for overstay guests. Overstays may also prove problematic
when specific rooms have been blocked for arriving guests. This is especially
important for suites or other rooms that may have special importance to
an incoming guest.
Notes with a large corporate meetings market will most likely have a very low
no-show percentage. Conversely, a hotel that does little group business
may tend to have a higher no-show percentage overall (except on those
occasions when a corporate group stays at the property). Hotels and resorts
can control no-shows through a number of policies and procedures, such
as requiring a deposit in advance and calling the guest before arrival to
confirm arrangements.
Percentage of Walk-ins
The percentage of walk-ins is calculated by dividing the number of rooms
occupied by walk-ins for a period by the total number of room arrivals for
the same period. Using figures from exhibit 1, the percentage of walk-ins
for the Holly Hotel during the first week of March can be calculated as
follows:
Number of Room No  shows

Percentage of Walk-ins = Number of Room Reservations
52
=
288
= 0.2761 or 27.61% of room arrivals
Walk-in guests occupy available rooms that are not held for
guests with reservations. Often, hotels can sell rooms to walk-in guests
at a higher rate since the guests may have less opportunity to consider
alternate properties. Front desk agents are often asked to show a guest-
room to a walk-in guest which is much, more effective than trying to sell
rooms over the telephone. Walk-in guest sale helps improve both occupancy
and room revenues. However, from a planning perspective, it is always
considered better to have reservations in advance than to count on walk-
in traffic.
It should be noted that the walk-in ratio can be dramatically affected

by the other ratios. For example, if a hotel has ten no-shows beyond
forecast, it may accept more walk-ins than usual to make up for the lost
business. When this information is tracked for historical purposes, it is
essential that the other ratios are also be tracked to show how they affect
one another.
FORECASTING
by the total number of room reservations for the same period. Using figures Notes
from Exhibit 1, the percentage of no-shows for the Holly Hotel during the
first week of March can be calculated as follows:
Percentage of No-shows = 0.1806 or 18.06% of Reserved Rooms
Some properties track no-show statistics in relation to guaranteed and

non-guaranteed reservations. Non-guaranteed reservations typically have
a higher no-show percentage than guaranteed reservations since the
potential guest has no obligation to pay if he or she does not register.
Properly forecasting no-show rooms also depends on the hotel’s mix of
business; for example, corporate groups generally have a much lower no-
show percentage than other types of group or individual business. A hotel
Exhibit 1: Occupancy History of the Holly Hotel
Occupancy History: First Week of March
Room Room Room Room

Day Date Guests Arrivals Walk-ins Reservations No-shows
Mon 3/1 118 70 13 63 6
Tues 3/2 145 55 15 48 8
Wed 3/3 176 68 16 56 4
Thurs 3/4 117 53 22 48 17
Fri 3/5 75 35 8 35 8
Sat 3/6 86 28 6 26 4
Sun 3/7 49 17 10 12 5
Totals 766 326 90 288 52
Occupied Overstay Understay Room

Rooms Rooms Rooms Check-outs
90 6 0 30
115 10 3 30
120 12 6 63
95 3 18 78
50 7 0 80
58 6 3 20
30 3 3 45
558 47 33 346
Notes 4. Number of expected room no-shows
5. Number of expected room understays (check-outs occurring before

expected departure date)
6. Number of expected room check-outs
7. Number of expected room overstays (check-outs occurring after

the expected departure date)
Some hotels with a very high double occupancy percentage may be as

concerned with guest counts as room counts. For example, an all-inclusive
resort with a large amount of business from vacationing couples may want
to forecast guest well as room count activity. Convention hotels may often
have the same concerns.
Overall, these data are important to room availability forecasting since

they are used in calculating various daily operating ratios that help
determine the number of available rooms for sale. Ratios are a mathematical
expression of a relationship between two numbers that results from dividing
one by the other. Most statistical ratios that apply to front office operations
are expressed as percentages. The ratios examined in the following sections
are percentages of no-shows, walk-ins, understays, and overstays.
Occupancy history data from the fictitious property shown in Exhibit 1
(the Holly Hotel) are used to illustrate the calculation for each front office
ratio. Managers should look for consistency in ratios. Consistency may be
roughly the same ratio every day or identifiable patterns. Without
consistency, forecasting ratios and operations performance will be very
difficult.
Percentage of No-Shows
The percentage of no-shows indicates the proportion of reserved rooms
that the expected guests did not arrive to occupy on the expected arrival
date. This ratio helps the front office manager to decide when (and if) to
sell rooms to walk-in guests.
The percentage of no-shows is calculated by dividing the number of

room no-shows for a specific period of time (day, week, month, or year)
FORECASTING
Forecasting is a difficult skill to develop. The skill is acquired through Notes

experience, effective record keeping, and accurate counting methods.
Experienced front office managers have found that several types of
information can be helpful in room availability forecasting:
1. A thorough knowledge of the hotel and its surrounding area.
2. Market profiles of the constituencies of the hotel services.
3. Occupancy data for the past several months and for the same
period of the previous year.
4. Reservation trends and a history of reservation lead times (how

far in advance reservations are made).
5. A listing of special events scheduled in the surrounding
geographic area.
6. Business profiles of specific groups booked for the forecast dates.
7. The number of non-guaranteed and guaranteed reservations and
an estimate of the number of expected no-shows.
8. The percentage of rooms already reserved and the cut-off date
for room blocks held for the forecast dates.
9. The impact of city-wide or multi-hotel groups and their potential
influence on the forecast dates.
10. Plans for remodelling or renovating the hotel that would change
the number of available rooms.
11. Construction or renovating plans for competitive hotels in the
area.
FORECASTING DATA
The process of forecasting room availability generally relies on historical
occupancy data. To facilitate forecasting, the following daily occupancy
data should be collected:
1. Number of expected room arrivals
2. Number of expected room walk-ins
3. Number of expected room stayovers (rooms occupied on previous

nights that will continue to be occupied for the night in question)
Notes
2 FORECASTING
ROOM AVAILABILITY
The most important short-term planning performed by front office
managers is forecasting the number of rooms available for sale on any
future date. Room availability forecasts are used to help manage the
reservation process and to guide front office staff in effective room
management. Forecasting may be especially important on nights when a
full house (100 percent occupancy) is possible.
A room availability forecast can also be used as an occupancy

forecast. Since there is a fixed number of rooms in the hotel, forecasting
the number of rooms available for sale and the number of rooms
expected to be occupied forecasts the occupancy percentage expected
on a given date. The forecasted availability and occupancy numbers
are very important to the daily operations of the hotel. Room occupancy
forecasts can be useful to the front office manager attempting
to schedule the necessary number of employees for an expected
volume of business. These forecasts may be helpful to other
hotel department managers as well. For example, the housekeeping
department needs to know how many rooms are expected to be
occupied to properly schedule room attendants. Restaurant managers
need to know the same information to better schedule service staff. The
chef needs this figure to determine how much food to order for the
restaurants.
Obviously, a forecast is only as reliable as the information on which it

is based. Since forecasts can serve as a guide in determining operating
costs, every effort should be made to ensure forecasting accuracy.
Notes
3 YIELD MANAGEMENT
A YIELD MANAGEMENT DEFINITION

‘Yield management’ or ‘revenue management’ (as it is mainly called in the United
States business environment)is a revenue enhancing technique appropriate to
many service industries. To be able to utilize this technique properly, the hotel
has to undertake the following procedures or practices, overbooking, duration
and itinerary control and market segment pricing (price differentiation plus
fencing).The result from these practices are then subjected to detailed analysis.
The word yield means to produce or give forth an output or return, and the
term yield management means output management. When applied to
accommodation, the term means the management of revenue generation from
rooms/accommodation. In other words, it is a yardstick of performance of the
establishment in terms of achieving maximum occupancy i.e. full house at
optimum revenue generation. Making the very best use of product is yield
management.
Yield management is applicable to service industry or any industry where
the product’s perishability is very high, for example a bed room, which if not
sold on a particular day, cannot be stored for future use. Hence, the process of
knowing how many bookings to take at what rate (rack rate or discounted rate),
for how many days so that the maximum number of rooms are sold and
maximum possible revenue is generated for that period is called yield
management. The ability to decide whether a room sold at rack rate for a day or
two would be more profitable or the same room sold at a discounted rate for a
longer period, say 4–5 days, would be more profitable, is yield management.
The management of course will have to consider various factors such as high
season and off-season etc. One basic factor is that high rate can be set during
high demand of the product and during the period of low demand the rate of
the product i.e. the accommodation can be set at lower rate to encourage higher
occupancy, as rooms are the most perishable commodity/product of the hotel.
Yield management aims to maximize revenue by adjusting prices of commodity
to suit market demand. In other words, yield management is based on supply
YIELD MANAGEMENT
and demand. Profitability is directly related to pricing and pricing should be Notes
related to demand and supply.
Since yield management is the management in terms of maximizing revenue
generation, it can also be called as revenue management or revenue enhancing
technique. The hotel’s aim should be ‘high’profit business rather than high volume
business’. It is a set of demand forecasting techniques used to determine whether
prices should be increased or decreased, and whether a reservation request
should be accepted or rejected with an aim to achieve maximum revenue. Yield
management combines occupancy percentage and ADR (Average Daily Rate)
into a single statistics: YIELD.
Factors other than high season and off season such as, duration and type of
accommodation used by guests, control and market segment pricing etc. are
also important in yield management. Duration and accommodation type means
length of stay along with the type of accommodation. Various segment guests
booking are monitored constantly by the front office manager and reservation
manager. By this monitoring a pattern showing average length of stay, guest
profile, and rooms profile in relation to time(during the week or month) shall
emerge. This will help greatly the management in assigning the operations of
their organisation. Another important factor is ‘market segment pricing’, this
means different room rate for different segments of market. Now, each of these
market segments has a definite number of rooms available at a definite price
and instead of taking as many of any category of guest as requests, the hotel
decides how many rooms to open not for that week but for that one single day.
Overbooking
It is necessary in yield management is to ensure that the best market mix of
customers is achieved. But it must be remembered at all times that overbooking
is in breach of contract and must be managed with extreme care.
Duration and Itinerary Control

Duration and itinerary control is simply a longwinded way of saying that the
reservations department and the front office manager constantly monitor the
length of stay of the various people who book rooms and at the same time they
monitor the types of rooms that they book. This is so that a pattern can be built
up as to the average length of stay of what type of guest in what type of room
and at what time during the week or month. This information on its own may
be interesting but will not have a great deal of significance. But combined with
all of the other historical data, it will help give the rooms division management
a very clear picture of their operation.
Notes Market Segment Pricing

This once again is a complicated way of saying that the hotel has a variety of
different room’s prices for different segments of the market.
Activity 1: Using an earlier chapter of the book list the various market
segments that a hotel encourages staying in their hotel.
The ‘fencing’ element of this strategy means that each of these market seg-
ments has a finite or limited number of spaces available. It is this idea of ‘fenc-
ing’ the various rates that makes yield management slightly different from pre-
vious rooms and revenue maximization techniques. Instead of taking as many
of any category of guest as requests a room, the hotel decides how many rooms
to open not for that week but for that one single day.
WHEN IS THE USE OF YIELD MANAGEMENT APPROPRIATE?

The objective of the intelligent use of yield management concepts and prin-
ciples is to increase bottom line profitability in hotels that have the following
characteristics:
• Demand for the hotel can be divided into distinct market segments.
• Each of these segments are prepared to pay different amounts of money
for their room.
• The capacity supply is relatively fixed and it is costly or impracticable to
add or subtract room supply in the short term. That is that the hotel has a
fixed number of rooms and that it is not really feasible to instantly add
extra rooms.
• The room supply is perishable and cannot be stored to be sold at a later
date.
• The marginal cost of selling an additional room is low.
• The request for a room is ordered in advance of its use.
• Demand for the room fluctuates and cannot be predicted with a high
degree of certainty.
• The physically (not commercially) identical product can be sold to different
market segments for different booking conditions.
Activity 2: (a) For each of the dot points above give a relevant example of
explanation.
(b) Find out from a hotel local to you what is their marginal cost of selling a
room.
SYSTEMS AND STRUCTURES IN PLACE FOR YIELD/REVENUE

MANAGEMENT
Yield management tends to operate within a hotel that has a mix of market
segments with variable rack rates, the property should ideally have over fifty
rooms and a computerized reservation/management information system. How-
YIELD MANAGEMENT
ever, such a limitation of property size has now been shown not to be necessar- Notes
ily true, similarly whilst a computerized system is very beneficial it is not man-
datory.
YIELD MANAGEMENTS FORMULA

Yield management works by using a very simple formula, and that is;
Revenue realized
Yield =
Revenue potential
The revenue realized is a variable amount, whilst the revenue potential is

fixed. Revenue potential is calculated by multiplying the number of rooms by
the actual rack rate. For example: a hotel has 100 rooms of which 80 are doubles
at £70 per room and 20 are singles at £50 per room. The revenue potential would
be £6,600. That is derived from the following calculations 80 × £70 = £5,600 plus
20 × £50 = £1000.
Activity 3: (a) For the past week the King’s Hotel has taken the following amount
of revenue from its rooms: Monday £12,629; Tuesday £16,782; Wednesday
£22,542; Thursday £19,083; Friday £13,652; Saturday £9,086; Sunday £5,420.
Using the King’s Hotel room detail and rack rates give the yield percentage for
each day.
(b) Now compare the yield percentage against the following occupancy
percentage for the same period. What comments can you make?
Monday 50 per cent; Tuesday 69 per cent; Wednesday 100 per cent; Thurs-
day 80 per cent; Friday 64 per cent; Saturday 78 per cent; Sunday 25 per cent.
TOOLS AND STRATEGIES

Yield management emphasizes the achievement of high rates on high demand
days and high occupancy when demand is low. The focus of yield manage-
ment is to maximize revenue EVERY DAY – not just for seasons or periods.
The underpinning framework of yield management consists of four steps:
1. Forecasting
2. Systems and procedures
3. Strategies and tactics
4. Feedback.
Forecasting
Forecasting is the key to effective yield management. Forecasting must be done
on a regular basis, a minimum of once a week during normal occupancy peri-
ods and possibly daily during high demand periods, and must encompass more
Notes than 30– or 60–day projections. In order to make accurate forecasts a variety of
information is required.
The information sources available to the yield management team are: his-
torical data — both recent and past years are required on the number of book-
ings, the type, e.g. group or tour, transient, airline, corporate and so on; also
information regarding the number of cancellations, walk-inns, no-shows, over-
stays and understays, and on what days these occurred. This information will
give the team details on lead times, wash factors, high and low demand
periods, from which the team will formulate the rates to be offered.
Activity 4: In groups, discuss why the above data is necessary for the accurate
forecasting of rooms occupancy, and the maximization of revenue.
Other factors need to be considered when undertaking forecasting, such as
• Weather conditions, both locally and nationally
• Events in local area
• Competitor’s activities
• Airlines schedules and services
• Limitations of the property
• Strategies of the property
• Internal promotions
• Internal policies in overbooking
• Consumer behaviour
Not all the above factors are controllable but they will affect the demand upon
a hotels facility and the subsequent pricing strategies and decisions.
Yield management is only a management decision tool and even if the fore-
casts are ‘off’, the decisions made will be better than if they were made on the
basis of no forecast at all.
Systems and Procedures

A computerized system aids the communication of forecast information from
the yield management team to relevant departments of a property and in some
cases between properties and booking agencies or central reservation systems.
A computerized system allows 24 hour input of information and link up to
enable efficient circulation of current information. The yield management team
and/or analysts can, in some cases, enter the system directly and make phan-
tom bookings. This is done so as to close a rate level in order to stop any reser-
vations clerk or booking agencies selling any more rooms at that particular
rate.
The information from the yield management team regarding the various
YIELD MANAGEMENT
rate levels per number of rooms is input into the computer system. The cus- Notes
tomer makes a telephone inquiry and the reservations clerk, working from the
VDU screen; first looks at the days required and then checks the room avail-
ability. The reservation clerk, using basic up–selling skills (see Strategies and
tactics below), will always offer the highest priced room and work down, in an
attempt to not lose any potential revenue.
However, the system needs to be flexible in order to accommodate the ‘regu-
lar’ customer who will expect a continuation of their corporate or ‘special’ rate.
This flexibility is necessary to maintain goodwill especially for the long–term
customer. It is vital that the hotel must remember to retain a human side in
yield management. The system cannot take over the role of the manager and
many situations may still require to be handled on a case by case basis.
Strategies and Tactics

The two main aims of the yield management are as follows:
1. On high demand days maximize average room rate to increase revenue.
2. On low demand days maximize occupancy and average room rate.
On high demand days the team will plan for transient reservations (a guest
that is not a part of a group booking). They will determine the correct mix of
market segments so as to sell out at highest rates possible, e.g. the ‘walk in’
businessman who will pay the highest rate for the privilege of walking in off
the street at the last minute and be able to book a room. Once the mix of market
segments has been decided the team will assign a number of rooms to each
segment of the mix.
A ROOM ASSIGNMENT SCENARIO

A hotel has 100 rooms, and allocates the following numbers of rooms to each
market segment:
Rate levels
No. 1 (highest) 100 rooms
No. 2 50 rooms
No. 3 40 rooms
No. 4 30 rooms
This means that at all times a 100 per cent of the rooms will be held for rack rate
guests. However, in reality a hotel will always have a number of guests on
corporate or special rates. Thus, the practicality of the situation may dictate
that 80 per cent of rooms are ALWAYS kept for rack rate guests, leaving 20 per
cent for necessary discounted rates. Similarly, the rate levels reflect that only 30
per cent of the rooms will be ever be available for the cheapest of rates.
Notes The operating procedure is simple. The reservations clerk will monitor the
pick–up of each room category as they progress through the lead time to the
day of arrival. If they find, unexpectedly, that the high rate categories are
filling up faster than anticipated this would mean that they would close out
the lower rates.
Thus, this strategy restricts low profit categories such as sports teams or
mass tours. The YM team may also require minimum stays to prevent the
early departure factor. Also, it helps the hotel to fill on down times such as
weekends. For, example, a minimum of two nights stay is required as long as
one night is a Saturday or Sunday.
The team will also plan for group bookings that fall on high demand days.
First of all, the hotel will only sell to groups who are willing to pay higher
rates and provide high occupancy per room. A tactic that is often used is to
only sell to a group who book meeting space and hospitality suites as well as
their accommodation, thus encouraging the guests to stay in–house for meals
to use the bar and other facilities. For more price sensitive groups, the YM
team will attempt to allocate their booking in low demand dates, this is par-
ticularly relevant for local clients who want to book function space for a din-
ner dance or meeting and who wish to have overnight accommodation.
SALES STRATEGIES
It was mentioned earlier that the reservations department is expected to sell
the highest rated rooms first. This means to always quote rack rate. However,
it is acknowledged that for many reservations staff this form of hard sell is
difficult, accordingly reservations staff are encouraged to undertake an alter-
native approach known as ‘Up–selling’. The reservations clerks may offer a
standard room first and then offer a more luxurious room at a slightly higher
price or offer ‘extras’ for a minimum cost. For example, an upgrade of an
£ 80.00 per night standard could be sold by stating that for a slight increase in
price, i.e., £ 95.00 the guest can have a deluxe room, whilst for only £ 110 per
night breakfast is included. The customer may be offered as upgraded room
at a lower rate than normal, however, it is good practice to inform the cus-
tomer that it is a ‘once–off’ deal, a gesture of goodwill, so the customer does
not expect that rate everytime they book. The benefit of this practice is that
the hotel gets a higher average room rate and at the same time gives the guest
the opportunity of staying in a better room, with the possibility that they
would like the room sufficiently to continue to book that grade of room.
FEEDBACK
Feedback enables the team to judge the accuracy of their forecasts and form
56 Self-Instructional Material the subsequent months’ and years’ historical data. More importantly, it gives
YIELD MANAGEMENT
the team an indication of the responsiveness of the organization’s reservation Notes

system to their strategies and also the effectiveness of their strategies in re-
sponse to market demand. The monitoring of denials (the guest cannot stay
because there are no rooms available) and conversions (the guest who en-
quires about a room and is persuaded to reserve that room) helps this effort.
Feedback allows everyone involved in yield management to keep updated on
strategies and information as well as acting as a mechanism for praise and
assessing individual or departmental performance. These are the structures
and basic systems of yield management, but to implement them in a hotel
requires a yield management team.
THE YIELD MANAGEMENT TEAM

Before an effective yield management system can be put into place and used
it is necessary to have an operations team. They will be the driving force
behind the successful implementation of yield management and will be the
group of people who regularly meet to forecast the forthcoming business of
the hotel.
The yield management team will typically consist of the rooms division
manager, the sales manager and the reservations manager. This does not
mean that anyone else is excluded, but for a speedier and more effective deci-
sion making progress it is wise not to make the management team too big. In
some hotels, the general manager likes to be involved or the front office man-
ager may take the place of the reservations department. However, the origi-
nal three would tend to make the best team. The rooms division manager has
the overall control of the department with targets for maximizing both occu-
pancy and revenue. The sales department must be a part for it is they who go
out on a daily basis to sell the hotel’s bedrooms, and whilst they are fully
aware of the need to maximize revenue their primary thrust is to get bodies
into the hotel. Thus, by working with the forecast team it ensures that the
sales and marketing staff are fully informed as to the peaks and troughs of
the hotel’s business. The last but probably the most important member of the
team is the reservations department. The reservations manager is the person
who has a complete understanding of all of the hotel’s bookings, the future
booking patterns and the past histories of the hotel’s arrivals and occupan-
cies, and who is most up to date with bookings.
The role of the yield management team is fourfold:
1. To predict demand
2. To assign rooms to transient reservations
3. To open or close rates as seen fit
4. To conduct feedback sessions
Notes The principal role of the team is to predict the demand for rooms into the
foreseeable future. It is insufficient to simply take last year’s figures and adjust
by an agreed percentage figure. The question that now has to be asked is
‘What would be our mix of market segment if we were to maximize yield?’
It is now generally accepted that what was a successful formula for filling
bedrooms a few years ago is now wrong for today’s hotel market mix. Thus, it
is up to the team to constantly remind each other of the fact that neither the
customer nor their expectations remain static. By trying to predict demand, the
team assesses what has happened in the past; the time of year, the weather,
any exceptional circumstances which surrounded bookings for then and so on.
They, then look into the future for any similar occurrences that could affect,
either positively or negatively, the booking of hotel rooms. Whilst no one can
accurately predict what the future may hold, it is still better to conduct such
predictions and to make management decisions with limited information than
with no information at all.
Once a fair estimate has been made of the room requirements for both the
near and distant future, the team then has to allocate the right amount of room
inventory, i.e. number of rooms, to the various market segments. This is done
by discussing; reasoning and deciding what groups will arrive; their room
requirements; what will be the volume of corporate rate business; how many
walk-ins will arrive, etc. All of these imponderables are examined and with
them, the historical data which management has amassed. The yield manage-
ment team decides which classes or levels of rates to open or close.
Another aspect of the yield management team’s work is to conduct feed-
back sessions. These sessions are necessary to help judge whether or not the
forecasts have been accurate and effective. Feedback acts as a measure of
responsiveness in terms of systems, strategies and the management of revenue
and occupancy. It also acts as a measure of staff performance.
It is necessary for the yield management team to constantly strive to have
the most up to date information and to react quickly to the subtle changes in
the accommodation business. It is no longer sufficient to believe that a good
overbooking policy is enough to ensure a full house. Unless all of the available
data is used then the rooms division manager can end up with a 100 per cent
room occupancy but with a revenue yield that is considerably less.
TRAINING DEVELOPMENT AND ORGANIZATION CULTURE

A yield management system creates a formalized and efficient procedure
for manipulating rates to optimize both market demand and revenue. This
presents the individual property manager and the organization with change;
YIELD MANAGEMENT
that is a change in both staff attitude and working procedures. An integral Notes
part of this management of change process will require managers, reserva-
tion clerks and booking agents to be trained. The training process would con-
sist of education in new computerized systems, yield management policies
and customer enlightenment programmes. For example, reservation clerks
will need to be trained to say ‘NO’ to low rates and learn to ‘hold out’ for the
higher rates of late corporate business and the techniques of up-selling.
The organization may also undergo a cultural change in its approach to
using yield management. The system actively encourages managers to be
proactive in their decision-making, planning and communicating strategies to
both staff and booking agencies.
THE CUSTOMER
Yield management is a system that is entirely objective in its approach. That is,
it places the needs of the customer secondary to those of the hotel. Yield
management systems want to maximize both the occupancy and the revenue
of the hotel, and to do this the yield management team opens and closes room
categories at their will and not in accordance with what the customer wants.
For many years the prospective hotel guest has become used to bargaining
for their room rates or at least expecting that a room at the rate which they
normally pay will be available. The hotel has been seen by their customers as
being simply providers of room and bed space. The idea that they are highly
organized establishments where the sole purpose for the owners is to make
money does not appear to be a part of the hotel guest's thought pattern.
Yield management has turned this aspect of hotel operation on its head.
What the system now tells the customer is that we have certain rooms set aside
at certain price categories, and once the cheaper categories fill you will have to
pay more. The initial fear of hoteliers is that prospective guests may choose not
to stay with one hotel because of its perceived inflexibility and intransigency
over room rates.
The attitude of the general public towards the practice of yield manage-
ment by the hotel industry is that hotels are not like aeroplanes (the originators
of YM) in that they cannot move, and therefore hoteliers will sell their rooms at
any price. Customers seem to be resigned to the fact that airlines charge differ-
ent prices depending on how far ahead a ticket is bought and what restrictions
are met, but it is dubious as to whether hotel customers will accept this pricing
method. The airline industry comprises a small number of major competitors,
and customers seldom have much choice. Hotels, on the other hand, have
numerous competitors. If customers don’t like having to pay different prices
for the same room, they may decide to patronize the competition. Likewise,
Notes customers may believe it's unfair to pay a higher price for a room than some-
one who reserved it a few weeks earlier.
Thus, hoteliers may face a customer-education problem. Time will tell
whether the hotel industry’s newly found cavalier attitude will be maintained,
or whether it will revert back to the ‘old ways’.
THE FUTURE NOW

Yield management will run most successfully for any hotelier, providing they
follow the concepts as described in the previous sections. Even the original
idea that yield management will not be successful for hotels of less than 50
rooms has been shown to be completely untrue. Yield management will work
for any hotelier who operates a manual operation or computerized system,
provided they are prepared to commit the time and effort. In all cases, such
effort will be shown to make a substantial financial difference.
However, for those properties that are determined to fully maximize their
room space, there are now software packages on the market that will do much
of the decision making for the hotel management. It has to be said that they
do tend to be expensive, but in most cases the increase in the annual rooms
revenue would probably cover the purchase cost.
WHAT IS A YIELD MANAGEMENT SOFTWARE SYSTEM?

A yield management software system is a powerful decision-making tool that
automatically makes yield management judgements to determine the rate avail-
ability by length of stay to maximize overall revenues. Such software analyses
raw data collected from in-house property management systems, and identi-
fies certain booking patterns, categorizes all the information and prepares
forecasting models in the form of straightforward reports.
Quite simply a yield/revenue management system:
• Monitors and manages risk automatically
• Identifies dates that have low demand and/or revenue
• Provides optimal length of stay control
• Manages risk of overbooking
• Automatically highlights abnormal market behaviour
• Allows events to be entered before they occur
• Creates flexible reports for marketing programme evaluation
• Minimizes data that must be reviewed
• Determines total transient and group demand displaced by a potential
YIELD MANAGEMENT
group arrival Notes

• Helps determine group availability and rates.
HOW DOES THE YIELD REVENUE MANAGEMENT SYSTEM

WORK?
Forecasting
The forecasting element of the system prepares its forecasts by using:
• Demand patterns
• Special events databases
• On-books information and the
• Results of any user demand changes.
Based on this data, the software forecasts transient demands based on histori-
cal bookings and folio data. The system will forecast no-show and cancellation
patterns, demand and uncertainty in demand, according to market segments,
room type, day of the week, length of stay and booking lead-time. These
transient forecasts are then fed into the opportunity cost optimization aspect of
the system.
Analysis
When a hotel adopts a fully computerized yield management system an initial
analysis of the property is conducted. After the data has been collected it is
analysed for patterns and exceptions. These patterns and exceptions are then
searched during the nightly processing activity. In running the nightly activity
the system looks for:
1. Booking lead times.
2. Demand patterns such as average, length of stay, no-shows, day of the
week and seasonality.
3. Special events where for any set of dates there is significantly different:
• Occupancy patterns
• Market segment patterns and
• Booking lead-time patterns.
4. Hotel booking patterns, where bookings are sorted into suitable forecasting
groups. (Market segments, and rates are translated into rate categories,
as with rate fencing.)
The system also operates history databases, which keep track of all the detailed
and summary information needed for forecasting as well as a monitoring
system that surveys forecasts; whether system generated or manually input,
Notes P ro pe rty m a na ge m en t
syste m da ta ba ses
R a w d ata from h isto ry
file
DATA COLLECTION
In fo rm ation a bo ut th e p ro pe rty is
colle cted
STAGE
1
S im u ltan eo usly the

in fo rm ation is ch ecked
a nd verifie d
ANALYSIS
STAGE
P e rtine nt in fo rm a tion is a na lysed a nd p attern s 2
e xtracte d
DECISION M AKING
STAGE
3
Fo re ca sts an d op po rtu nity cost is pro du ced
UPDA TE & M ON ITORIN G

STAGE
4
In fo rm ation is u p da ted a nd m o nitore d .
STAGE
REP ORTS A RE PR OD UCED
5
Fig. 1: Yield management process
for significant deviations of actual bookings from anticipated levels. Most

systems also operate two other operations. Firstly is the overbooking system
that allows ‘overbooking’ to make up for the no-shows, cancellations or early
departures, whilst at the same time freeing rooms for additional guests. The
second operation is the group evaluation system. This helps the property place
and evaluate group demand. It provides the property manager with a tool to
evaluate the group based on profitability, placement, displaced total demand
and fair market rate.
As can be seen in Fig. 1, the process of the latest software packages is very
simple in its operation. It follows the procedures mentioned earlier, but unlike
those it does it with a far greater depth of analysis than can normally be ex-
pected from a purely manual decision-making base.
YIELD MANAGEMENT
Thus, it can be seen that the use and development of yield management in Notes
the hotel industry has been enhanced greatly over the past few years. Initially
seen as another fad, yield management has now been accepted as one of the
major ways forward for the maximization of both space and revenue – which,
after all, is the primary function and role of any discerning rooms division
manager.
DIFFERENTIAL ROOM RATES

One of the problems with both the rule-of-thumb and bottom-up approaches is
that they only produce an average room rate. This would be a sound approach if
a hotel had only one room type, but we know that this is not the case. Having
determined an average room rate we now need to calculate differential rates.
Let us assume we have a 60 bedroom hotel, with an overall average of 65%
occupancy and three room types.
Type Rooms Occupancy %

Single, single occupancy S 20 68%
Double, single occupancy D(s) 30 60%
Double, double occupancy D(d) 60%
Deluxe, single occupancy LD(s) 10 9%
Deluxe, double occupancy LD(d) 48%
Total 60
Average 65%
We must now determine appropriate weightings for the different rates. If,
for instance, a Single room has a weight of 1, a double room will have a weight
of 1.8, but if occupied by one person a weighting of 1.4. The weightings are
purely a matter of judgement.
Type Rooms Occupancy % Average Rooms

Occupied Weight
Single, single occupancy S 20 68% 13.6 1

Double, single occupancy D(s) 30 20% 6 1.4
Double, double occupancy D(d) 60% 18 1.8
Deluxe, single occupancy LD(s) 10 9% 0.9 1.8
Deluxe, double occupancy LD(d) 48% 4.8 2.4
Total 60
We now need to calculate the average revenue target per night which is
Rs. 6,825 (average rate Rs. 1,225 × 60 rooms × 65% occupancy)
Notes Type Rooms Occu- Average

pancy% Occupied
Rooms AO × Revenue
Weight Weight Expected
Room Rounded
Rate
Total
Revenue
S 20 68% 13.6 1 13.6 1375.11 101.11 101 1373.60

D(s) 30 20% 6 1.4 8.4 849.33 141.55 142 852.00
D(d) 60% 18 1.8 32.4 3276.00 182.00 182 3276.00
LD(s) 10 9% 0.9 1.8 1.62 163.80 182.00 182 163.80
LD(d) 48% 4.8 2.4 11.52 1164.80 242.66 243 1166.40
60 67.54 6829.04 6831.80
The order columns in the spreadsheet above are explained below:
AO x Weight
Average occupancies times weight. This produces a combined weighting which

reflects both the ‘value’ of the room and the expected occupancies.
Revenue expected
This divides the nightly revenue expected (Rs. 6825) into the proportions shown
in the previous column. For the first row (Single), we calculate
13.6
6825 × = Rs. 1375
67.5
Room rate
The room rate is now calculated by dividing the Revenue expected for the
particular room type by the number of average occupied rooms. The figure is
then rounded up.
OCCUPANCY RATIO
Occupancy ratios relate to the sale of rooms. Occupancy ratios reflect:
— Use factor of hotel rooms and the facilities.
— Selling skills of the staff in meeting its basic selling responsibility.
— The pattern of the business.
1. Percentage of Occupancy or Room Occupancy Percentage
Relationship of the number of rooms sold to the number of rooms available for
sale. (This ratio is the barometer for measuring the market success of the sales
department of the hotel.)
Number of Rooms Sold
 100
Number of Rooms Available for Sale
2. Multiple Occupancy Percentage
Most hotels are interested in knowing on daily basis what is their percentage of
multiple occupancy as it provides guest count, an information useful in fore-
YIELD MANAGEMENT
casting food and beverage sales, indicating clean linen requirements and Notes
analysing the hotel’s average room rate. The general trend in hotel industry
these days is to have a standard sized room, with two beds or a double bed in
it and when the room is sold to one person it is called on single occupancy and
when it is sold to two persons it is called on double occupancy of course the
room rates in both cases are different i.e., lower in case of single and higher in
case of double occupancy. The term multiple occupancy means number of rooms
sold with two or more than two guests in a room. Hence, multiple occupancy
can be double occupancy or triple occupancy or more. There are two ways of
expressing the multiple occupancy.
(i) Double Occupancy and its Percentage (Number of rooms sold with 2
persons occupying each room is called double occupancy.)
Double
Occupancy % is 
House Count  Number of Rooms Sold
Number of Rooms Sold   100
Or  House Count
Number of Rooms Sold 
 1 × 100
(ii) Guest per Room also called as AGR (Average number of guest per room)
No. of Guests
Guest per Room =
No. of Rooms Sold
3. Single Occupancy and its Percentage (Number of rooms each occupied by
one person is called single occupancy room.)
Single occupancy percentage = 100 – D.O. %
The single occupancy percentage can be calculated by the following
formula:
2 
House Count
No. of Rooms Sold 
× 100 or  2 × (No. of Rooms Sold)  House Count
No. of Rooms Sold 
The earlier concept of single room was a room with one bed and ment for
one person occupancy only and a double room was a room with two beds/one
double bed and ment for two persons occupancy and for considering the
occupancy percentage of each category was considered separately. This can be
explained by the following numerical example.
Suppose a hotel has 60 single rooms and 40 double rooms (a total of 100
rooms) and on a particular day 50 single rooms and 30 double rooms are sold,
then the single room occupancy % shall be 50/60 × 100 i.e., 83.3% and double
room occupancy shall be 30/40 × 100 (i.e.,) 75%.
4. House Count (The number of guests staying on a particular night)
H.C. = Previous H.C. + Arrivals – Departures.
Total number of guests in the hotel can also be calculated as follows:
Notes Total Guests = Single Rooms + 2 × (Double Rooms) + Extra Beds

5. Room Count
The number of rooms occupied on a particular night.
(i) Total number of available rooms – Number of vacant rooms
(ii) Total number of rooms on previous night + Number of rooms sold to new
arrival guest – Number of rooms vacated by departure guests.
6. Bed Occupancy Percentage (Guest occupancy or Sleeper occupancy)
Total Room Revenue
Average Room Rate =
Number of Rooms Sold
Please note that double bedded, twin bedded, king bedded, and queen bed-
ded rooms are counted as 2 beds while computing bed occupancy percentage.
7. Average Room Rate (Ratio of rooms income to the number of occupied
rooms.)
Number of Beds Sold

× 100
Number of Beds Available for Sale
8. Rev PAR = Revenue per available rooms
Total Room Revenue
=
Number of Total Available Rooms
For example, a hotel has 100 Rooms and Average Rate is Rs. 1000- per day
and total number of rooms sold on a particular night are 80. Calculate ARR and
RevPAR when the revenue realized is Rs. 67,587/-
67587 67587
Hence ARR = = Rs. 844.83 and RevPAR = = Rs. 675.87
80 100
ARR is the earned per day per occupied room. Suppose a hotel has 260
rooms and on a particular night all rooms are sold and also the total revenue
generated by rooms sales is Rs. 10,82,562/-. Hence,
1082562
Average Room Rate = = Rs. 4163.70
260
9. Average Revenue per Guest/Average Spent (ARG)
It is the ratio of room income to the total number of guests staying in the hotel.
(H.C.)
Suppose a hotel has 260 rooms, and suppose on a particular night all rooms
are sold and 436 guests are in the hotel, and suppose the total revenue received
is Rs. 8,74,380/-
874380
Hence ARG = = Rs. 2005.45
436
Calculation of Variance in ARG
Actual ARG – Budgeted ARG = ± Variance in ARG
YIELD MANAGEMENT
10. Potential Optimum Revenue Notes

Type of Number of Price at Potential
Rooms Rooms Optimum Optimum Revenue
Twins 100 Rs. 5000/- 5,00,000/-
Doubles 50 Rs. 4500/- 2,25,000/-
Singles 100 Rs. 3000/- 3,00,000/-
Twin doubles 10 Rs. 6500/- 65,000/-
260 10,90,000/-
10,90,000
Hence, Average Room Rate of above figures = = 4192.30
260
11. Average Optimum Room Rate
Average Room Rate (Actual average daily room rate) 4163.70
= = 0.9931
Average Optimum Daily Room Rate 4192.30
Or, in terms of percentage = 99.31%
When the answer is near 100, it shows the selling is “UP”.
12. Room Nights/Guest Nights/Bed Nights/Guest Days
All the above mentioned terms refer to the stay of one guest for one night.
- One guest staying for 30 nights or 30 guests staying for one night equals
the same (30 Rooms/Guest Night)
- Increasing sense of mobility, improved tele-communication system and
faster modes of transportation have contributed to shorter duration trips,
hence cutting the room nights per day to a minimum.
13. Variance in Guests
Variance in Guests = Actual Total Guests (H.C.) + Budgeted Guests
14. (i) Variance in Revenue
Actual Revenue – Budgeted Revenue = ± Variance in guest
(ii) Variance in Arrivals
Actual Arrivals – Budgeted Arrivals = ± Variance in Arrivals.
15. Average Stay per Visitor
Against every departure show the number of nights the guest has stayed.
At the end of the day, the total number of nights divided by the number of
departures for that day shall give us the average stay per visitor. For example,
there are 5 departures (Mr. A, Mr. B, Mr. C, Mr. D and Mr. E) in a day in a hotel.
The duration of stay of each respectively was 7 days, 10 days, 15 days, 2 days
and 6 days. Average stay per visitor can be calculated as follows:
7  10  15  2  6 40
= = 8 days
5 5
Notes 16. Overstay Percentage

This is the percentage of scheduled departures who remain on in the hotel,
even after their scheduled date of departure.
The formula for overstay percentage is:
Number of Overstays
× 100
Total Number of Scheduled Departures
17. Understay Percentage
This is the percentage of those guests who leave before their expected date of
departure i.e. don’t stay until the announced date of their departure. The for-
mula for the understay percentage is:
Understays
 100
Stayovers
18. No-show Percentage
It is the percentage of those guests who did not arrive inspite of confirmed
reservation.
Number of (DNA) Did-not Arrive Guests
The formula = × 100
Number of Confirmed Reservation Guests
19. Cancellation Percentage
It is the percentage of total number of cancellations as against total number of
reservations.
Total Number of Cancellations
The formula = × 100
Total Number of Confirmed Reservations
20. Calculation of Foreign Guests and Their Percentage on Total Guests
Total Guests (H.C.) – No. of Locals (Indians) = Number of Foreign Guests
Their percentage is calculated by
Number of Foreign Guests in Hotel
The formula =  100
Total Number of Guests in Hotel (H.C)
21. Calculation of Rooms Occupied by Foreigners
Rooms Occupied by Foreigners = Total Rooms Occupied – Rooms Occupied by
Indians
22. Potential Capacity of the Hotel
This can be calculated as follows:
Potential Capacity = Total Capacity (No. of Rooms) of the Hotel –
(Rooms Occupied by Staff + Complimentary
Rooms)
23. Calculation of Available Capacity
Available Capacity = Potential Capacity – (Room under Repair i.e. Out
of Order etc.)
YIELD MANAGEMENT
24. Break Even and Pricing Influences Notes

It is the sale at that point (rate) where by selling the rooms at that point (rate)
there is neither profit nor loss. The following example will explain this.
Example: A hotel has 600 rooms. The average occupancy percentage for four
nights (Thursday, Friday, Saturday and Sunday) in a week is (say) 50% and for
remaining three nights (Monday, Tuesday and Wednesday) is 100 percent. The
hotel general manager is approached by the manager of an airlines for a
package of 90 crew rooms per night every night of the week for a one year
contract (52 weeks). The sales manager of hotel tells you that to get this
business general manager may quote a tariff Rs 800 per night per room. The
average room rate of hotel is Rs 1200. Determine whether or not the general
manager should accept the contract at Rs 800 (any impact of food and beverage
sales may be disregarded).
Answer: To accept or refuse the contract the most important point to be con-
sidered is finding of Break Even which can be calculated as follows:
– The hotel has 600 rooms.
– On four nights i.e. Thursday through Sunday the occupancy is 50% i.e.
300 rooms out of 600 rooms (50% of 600) are sold and 300 rooms are
available. Hence, if 90 rooms (out of 300 rooms which are available) are
sold at 800/- per room (lower rate) there should be no problem as far as
the availability of rooms is concerned, and also the revenue generation is
concerned because the Hotel will earn at least some revenue.
– Now, since for 3 nights i.e. Monday, Tuesday and Wednesday
the occupancy is 100% i.e. the revenue earned is at average room rate
(Rs 1200) per night for these 3 nights for the year for the proposed 90
rooms would have been 3 × 90 × 1200 × 52 = Rs 16,848,000
(Days × Rooms × Average Rate × No. of Weeks in a Year)
– Now, let us calculate at what minimum rate we should take the business
so that there is no profit and no loss i.e. at Break Even, and let us presume
that rate to be Rs. X.
Hence, the revenue earned would be (X) × 7 × 90 × 52 = 32,760 X
Hence, for Break Even this figure (32,760 X) should be equal to 1,68,48,000.
Or, 32,760 X = 1,68,48,000 or X = Rs. 514.29 approximately.
Now, since this Break Even rate is quite below the quoted rate i.e. Rs 800,
the hotel should accept the contract, and shall still earn profit.
25. Calculation of Vacant and Occupied Rooms
If total rooms sold = Available capacity
Vacant rooms = Zero
Otherwise, Vacant rooms = Available capacity – Total rooms sold
Rooms resold = 0
Notes Rooms occupancy = Total rooms sold

Calculation of variance in rooms sold
Variance in rooms sold = Total rooms sold - Budgeted rooms/day.
26. Productivity/Activity
Productivity/Activity of a hotel is again a very important statistics which
helps the management in deciding future course of action. Productivity refers
to the measure of the activities i.e. sales divided by man hours. The term man
hours refers to the total number of hours spent by the staff such as house-
keeping, front office, reservation, bell desk etc. of various sections put to-
gether to produce the sales. The following example explains this in detail.
Given two hotels A and B with the above statistics for 2 successive ac-
counting periods, determine both productivity ratios and answer the follow-
ing questions:
(a) Which period was more productive for (i) Hotel A, and (ii) Hotel B?
(b) Which hotel was more productive in (i) Period 1 and (ii) Period 2?
Hotel A Hotel B
pd 1 pd 2 pd 1 pd 2
Room Sales Rs. 4,23,41,150 Rs. 5,61,74,600 Rs. 4,13,29,250 Rs. 2,91,88,900
Total Wages " 61,07,000 " 67,58,100 " 39,00,900 " 66,18,750
Housekeeping " 4,2,5500 2366 Hrs. " 5,51,350 3120 Hrs. " 1,61,500 591 Hrs. " 1,49,400 527 Hrs.
Supervision
Front Office " 9,02,200 5075 Hrs. " 6,86,850 3853 Hrs. " 4,08,400 2234 Hrs. " 3,85,550 2121 Hrs.
Reservation " 3,02,650 1729 Hrs. " 2,15,850 1230 Hrs. " 2,02,700 1175 Hrs. " 1,43,500 828 Hrs.
Bell Desk " 8,74,900 6794 Hrs. " 4,82,250 4573 Hrs. " 3,39,800 3123 Hrs. " 2,95,300 2512 Hrs.
Housekeeper " 24,43,450 15021 Hrs. " 26,97,650 16769 Hrs. " 18,75,650 10386 Hrs. " 4,24,850 8497 Hrs.
Occupied 20,508 24,072 19,900 15,191

Rooms
Hotel A Hotel B
For Period 1 For Period 2 For Period 1 For Period 2

Total Man Hours = Total Man Hours = Total Man Hours = Total Man Hours =
(2366 + 5075 + 1729 (3120 + 3853 + 1230 (591 + 2234 + 1175 (527 + 2121 + 828 +
+ 6794 + 1502) + 4573 + 16769) + 3123 + 10386) 2512 + 8497)
= 30985 = 29545 = 17509 = 14485
Man Hrs. Man Hrs. Man Hrs. Man Hrs.
(i)
Occ. Rooms Occ. Rooms Occ. Rooms Occ. Rooms
30985 29545 17509 14485
= = 1.51 = = 1.22 = = .87 = = .95
20508 24072 19900 15191
(ii) Average Room Rev. Average Room Rev. Average Room Rev. Average Room Rev.
42341150 56174600 41329250 29188900
= 2064.62 = 2333.61 = 2076.85 = 1921.46
20508 24072 19900 15191
Sales Sales Sales Sales
(iii)
Man Hours Man Hours Man Hours Man Hours
42341150 56174600 41329250 29188900
= 1366.50 = 1901.32 = 2360.45 = 2015.11
30985 29545 17509 14485
YIELD MANAGEMENT
Which period is more productive for Hotel A? Notes

Comparing the ratio of period 1 and period 2 as computed in (i) above we
find that period 1 ratio is 1.51 and period 2 ratio is 1.22 which is lower. That
means less money was paid to maintain rooms in the period and hence period
2 is more productive for Hotel A.
Which period is more productive for Hotel B?
Ratio of period 1 (.87) is less as compared to ratio of period 2 (.95) for Hotel
B and hence period 1 is more productive for Hotel B.
Which hotel was more productive in period 1 ?
For Hotel A the ratio was 1.51 while for Hotel B the ratio was .87 for period
1. Since the ratio for Hotel B is lower hence Hotel B was more productive dur-
ing the period 1.
Which hotel was more productive in period 2?
For Hotel A the ratio was 1.22 and for Hotel B the ratio was .95 for period 2.
Since the ratio for Hotel B is lower hence Hotel B was more productive during
the period.
Further, calculation of average room revenue calculated in part (ii) shows
that average room revenue for Hotel A for period 1 and period 2 is
2064.62  2333.61 4398.23

= = 2199.111
2 2
and average room revenue for Hotel B for a combined period 1 and period 2 is
2076.85  1921.46 3998.31

= = 1999.16
2 2
Further, if we compare the calculations made in section (iii) above of sales
to occupied room for Hotel A for period 2 (1901.32) and period 1(1366.50), we
conclude that the activity ratio of period 2 was better for Hotel A. Similarly, the
activity ratio of Hotel B for period 2 (2015.11) was better as compared to activ-
ity ratio of period 1 (1366.50) of Hotel A.
27. Market Share Index
The formula for calculating Market Share Index is : Market Share Index = Share
of Individual Hotels sold rooms by the total sold rooms of city ÷ Per Market
Share of the hotel. This can be explained by the following example.
A hotel garden has 53 rooms. Apart from this there are 3 other hotels in the
same city with 64, 27 and 46 rooms respectively. The total rooms occupancy of
the city is 145 and the room occupancy % of Hotel Garden is 62%. Find out the
market share index of Hotel Garden.
Notes Formula for “Market Share Index” =

% of Share of City Market
% Per Market Share of Hotel
Total No. of Rooms in city = 53 + 64 + 27 + 46 = 190.
145
The room occupancy % of the city = × 100 = 76.3%
190
53
and per market share of the hotel garden is = × 100 = 28%
190
Now since the room occupancy % of Hotel Garden is 62%. (given in the
question)
62
Hence, the total Rooms sold are × 53 = 33
100
33
Hence, Hotel Garden share of rooms of city market = × 100 = 23%
145
23
Hence, Market Share Index = × 100 = 82%
28
Following is a numerical example to explain various formulae used in the
chapter.
Q. Hotel ABC has 400 rooms out of which 10 rooms are permanently in
Hotel use. All rooms have 2 beds each. On 10th December the Hours Count
was 510. The number of rooms sold on this day 305. On 11th December 68 new
guests arrived and 43 guests checked out, and the number of rooms sold on
11th December were 321. The total room revenue realized on 11th December
was Rs. 1,23,45,678. The rack rate of rooms is Rs. 40,000/- per day. Calculate the
following
(i) Room occupancy %
(ii) Bed occupancy %
(iii) Single occupancy %
(iv) Double occupancy %
(v) Multiple occupancy %
(vi) House Count
(vii) Room Count
(viii) ARR
(ix) ARG
(x) Average optimum room rate in terms of ratio.
Further the budgeted House Count of 11th December was 600, and the
expected arrivals for the same date were 103. Also, the budgeted room
YIELD MANAGEMENT
revenue for 11th December was Rs 1,35,79,024. From the above figures, also Notes
calculate the variance in arrivals, revenue, and guests.
Ans. Total no. of Rooms = 400, Rooms under Hotels use = 10
Therefore, salable number of rooms are 400 –10 = 390
Hence, total number of beds for sale are 390 × 2 = 780
Total room revenue realized on 11th December is Rs 1,23,45,678.
Rack Rate Rs 40,000
On 10th, the number of rooms sold = 305
On 11th, beginning the house count was 510
On 11th, the arrivals were 68 and the departures were 43
Hence, house count of l lth is 510 + 68 – 43 = 535
Number of rooms sold on 11th, are 321 i.e.
Room count of 11th December is 321
321
Now, room occupancy % will be × 100 = 82.3%
390
535
Bed occupancy % will be × 100 = 68.58%
780
House count 
Single occupancy % =  2   × 100
 No. of rooms sold 
535 
=  2   × 100 = 33.33%
 321 
Hence, double occupancy % will be (100 – 5.0%) i.e. (100 – 33.33) = 66.67%
The figure of multiple occupancy % is also same (i.e.) 66.67%
12345678
Hence the ARR of 11th December is = 38,460.06
321
12345678
and ARG of 1 lth December is = Rs 23,076.03
535
38460.06
Also Average Optimum Room Rate will be = 0.96 (Very near
40, 000
to 1)
Further, the variance in Guest = (Actual – Budgeted), i.e., 535 – 600 = – 65
Variance in Revenue = (Actual – Budgeted), i.e., Rs. 1,23,45,678
– Rs 1,35,79,024
= Rs – 12,33,346
and variance in arrivals = (Actual – Budgeted) i.e. 68 – 103 = – 35
Notes From the above figures, we note that Hotel ABC could not achieve the
projected/budgeted figure of any that is the number of guests, revenue
realized and arrivals.
STATISTICS
– Statistics is grouping of data in an orderly and usable manner.
– Statistics is the science which helps us in knowing how to extract useful
information from available data. In other words, statistics reduces the
diversity of the day’s activity to important and manageable information.
– The word ‘statistics’ is derived from the Latin word status meaning “A
(political) state”.
– Statistical reports and analysis provide knowledge to the manager, who uses
them for planning and control.
– It provides information for establishing standards, making comparisons and
drawing conclusions.
– From these, the management draws general inferences and makes decisions.
Early statistics was simply the collection of data on different aspects of
the life of people useful for the state. Later its scope widened to include
collection of numerical data in tables and charts and by the end of 19th
century it was not only collection and presentation of data but also the
interpretations and drawing of inferences from the data.
Fundamental Characteristics of Statistics

– Statistics are expressed quantitatively, not qualitatively.
– Statistics are a sum total of observations: A single observation does not form
statistics.
– Statistics are collected with a definite purpose.
Types of Statistics
Primary Data: When an investigator collects data himself with a definite plan or
design in his mind.
Secondary Data: Collected by individual and used by some other person for his
experiment (published reports, or official statistics collected by Govt. etc.)
Raw or Ungrouped Data: Unarranged or ungrouped data.
For example: 25, 20, 16, 18, 30, 35, 40, 16, 20, 25, 30, 46, 40, 30, 5, 10, 25, 18, 20,
30, 25, 44, 28, 35, 30, 25, 25, 20, 30.
Arranged Data: For example, marks of the students arranged in ascending or
descending order, also called as arranged data.
YIELD MANAGEMENT
For example; 5, 10, 16, 18, 18, 20, 20, 20, 20, 25, 25, 25, 25, 25, 28, 30, 30, Notes
30, 30, 30, 35, 35, 40, 40, 44 and 46.
Frequency Distribution Table (For Ungrouped Data)
Marks Number of Students

5 1
10 1
16 2
18 3
20 4
25 6
28 1
30 6
35 2
40 2
44 1
46 1
Total 30
In the above table six students obtained 25 marks each, 3 students obtained
18 marks each and so on.
In the above example, marks obtained are called variates (e.g. 25) and the
number of students is called frequency (e.g. 6) and the table given above is called
frequency distribution table for ungrouped data.
Frequency Distribution Table (For Grouped Data)
We further simplify the presentation of data and condense them into classes or
groups.
Marks Number of Students (Frequency)

1-5 1
6-10 1
11-15 0
16-20 9
21-25 6
26-30 7
31-35 2
36-40 2
41-45 1
46-50 1
Total 30
Cumulative Frequency Distribution Table

The total of frequencies of a particular class and/or all classes prior to that class
is called cumulative frequency distribution table.
Notes Marks Frequency Cumulative Frequency

1-5 1 1
6-10 1 2 (1 + 1)
11-15 0 2 (2 + 0)
16-20 9 11 (2 + 9)
21-25 6 17 (11 + 6)
26-30 7 24 (17 + 7)
31 -35 2 26 (24 + 2)
36-40 2 28 (26 + 2)
41-45 1 29 (28 + 1)
45-50 1 30 (29 + 1)
30
Graphical Representation of Statistical Data and Writing a

Report
– We can get a better perspective by representing the data pictorially.
– They are eye-catching and are good visual aids.
1. Bar Graphs: These are in the form of bars or rectangles of uniform width and
are drawn with equal spaces in between them on X axis. The scale of height is
shown along Y axis. The width of rectangle has no meaning to convey.
2. Histogram and Frequency Polygon: These are graphical representation of a
frequency distribution as
(i) Class boundaries along X-axis.
(ii) Frequency along Y-axis.
(iii) Rectangles constructed with bases along the X-axis and heights along
Y-axis.
A frequency polygon is obtained by joining the mid-points of the respec-
tive tops of this rectangle in a histogram. To complete the polygon the
mid-points at each end is joined to the immediately lower or higher mid-points
as the case may be at zero frequency.
Example: In a city the following weekly observations were made on a study of
cost of living index.
Cost of Living Index No. of Weeks

140-150 5
150-160 10
160-170 20
170-180 9
180-190 6
190-200 2
YIELD MANAGEMENT
Notes
20
18
16
14
12
10
8
6
4
2
1 40 1 50 1 60 1 70 1 80 1 90 2 00
Fig. 2
3. Ogive Curve: It is a graphical representation of a cumulative frequency
distribution.
(i) Along X axis upper class boundaries.
(ii) Along Y axis cumulative frequency of respective class.
(iii) Join points corresponding to cumulative frequency at each upper class
boundary by a curve.
Marks Frequency Cumulative Frequency

30-50 7 7
50-70 10 17
70-90 23 40
90-110 51 91
110-130 6 97
130-150 3 100
1 00 (1 50 ,1 00 )
(1 10 ,9 1) (1 30 ,9 7)
75
50
(9 0,4 0 )
25
(5 0,7 ) (7 0,1 7 )
0
50 1 00 1 50 2 00
Fig. 3
4. Pie Chart: Another way of presentation, here the

division is done in segments considering the total to be
360° i.e. a complete circle. Now if 25% is to be represented
than ¼ of circle i.e. 90° segment will show that. Similarly, a
segment of 60° will represent approximately 16.6% of
Fig. 4
the total.
Notes 5. Pictograph: This is a method of representing the data by means of some

relevant picture. For example, data regarding Railway Wagons has been shown
below:
1985:
1500 Wagons
1990:
3000 Wagons
1995:
6500 Wagons
2000:
9000 Wagons
Scale = 1000 wagons
6. Line graph: The following points should be considered.

(a) Display title clearly
50
40
30
20
10
0 Ja n Feb Mar A pril May Ju ne Ju ly A ug S ep O ct N ov D ec
Fig. 5
(b) Lable each axis

(c) Show a scale for values on each scale.
(d) Vertical scale normally begins at zero.
(e) Independent variables always go on horizontal axis (time is always an
independent variable)
(f) Source of figures should always be given clearly.
This line graph shows the sales figures of a company for a year starting from
YIELD MANAGEMENT
January to December 2003. For example, in the month of February it was Notes
20,000, in the month of March it was 10,000 and in May it was 45,000, and so
on.
I Report Writing
A systematic approach to report writing
1. State the problem 6. Form conclusion
2. Define the scope 7. Organize the report
3. Plan the Records 8. Prepare the first draft
4. Collect Information 9. Edit Draft
5. Analyse the Information 10. Publish
Readers Standards
Collected  Conclusion Report  Rough  Final
Data outlines Draft Report
Analysis Organisation Writing Editing

 Review   Review   Review  Review 
Review
Important Factors: Purpose, Scope, Time and Budget

Note : First six points form the Content of Report and last four points make
the Form of Report.
II Presentation
— Basic Principles
1. Specific Recordes 2. Purpose
3. Language 3. Structure
— Organization of the Report
1. Title 2. Summary
3. Conclusion and Recommendation 4. Table of Contents
5. Introduction 6. Miscellaneous
7. Main Body 8. Signature
9. Bibliography 10. Appendix
III Action Steps. Reports are not self executive.
1. Implication of finding 2. Why is it happening
3. Action steps 4. Time scale
5. Measure and evaluate
Notes Computing Room Availability

Simple mathematics and reasoning is used for computing room availability in
case of a large hotel. This may be done by manual calculation, machine calcula-
tion or by computers whichever system is used by the hotel.
Determining Room Availability

Various factors as follows are considered while determining room availability.
1. Total commitment.
2. Understays or Earlys: Guests who may not always leave on the sched-
uled date of departure and leave before that date. Also called early
check-out.
3. Overstays: Those guests who stay after the specified date of depar-
ture.
4. Cancellations: Those guests who cancel their reservation and inform
the same to the hotel before the scheduled date of arrival.
5. No shows: Guests who do not arrive on the expected date of arrival in
spite of having a confirmed reservation.
6. Stayovers: Guests who were registered for the previous night and re-
main the next night.
7. Early arrival: Those guests who arrive at the hotel before their sched-
uled date and time of arrival and when they come before the expected
time of arrival they are called Waits.
8. Wait-listed: Those guests who don’t have any confirmed reservation
in the hotel.
9. Number of reservations.
10. Roll Ins (Walk In): Those guests who come to the hotel without any
prior reservation.
11. Out of order rooms.
12. Permanently blocked rooms.
13. House use rooms.
Steps Involved in Calculating Rooms Availability

1. From the previous night room occupancy figure subtract the number
of rooms with scheduled departures.
2. To the figure of total number of rooms needed for reservation for the
current day add the figure rooms of stayovers and this will give the
committed number of rooms. Total room of Stayovers + Total number
YIELD MANAGEMENT
of rooms for reservation for current day = Committed number of Notes

rooms.
3. Calculate the figure of expected overstays rooms. This figure is cal-
culated on the basis of previous overstay figure percentage by a simple
formula:
Overstays rooms = Departures room × Overstay rooms %
4. Further, calculate figure of expected understays rooms the same way
i.e. on the basis of previous understay figure percentage by a simple
formula:
Understays rooms = Stayovers rooms × Understay rooms %
5. Next, calculate figures for (i) Cancellation, (ii) No shows and (iii) Early
arrivals rooms respectively. They are calculated on the basis of pre-
calculated respective percentage factors. The following simple formulas
can be used:
(a) Cancellation rooms = Reservation rooms x Cancellation factor
rooms %
(b) No shows = Reservation x No show % and then transformed into
number of rooms required for them.
(c) Early Arrivals = Reservation x Early Arrival % and then trans-
formed into number of rooms required for them.
(Some of the factors other than the above stated such as permanentally
blocked rooms, house use rooms, and ratio of airlines and/or group
will also affect the room status position).
6. Next step is to calculate adjusted rooms commitment which will be
affected by overstays, understays, cancellations, no shows and early
departures. This can be done by simple logical additions and subtrac-
tions as follows:
Adjusted Commitment = Total commitment
– Overstays (will reduce the availability of rooms)
+ Understays (will increase the availability of rooms)
+ Cancellation (will increase the availability of
rooms)
+ No shows (will also increase availability of rooms)
– Arrivals (will reduce the availability of rooms)
7. Finally determine room availability by subtracting adjusted commit-
ment from total number of rooms available for sale (room inventory)
by using the formula:
Notes Room availability = Room inventory - Adjusted commitment

The above can be explained by the following example.
Let us presume that the hotel has 580 single room, and each room has one guest
in it and hence the figures of guest and room shall be same.
Total rooms available for sale 580
Rooms occupied on previous night 546
Less departures room say 216
Stayovers rooms 330
Add reservation (Say) (also the same number of rooms) 218
Hence, rooms committed 548
Now, let us suppose the overstay % factor
as explained in step 3 above is 2% of
departure. Hence, the overstay figure can be
calculated as 216 x 2/100 = 4.3 i.e. 4 (round figure). 4
This will be added to 548 552
Further, let us suppose the understay % factor
(as explained in step 4 above) is 3% of stayover.
Hence, the understay figure will be 330 x 3/100 = 9.9
or say 10. This figure will be deducted from 552. 10
542
Next, let us suppose that (i) Cancellation % factor
and (ii) No show % factor (as explained in step 5
above) are 4% and 6% respectively of reservation.
Hence, they can be calculated as
(i) Cancellation = 4/100 x 218 = 8.7 or say 9. 542
This will be deducted from 542. 9
533
(ii) No show = 6/100 x 218 = 13. This figure will
also be deducted from 533 13
520
Similarly to know the effect of early arrivals
which will reduce the availability of rooms, let us
presume early arrival % is 0.5 % of reservation and hence
early arrivals can be calculated as 0.5/100 × 218 = 1.09
say 1. This will be added to 520. 1
521
YIELD MANAGEMENT
Hence, estimated room count will be 521 Notes

and total room available can now be
calculated by subtracting 521 from 580 580
521
59
From the above calculation, we find that the space available is 59 rooms or,
in other words, 59 walk-ins (roll-ins) can be accommodated.
Now, further let us say estimated average walk-in factor on the basis of
previous walk-in record is 27. Therefore, the figure of 27 rooms will be taken
from 59 rooms which are available for sale and the estimated rooms require-
ment will be 521 + 27 = 548 and further the rooms vacant will be 580 – 548 = 32
rooms.
Let us consider another example.
Suppose a hotel has 600 single rooms. Presume the room count is 553 on
previous night., Let us presume further that there are 235 departures to day
and also there are 241 arrivals (reservations). Also, further presume that the
overstay factor is 2% , understay factor is 4%, cancellation factor is 3%, the no
show factor is 6% and early arrival factor is 1% and the average pattern of roll
on (walk-in) guest is 42. Calculate the committed and adjusted number of re-
quirements of the day.
Room Count 553
From this subtract the departures 235
318
To this add expected arrivals 241
559
(i) Now, overstay factor is 2%

2
Hence, the overstay figure will be × 235 = 4.7 say 5
100
This will be added to the figure of 559 and hence we have the new
figure 559 + 5 = 564
(ii) Understay factor is 4%
4
Hence, understay figure will be × 318 = 12.6 or say 13
100
This will be subtracted from the figure of 564 and hence we get the
new figure as 364 – 13 = 351
Notes (iii) Cancellation factor is 3% and hence cancellation figure
3
will be × 241 = 7.23 say 7
100
Add this figure to 551 and we get 551 + 7 = 558
(iv) No show factor is 6% and hence no show figure will be
6
× 241 = 14.46 or 14.5 or say 15.
100
Add this figure to 558 and we get the new figure as 558 + 15 = 573
(v) Early arrival factor is 1 % and hence early arrival figure will be
1
× 241 = 2.41 or say 2.
100
Add this figure to 573 and hence we get the new figure as 573 + 2 = 575
(vi) The roll on (walk-in) figure is 42 and this should be added to the figure
of 575 and we get the new figure as 575 + 42 = 617
Now since the total rooms are 600 and we get the figure 617 this mean
that we have a –17 figure (600 – 617) = –17
Effect on the Room Commitment

(a) Now show-reduces rooms commitment,
(b) Calculations-reduces rooms commitment
(c) Overstay-increases rooms commitment
(d) Understays-reduces rooms commitment
(e) Roll-on-Increase rooms commitment
(f) Wait listed-reduces rooms commitment
(g) Early arrivals-reduces rooms commitment
Further, the room forcast can be calculated and is explained by the following
example:
YIELD MANAGEMENT
Room forcast Notes

Rooms available
for sale 940 940 940 940 940 940 940
Previous night
occupancy 891 781 670 553 436 388 541
Departures 216 201 320 182 72 55 309
Overstay (2%)* 04 04 06 04 02 01 06
Adjusted (216-4)
Departure 212 197 314 178 70 54 303
Stay overs** 679 584 356 376 366 334 238
Understamp (3%)*** 20 17 12 12 12 10 06
Adjusted stay overs

(679-20) 659 567 342 363 354 324 232
Reservations (say) 103 88 211 64 22 219 547
Cancellations (5%) 05 05 10 03 01 10 27
No shows (6%) 06 06 12 04 01 12 31
Adjusted Reservation
(103–15+6) 92 77 189 57 20 197 489
Rooms committed 751 644 531 420 374 521 721
Walk Ins (2%)**** 15 13 11 08 07 10 14
Early Arrivals *****

(2%) 15 13 11 08 07 10 14
Projected occupancy 781 670 553 436 388 541 749
*2% of 216 = 4.32 = 4 (calculated on the figure of departure)

**891 - 212 = 679 (Previous night occupancy–Adjusted departures)
***3% of 679 = 20.37 = 20 (calculated on stayovers)
****2% of 751 = 15 (calculated on rooms committed)
*****2% of 751 = 15 (calculated on rooms committed)
Adjusted Departures
This figure is obtained by adding understays to announced departure and
subtracting overstays.
Considering the above stated example,
Announced departure (216) + Understays (10) – Overstays (4) = (222)
Adjusted departure
Notes Adjusted Stayovers

This term refers to the figure obtained by subtracting adjusted departures
from rooms occupied last night. In this example it is calculated as 546 – 222 =
324 rooms
Adjusted Reservations
This figure is also an important factor for calculating rooms availability and
can be computed by adding early arrivals and deducting cancellation and no
shows to announced reservations. In the above example, announced
reservations are 218, cancellations are 9, no shows are 13 and early arrivals are
1 and hence adjusted reservation can be calculated as 218 + 1 – (9 + 13) = 197
rooms.
Example Showing How to Calculate Various Front Office

Statistics
A hotel with 78 saleable rooms just finished a 28-days accounting period and
had 1412 rooms sold on double occupancy and 560 rooms sold on single
occupancy. The rooms sales totalling to Rs. 28,60,608.87, calculate the following:
I. (a) Room occupancy %, (b) Average room rate,
(c) Bed occupancy %, (d) Average number of guests per room.
Answer:
(a) To calculate occupancy percentage (room occupancy percentage), we
use the following formula:
Total rooms sold

× 100
Available rooms for sale
and therefore in the above case R.O. %
 1412  560 
=    100  90.3%
 78  28 
(b) Average room rate: For this the formula is:
Total revenue (from rooms sale)

Total rooms sold
Rs. 28, 60, 608.87

= = Rs. 1450.61
(1412 + 560)
(c) Bed occupancy % : For this the formula is:
Total beds sold

× 100
Total beds available for sale
YIELD MANAGEMENT
 2 × 1412 + 560  Notes

  × 100= 77.47%
 78 × 2 × 28 
(d) Average number of guests per room: The formula for this is:
Total no. of guests during the period

Total number of rooms sold
1412  2  560
= = 1.7
1412  560
II. The same hotel has opened today with the following number of
reservation and check-out schedule:
(i) Stand-by reservations (wait-listed) 7
(ii) Vacant rooms 18
(iii) Time arrivals reservation (6 pm reservation) 13
(iv) Guaranteed reservation 47
(v) Check-outs 43
(vi) Waits (guests who arrive before arrival time) 2
Construct a count sheet and determine the selling status for the day.
Answer
Arrivals (–Position) Departures (+ Position) (+ –)
Time
Guaran- Waits Arrivals Total Check Vacant Total Position
teed 6.00 pm outs Rooms
47 2 13 62 43 18 61 –1
Here we must note that the figure of stand-by reservation which means
wait-listed guests has not been considered because generally a wait-
list guest will not take any chance and usually will not arrive, and
hence selling status is (-1) but if we consider the wait-list guests also
while calculating room status then the room status will be
(–1) + (–7), i.e., –8
III. Further, using the same information as above apply the following
historical data for the day and determine what management decision
should be made regarding the selling at front desk.
Cancellations 6
Roll ins (walk-ins) 12
Notes Stayovers 11
Early check-outs 27
No shows 3
Considering the above historical data the effect will be (i)
cancellations, early check-outs and no shows will increase the status
while (ii) roll-ins and stayovers will decrease the status and hence
finally the status can be calculated as:
(–1) + (6 + 27 + 3) – (12 + 11) = + 12
Reports and Statistics (Importance)

As an aid to the Management: They enable the management to be aware of
the facts and to be able to draw inferences which are not apparent from
accounts books.
They also provide information that help guide and control the affairs of the
business and review operation.
Supervisors are required to work with reports and review of the business.
Reports and statistics help in policy decisions and future development, and
also help to isolate problem areas and to indicate corrective action areas. At
times they point out advantageous and disadvantageous trends; tell about the
pattern of business and tell sources of revenue and their relative magnitude.
Reporting
Various reports can be generated (depending upon the user’s need) for the
smooth and organized planning for future. For example, reports that focus
primarily on rooms availability, room status and room forecasting etc.
These reports are designed to assist the management in staff scheduling
and distributing work loads-an important aspect of planning. Some of the
important reports and some important proformas are given in the following
pages.
A. Daily Reports and their Distribution

(i) Night Clerk’s Report: Prepared by the night receptionist and on the
Front Office Manager, General Manager, Executive Assistant Manager,
Vice-chairman and Chairman.
(ii) Suites Status Report: Prepared by Front Office staff and distributed to
General Manager, Front Office Manager, Chief Accountant.
(iii) Progressive Report: General Manager, Front Office Manager,
Accounts Department.
YIELD MANAGEMENT
(iv) Flash Report: Prepared by Front Office Assistant Manager and Notes
distributed to General Manager, Front Office Manager, Accounts
Department.
(v) Actual Rooms Available Report: Prepared by Front Office staff and
distributed to General Manager, Front Office Manager, Accounts
Department.
(vi) Under Repairs (U.R.) Rooms Report: Prepared by Executive House
Keeper and distributed to General Manager, Front Office Manager,
Accounts Department.
(vii) VIP-In House Report: Prepared by Assistant Front Office Manager and
sent to Front Office Manager, Accounts Department.
(viii) Expected Arrivals Report: Prepared by Reservation Manager and
distributed to Front Office Manager, Accounts Department.
(ix) Expected VIP Report: Prepared by Reservation Manager and
distributed to General Manager, Front Office Manager, Lobby
Manager, Sales Department.
(x) Discounted Rooms Report: Prepared by Front Office staff and
distributed to General Manager, Front Office Manager, Chief
Accountant and Night Auditor.
(xi) Complementry Rooms Report: General Manager, Front Office Manager,
Chief Accountant and Night Auditor.
(xii) Rooms Change Report : Prepared by Front Office Staff and distributed
to Front Office Manager, Accounts Department, Cashier and Lobby
Manager.
(xiii) Forecasting Report (Taken out 3-4 times a day specially in season):
Prepared by Front Office Staff and distributed to Front office and lobby
manager.
(xiv) Geographical Sources and todays new booking Report: Prepared by
Front Office staff and distributed to Front Office Manager, Sales and
Marketing.
B. Month Ending Report

(i) Actual Forcast Comparison Report: Comparison of actual market mix
and actual revenue earned with what was forecasted prepared by
Marketing and Sales Department.
(ii) Suite Occupancy Report: Break up of all suites status (occupied/
vacant/under repairs) during the month and prepared by Front Office
Department.
(iii) Market Mix Comparative Report: Break up of all rooms sold during
the previous month (EST Groups, Members, Companies etc.). This tells
how many rooms are sold in a month and the source of our business
Notes for devising our future activities. Prepared by Marketing Sales

Department.
(iv) IR production Report: We calculate the total number of rooms nights
sold for each different hotel and marketing for each. Made usually by
either Front Office or Sales Marketing Department.
(v) Department of Tourism Report: Sent to Ministry of Tourism by the
10th of every month; gives the months occupancy %, number of rooms
sold, number of beds sold, and total number of arrivals. Prepared by
some responsible manager.
(vi) Guaranteed Company Rate Production Report: Tells total number of
room nights given by each company. Prepared either by Front Office
Manager or Marketing and Sales Department.
(vii) Statistical Report: Shows various percentages like single and double
etc. prepared by Front Office Department.
(viii) Citywise Room Nights Generation Report: Room nights materialized
from all the major cities and capitals of Indian states are listed so as to
determine the maximum business source for us. Prepared by Front
Office Department.
(ix) Group Materialization Report: Number of groups that stayed Rack
charged or on discount room nights total revenue generated. Travel
Agent/Tour operators name, complementary rooms etc. Prepared by
Reservation Department and Front Office.
(x) Occupancy Comparison with other Hotels Report: A report on ‘Fair
share’, concept basis. Prepared by Front Office Department.
A Weekly Forecast
A weekly forecast of a hotel is a production of the hotel’s occupancy for the
coming week. This is an important information for the management to make
effective decision regarding the number of reservations that can be taken on
each day for the coming week and also will give a fairly good idea of the
overbooking that can be taken during the week. Also this helps the management
in deciding rates and cost control. Also the management can make marketing
policy on this basis. Weekly room forecast shows the projected occupancy based
on front office statistics for each day of the month. This weekly forecast report
is usually made on following calculations:
1. Departures are calculated by subtracting the previous night’s occupancy
from room inventory (available number of rooms).
2. Total departures are calculated by subtracting estimated overstays.
3. Overstays are calculated by subtracting departures from previous
night’s occupancy.
4. Total stayovers are adjusted by subtracting estimated understay.
5. Total reservations are adjusted by subtracting estimated cancellations
and no shows.
YIELD MANAGEMENT
6. Total rooms committed are calculated by adding adjusted reservations Notes

plus adjusted stayovers.
7. Projected occupancy is calculated by adding total rooms committed,
estimated walkins and estimated early arrivals.
8. Projected occupancy is added to total group reservation to determine

total projected occupancy.
PROFORMAS OF SOME IMPORTANT STATISTICAL REPORTS
OCCUPANCY & REVENUE REPORT FOR THE MONTH
Last This Year
Particulars Year Percent-
Actuals Budget Actual tage
A. Occupancy
Total Rooms per Day
Available Capacity per Day
Total Occupied Rooms per Day
No. of Beds Sold per Resident
Single Occupancy %
Double Occupancy %
No. of Foreigners per Day
No. of Indians per Day
B. Sales
Average Rate per Room
Average Rate per Guest
Average F and B Revenue
per Guest
C. Income
1. Room Revenue
2. F and B Revenue
Restaurant : (i) Cabana
(ii) Rohana
(iii) Rasoi
(iv) Chinese Dragon
(v) Round the Clock
Bar
Room Services
Others
Total F and B Revenue
3. Other Revenue
Total
Notes
BREAKUP OF ROOM OCCUPANCY UNIT ROOMS PER DAY

Actual Room Average Room Budgeted Average Room
SEGMENT Last year Rate Last Year Rooms Actuals Rate
A. Room Type-wise
1. Rooms
2. Regular Suites
3. Deluxe Suites
4. Total
B. Market Segment-wise
1. Groups
2. Contracts/Styputs
(Stayputs)
3. Charters
4. Airlines
a. Crew b. Layover
5. Conference
Indian: Full Rate
Discount Rate
Foreigner: Full Rate
Discount Rate
6. FIT
Indian : Full Rate
Discount Rate
Foreigner: Full Rate
Discount Rate
C. Promotional Packages
Packages
Suites
Others
Holiday Plan
N.B. Multiplication of actuals and ARR, the sum of the total of A & B separately should be equal to Room Revenue for given month. Contract to : Rooms taken
by commercial firms/embassies etc. on contractual basis, Stayputs: Long staying clients of tour operators.
YIELD MANAGEMENT
MATERIALIZATION REPORT (COMPANY) Notes

S. Room Name of Name of Check Check
Remarks
No. No. Guest Company in out
This report is made on the basis of the copy of registration cards. It is

made in alphabetical order and contains information about the amount of
business given by a particular company. It helps in deciding the discounts
etc. to be given to a specific company. The report is very useful for planning.
COMPLIMENTARY ROOMS STATEMENT

Name of Room No. Authorization Connection In Out Total
Guest Stay
Date .....................
S. Nationality No. of Pax. Room Nights Remarks

No.
NATIONALITY BREAK-UP REPORT

This is done every night after 12.00 p.m. The information is obtained from
the arrival register. The formula used is: Number of PAX multiplied by number
of nights. It is used for the statistical information about the amount of business
obtained for different nationalities.
Notes
SEGMENT ANALYSIS
Groups Groups Crews Crews Fit Fit Total Total
Budgeted Materialized Budgeted Materialized Budgeted Materialized Budgeted Materialized
YIELD MANAGEMENT
Rooms Sales Mix Projection Notes

It is a future forecast of the rooms sale mix i.e. the forecast as to what
percentage of total rooms will be sold on double occupancy and what
percentage of total rooms will be sold on single occupancy.
Capacity management forecast, or in other words, controlling and limiting
room supply, is the process of overbooking to balance the risk of overselling
against possible loss of revenue arising from (i) early check-outs (ii) no shows
(iii) cancellation and rooms going unoccupied (spoilage). Overbooking is
important to ensure that the best market mix of customers is achieved. Capacity
management is determining how many walk-ins to accept (against expected
no-shows and cancellation) on that particular day of arrival. As a general rule,
more overbooking of lower priced rooms should be done, because upgrading
to higher priced rooms is an acceptable solution to an oversell problem i.e. if
the room is not available a higher price room can be given to him. The amount
of such overbooking depends of course on the demand for higher priced rooms.
Discount Fixation
Means allowing discount on room rate, i.e., rates below rack rate to rooms for a
restricted period of time i.e. to say for a specified period. The main idea behind
discount allocation is to sell the room and earn some revenue at least (which is
at a discounted rate) rather than keeping the room vacant and earning no revenue
at all (rooms are highly perishable commodity). This process of allowing
discount by room type serves two purposes (a) protect enough remaining rooms
at a higher rate and (b) it encourages upselling. For effective decision-making
the management must be supported by a reliable demand forecast system.
Control of Reservation Period

This means that based on the management information system the reservation
department might find it more beneficial for the hotel to refuse the request of
reservation made by a guest for one night even though the room may go vacant
for that night. This is done with an objective that an expected request for more
nights’ reservation by another guest/s, (in other words higher level of revenue)
shall be accepted.
On the basis of the above explanation, it is clear that the yield can be
calculated by a single formula
Revenue realized
Yield =
Revenue potential
The term revenue potential is always constant as long there is no change in

rack rate and can be calculated by multiplying the number of rooms by actual
rack rate while revenue realized is the figure of the actual revenue realized by
the sale of rooms at rates which may be rack rate or any discounted rate. The
Notes potential revenue is a tricky thing and can be explained by the following
example:
Suppose a hotel has 100 rooms (all double) and the rack rate is Rs 2000 for
double occupancy and Rs 1500 for single occupancy, then the potential revenue
can be:
(a) all rooms sold on double occupancy: 100 × 2000 = Rs 2,00,000 although
this is a very unlikely situation; and
(b) say 80 rooms on double occupancy and 20 rooms on single occupancy:
(80 × 2,000) + (20 × 1,500) = Rs 1,60,000 + 30,000 = Rs 1,90,000.00
Measuring Yield
Two factors (i) Actual revenue i.e. the revenue generated by sale on discounted
rate and (ii) Potential revenue (accrued revenue which could be generated if all
rooms were sold at rack rate) are important for the ratio called yield.
Calculation of potential revenue is done on the basis of two assumptions:
1. When it is presumed that all the rooms of hotel are sold on double
occupancy and at rack rate the total revenue so generated shall be
called Potential Revenue. However, it is a hypothetical case that all rooms
are sold at rack rate and on double occupancy.
2. Second method of calculating potential occupancy (which gives a lower
figure) is where the calculations are done on the basis of percentage of
rooms normally sold on single and double occupancy. In this case it is
important to note that the potential revenue figure which is forecasted
on the basis of forecasted percentage of double and single room sale
may be surpassed, and a higher potential revenue figure might emerge
if the demand for double room increases the above for cash figure.
Considering these important factors following formulas are used.
Suppose a hotel has 300 rooms and collects an average of Rs 2000 per
room. Suppose it is operating at 70% average occupancy currently. Let
us further suppose that there are 100 rooms with one bed (single
bedded) and 200 rooms with two beds (double bedded) rooms. Let us
say the room tariff is as follows:
(a) One bedded room tariff is Rs 3000 when sold for single occupancy.
(b) One bedded room tariff is Rs 4000 when sold for double occupancy.
(This situation is possible when an extra bed is put in the single
bedded room.)
(c) Two bedded room tariff is Rs 3500 when sold for single occupancy.
YIELD MANAGEMENT
(This is a situation when a double bedded room is sold to a single Notes

occupant.)
(d) Two bedded room tariff is Rs 4500 when sold on double occupancy.
A. Potential Average Single Rate
Single Room Revenue

Number of Rooms
This formula is used in case of those hotels which use the second method of
calculating potential revenue.
Revenue at 100% occupancy
= (100 × 3,000) + (200 × 3,500) = 3,00,000 + 7,00,000 = Rs 10,00,000
10, 00, 000
and hence potential average single rate = = Rs 3333.33
300
B. Potential Average Double Rate
Double Room Revenue
Number of Room
Revenue at 100% occupancy
= (100 × 4,000) + (200 × 4,500) = 4,00,000 + 9,00,000 = Rs 13,00,000
13,00,000
and hence potential average double rate = = Rs 4,333.33
300
C. Multiple Occupancy
It is basically the number of rooms with more than one person (as already
explained in this chapter). It is important because it indicates sales mix and
helps balance rates with future occupancy demand.
Multiple occupancy percentage:
As presumed in the beginning, 70% of total rooms are occupied, i.e., 70% of 300
rooms = 210 rooms.
Now suppose 105 rooms out of the occupied rooms are on multiple
occupancy.
Therefore, multiple occupancy percentage will be 105/210 × 100 = 50%
D. Rate Spread
Potential averages double rate – Potential average single rate.
The determination of rate spread among various room types is essential to
the use of decision making in targeting a hotel specifically marked.
In the above calculation, Rate spread = 4,333.33 – 3,333.33 = Rs 1,000
Notes E. Potential Average Rate

It is a collective statistics that effectively combines the potential average rates,
multiple occupancy percentage and rate spread. The potential average rate is
determined in two steps, Step 1 multiplying rate spread by multiple occupancy
percentage, Step 2 the result of Step 1 is added to potential average single rate.
This gives potential average rate base on demand and room rate information.
Potential average rate
= Multiple occupancy % × Rate spread + Potential average single rate
50
= × 1000 + 3333.33 = 3333.33 + 500 = Rs 3833.33
100
F. Rate Achievement Factor (also called Rate potential)
The Achievement Factor (AF) is found by dividing the actual rate, the hotel is
currently collecting by potential average rate. This is also equal to 100% minus
the discounted percentage.
Room rate achievement factor
= Actual average rate /Potential average rate
2000
= =.522 or 52.2%
3833.33
G. Yield
An important element in yield management is yield. The yield calculation
incorporates several of the previous formulas into a critical index. There are
various equivalent ways to express the yield equation.
Various methods and formulas are used for calculating yield
(a) Yield = Occupancy % × Achievement factor
In this particular example, it is as follows:
(b) Yield = Revenue realized/Revenue potential
Room nights sold Actual average room rate

(c) Yield = ×
Room nights available Potential average rate
Yield (in terms of %) = Occupancy % × Achievement factor

70
= × .52 × 100 = 36.40%
100
(d) Instead of computing yields as percentage, a revenue per available
rooms focused formula is used, i.e.
Actual room revenue
Revenue per available room =
Available room
YIELD MANAGEMENT
Or Notes
Revenue per available room = Occupancy % × Average Daily Rate
To explain this let us suppose that a hotel has 300 rooms and sells 210
rooms for a total of Rs. 5,25,000.
Hence, hotel’s revenue per available room shall be 5,25,000/300 = 1750.00
Average daily rate = 5,25,000/210 = Rs. 2500/-
And also occupancy % in this case will be 210/300 × 100 = 70%.
Revenue per available room = Occupancy % × Average daily rate
Hence, revenue per available room = 70% × 2500 = 1750.00
H. Identical Yields
It involves calculations of different combinations of occupancy and actual
average room rate which may result in identical room revenue and yields. In
other words, it means equivalent gross revenue.
Suppose the hotel is considering increasing its average rate from Rs. 2000.00
to Rs. 3500.00. What occupancy percentage must it achieve to match the yield,
it currently achieved? To find out this, the following formula is used:
Identical yield occupancy % = Current occupancy % × Current rate
/Proposed rate
= 70/100 × 2000/3500 = 40%
Identical yields do not generally represent identical operating situations.
However, for example let us consider the following three levels of Room sales
for which the Hotel has identical yields.
Number of rooms sold Occupancy percentage Average room rate Room revenue
1. 150 50% Rs. 2800.00 Rs. 420,000
2. 180 60% Rs. 2666.33 Rs. 420,000
3. 210 70% Rs. 2000.00 Rs. 420,000
Let us say that yield percentage is same in all the above three situations. All
the above three situations seem identical with same yield percentage. Out of
the three situations, in the first situation the number of rooms sold is the
minimum i.e. the percentage occupancy is minimum and the average room
rate is highest. Hence, the operating cost will be lowest in this case because the
number of rooms sold is minimum out of the three situations, and it may appear
that situation one is most profitable. Now, if we study situation 3 above we
note that maximum number of rooms are sold, and percentage of occupancy is
also maximum, at the same time average room rate is minimum and since the
number of rooms sold is maximum the operating expenses shall also be high in
this case and it may appear that situation no.3 is not as profitable as situation 1.
But before deciding finally which situation is more profitable we shall consider
one more factor, that in case of situation 3, since a large number of guests will
be in the hotel so we can expect more revenue generation from non-room sources
of the hotel such as food and beverage etc. which would mean ultimately a
Notes greater total revenue generation (both room revenue and non-room revenue
clubbed together) and situation 3 in fact might prove to be a more profitable
situation.
Equivalent Occupancy
While identical yield refers to same yield, equivalent occupancy means the
similar or matching occupancy and is a more effective way of evaluating whether
the change of room rate is justifiable or not. There are basically two types of
costs:
(a) Fixed cost: The cost which is incurred whether the room is sold or not.
(b) Marginal cost: The cost which is incurred only when the room is sold
otherwise not (for example cleaning and supplies etc.). When the marginal cost
is subtracted from room rate what is left is called contribution margin.
Equivalent occupancy is calculated by the following formula
Current contribution margin
Equivalent occupancy = Current occupancy % ×
New contribution margin
Let us suppose that the same hotel which is currently operating on 70%
occupancy with an average rate of Rs. 2000 is planning an increase in average
room rate to Rs. 2500 and further let us assume that marginal cost is Rs. 300.
Then what occupancy percentage the hotel must achieve in order to match the
net room revenue can be calculated by using the above formula.
Equivalent occupancy %
70% (2000-300) Current contribution margin

= ×
(Current occ. %) (2500-300) New contribution margin
70 1700
= × × 100 = 54.09% or 54.1%
100 2200
Further, we very frequently notice that discounting of rates is a very common
practice, and if discount, is given, obviously the figure of revenue will fall down
and to reach to the same figure of revenue the percentage of occupancy shall
have to be increased. Let us assume a 20% discount is given on the room rate of
Rs 2000, i.e. Rs 400. Thus, equivalent occupancy % in the above case will be
70% × (2000  300) × 100 70 1700 1190
= × × 100 = = 91.53%
(2000  400)  300 100 1300 13
J. Required Non-room Revenue for Guest

Non-room revenue means revenue generated from centres other than room
such as food and beverage, etc. If a manager, in order to increase occupancy
percentage, decides to give (i) discount and (ii) reduces the room rate, then
this would render an off selling change in non-room revenue and involves
calculating or estimating a number of elements.
YIELD MANAGEMENT
Rate discounting would cause Notes

(a) loss of room revenue, hence it is important to find out net loss due to
this;
(b) how much non-room revenue shall be needed to compensate this loss
further;
(c) the increase in occupancy likely to result because of this rate
discounting; and
(d) average amount each guest spends in non-room revenue contribution.
A formula for calculating weighted average contribution margin ratio for
all non-room revenue centres is as follows:
Contribution Margin Ratio =
Total non-room revenue  Total non-room revenue centre variable cost
Total non-room revenue
For example, suppose a hotel has 400 rooms and has Rs 6000 potential
average room rate. Hence, the potential room revenue will be Rs 24,00,000.
Suppose the marginal cost per room is Rs 300 and the hotel is operating at 60%
occupancy i.e. a total of 240 rooms sold per night and average room rate achieved
is say Rs 5000. The manager thinks that by lowering room rate to Rs 4000 the
occupancy can be increased to 75%, i.e., 300 rooms sold and that 90% occupancy
i.e. 360 room sold can be achieved by further lowering the rate to Rs 3333.33.
Note that room revenue in the above 3 cases, i.e., with occupancy % of 60, 75
and 90 for discounted rates of Rs 5000, Rs 4000 and Rs 3333.33 in the above
cases is same (i.e.) Rs 1200,000 and it may appear that all three situations are
similar. Now, further let us consider the factor of Rs 300 (the marginal cost per
room) and calculate the revenue for the above three situations. We find that
total consideration figures are as follows:
Total contribution = 60% × 400 × (5000 – 300) = 240 × 4700 = Rs 11,28,000
(In 1st case) (occ) (rooms) (Room contribution
margin)
Total contribution = 75% × 400 (4000 – 300) = 300 × 3700 = Rs 11,10,000
(In 2nd case)
And total contribution = 90% × 400 (3333.33 – 300) = 360 × 3033.33
(In 3rd case) = Rs 10,91999
From the above calculations, it is clear that the reduction of rate
to Rs 4000 would get 60 rooms extra but the revenue loss will be Rs 18,000
(11,28,000 – 11,10,000). Also, a further reduction to Rs 3333.33 in rate would
bring 120 extra rooms, but revenue loss will be Rs 36,001. Now to offset this
loss of revenue each additional guest shall have to spend Rs 300 on non-room
revenue contribution.
Notes 18000
= Rs 300 and
36001
= Rs 300
60 120
The discounting policy of the hotel make yield management quite tough
for management and when discounts are given on a selective basis it becomes
more complicated and complex, and then keeps on becoming more and more
complicated when there are a number of competitors to whom the rooms can
be sold. One such market segment is groups. Following elements may be
included while planning successful yield strategy.
Group Room Sales

Information about the following factors shall be collected:
(a) Groups already booked: Information as to how many groups are
already booked and how many rooms for each one of them are booked.
On the basis of previous history of each group make estimate of how
many rooms each one of them may cancel, because usually the group
organizers may book some rooms extra for their groups to avoid last
minute disappointment to their members. The manager should be able
to assess the figure of rooms which may be deleted. This figure is called
‘wash factor’.
(b) Group booking pace: The rate at which the group business is booked
is called group booking pace. The rate at which initial agreement
between the group organizers and hotel takes place over a period of
time, which may be a month, quarter, half yearly etc.
For example, suppose the reservation manager checks during the
month of June the booking position of groups for the month of
November and for the same year say 400 group rooms are blocked.
Now he checks the figure of room blocked in the month of June for
groups for November in the previous year, i.e., last year. Suppose that
figure is 320. Hence, he comes to know that this year it is ahead by 80/
320 × 100, i.e., 25% over previous year’s pace.
(c) Sometimes the manager has to keep in consideration that business of
group which has not even contacted the hotel yet (any period which
may be every month or half yearly or yearly etc.) but the manager is
almost sure of this business. This assumption is normally made on the
bases that the group comes to the hotel regularly after a particular
period. For example, ‘series groups’.
(d) Booking lead time: Lead time is the time gap between the date of
booking and expected date of arrival. The hotel should fix the lead
time for group booking. The lead time together with the pace of
booking is important in determining how much additional group
business should be accepted. If the current booking pace is lower
than expected, a lower rate to stimulate the business should be offered
YIELD MANAGEMENT
to get increased occupancy, and if demand is strong and group Notes

booking pace is ahead of the trends discounts should not be offered.
(e) Displacement of transient business: The process of displacement
means when a hotel decides to accept the group business, even if the
hotel has to turn away the transient guest, although transient guests
usually are ready to pay higher room rate. For example, suppose a
hotel has 400 rooms and has a potential average rate of Rs 4000 and
a group rate of Rs 3000 and a marginal cost of Rs 500 per room.
Consider the impact of a group requesting 80 rooms for the following
four days. Let us assume the following data:
Tuesday Wednesday Thursday Friday
Room nights available 400 400 400 400
Definite group demand 125 125 125 160
Expected transient demand 195 175 245 192
[400 – (125
Available rooms 80 + 195)] 100 30 48
Suggested groups 80 80 80 80
Transient displacement 0 0 50 32
From the above table, we find that there is no displacement of transient

necessary on Tuesday and Wednesday (on Tuesday available number of rooms
is 80 and on Wednesday the number of available rooms is 100) and if the group
is accepted an additional revenue of Rs 80 × 3000 × 2 = Rs 4,80,000 gross and
Rs 80 × (3000 – 500) × 2 = Rs 4,00,000 will be generated.
Further on Thursday and Friday the displacement of transient will have to
take place if the group business is accepted (transient displacement 50 on
Thursday and 32 on Friday). Now, let us calculate the impact in terms of revenue
on Thursday and Friday.
On Thursday there are 50 transient displacement that mean a gross loss of
50 × 4000 = Rs 2,00,000 (gross) and 50 × (4000 – 500) = Rs 1,75,000 (Net) and at
the same time gross and net revenue generated from the group of 80 persons
shall be 80 × 3000 = Rs 2,40,000 gross and 80 × (3,000 – 500) = Rs 2,00,000 net.
Finally, the net result is (2,40,000 – 2,00,000) = Rs 40,000 extra gross revenue
and (2,00,000 – 1,75,000) = Rs 25,000 extra net revenue generation. Similarly, we
find after calculation that on Friday there will be extra Rs 1,12,000 gross and
extra Rs 88,000 net revenue generation if the group is accepted. This will also
increase the occupancy factor which may also have positive effect on non-room
revenue centre sale.
However, it is important here that although by transient displacement
more revenue generation and higher occupancy is achieved by the hotel but
displaced transients might not return back in future because of the treatment
of "Turning Away". The hotel must take good care of them and make sure to
Notes accommodate them in some other hotel of the same standard and keep in
constant touch with them so as to give them a feeling that the hotel really is
caring for them.
Food & Beverage Activity

Food and beverage activities, in particular catering for functions, reception
etc. generate revenue independently. Such groups normally do not take up
rooms of the hotel. The hotel should book such groups who also need catering
service such as breakfast, lunch and dinner services, etc. along with conference
rooms and other function facilities (such as marriage parties etc.) so as to get
revenue from accommodation as well as food and beverage. Special packages
can be made and offered to such groups.
Large Conventions and Special Events

Sometimes, it is seen that there is a very big international or national conference
or convention or special events (such as exhibition, music concerts and sports,
etc.) held in the city, and any one individual hotel may not be able to
accommodate all the participants. The marketing and sales division or front
office manager should be aware of such happenings in the city and should be
ready to take the advantage of such situations. Special packages may be offered
to such group business. At times the hotel may have to displace transient guests
in such cases. Various factors such as size of the group and minimum number
of stay, etc. should be considered and at the same time non-room revenue which
can be generated should also be considered.
Objectives of Yield Management

The objective of use of yield management concept and principle is to increase
profitability to hotel where the following characteristics can be seen:
1. Demand of rooms can be divided into clear market segments.
2. Each of these segments are prepared to pay different amounts for their
room.
3. The capacity supply is relatively fixed that is to say that the hotel has
fixed number of rooms and instantly adding extra rooms is not feasible.
4. Marginal cost (cost involved in cleaning and supplies, etc. which will
be incurred only if the room is sold, otherwise not) of selling an
additional room is low.
5. Where rooms are reserved in advance.
6. Demand for room fluctuates and can’t be predicted with a high degree
of certainty.
7. Physically identical product (same type of rooms) can be sold to
different market segments for different booking condition.
YIELD MANAGEMENT
Benefits of Yield Management Notes

Amongst the various benefits for the hotel that yield management gives some
are as follows:
1. Improved forecasting.
2. Improved seasonal pricing and inventory decisions.
3. Identification of market segment demand and identification of new
market.
4. Increased coordination between front office and sales department.
5. Determination of discounting activities.
6. Improved development of business plans.
7. Establishment of a value-based rate structure.
Demand forecasting strategies are applied to reservation system, information
system, room and package pricing, room and revenue management, full season
rate determination and special rates for tours, travel agents and groups etc.
Tools and Strategies for Yield Management

The philosophy of yield management is high rates on full season (high demand)
and low rate but high occupancy for off-season (low demand) period, i.e.,
maximum possible revenue everyday of the year. This can be achieved by the
following basic steps:
Forecasting
Forecasting of business. How many rooms shall be needed from what time to
what time in future. Its accuracy is very important. Factors such as previous
pattern of business (for one year, one month or one week), number of bookings,
cancellations, no shows, understays, season, off season, overstay, weather
condition of the city in particular and country in general, exhibitions, fairs,
seminars, conferences, regular displays and shows, regular ethnic melas such
as Suraj Kund Craft Mela; desert festivals, regular religious festivals, regular
yatra periods such as Amar Nath Yatra, Badri Nath, Kedar Nath Yatra, special
schedule of airlines, limitations of property, internal promotions programmes
of the hotel, consumer behaviour strategies of the property etc. and also study
of competitors’ activities are all very important factors to be considered while
forecasting and deciding the overbooking to be taken.
Systems and Procedures

There is nothing like a specific system or procedure for yield management that
should be used. Whereas a mechanical or manual system for small hotel might
be used, an electronic computerized system is used in case of a large hotel.

FRONT OFFICE MANAGEMENT-I
Notes
4 RESERVATION SALES MANAGEMENT
RESERVATIONS MANAGEMENT
The discussions regarding availability and yield management shed light on the
foundations of the reservations department. Laying the groundwork on why
the reservations department does what it does makes it easier to understand
how it does it. The reservations department (referred to simply as “reserva-
tions” inside hotels) is ‘responsible for two important functions: making all
transient bookings and supplying the rest of the hotel with occupancy data.
The director of transient sales must monitor and manage a staff of reservations
agents. He or she must also collect, analyze, and distribute occupancy informa-
tion to the rest of the hotel. This dual role makes the director of transient sales
extremely important. Within reservations, these roles are called forecasting and
sales management:
“To guess is cheap.... To guess wrongly is expensive.” —Confucius.
The impact of the data reservations supplies to the rest of the hotel is vital.
Providing information on what occupancy levels are forthcoming, in essence
how busy` the hotel will be, is called forecasting. The reservations forecast
incorporates group and transient data to provide the hotel with an overall picture
of the sleeping room activity. As with many industries, estimates on future
demand dictate how resources will be used. Within a hotel, the various
departments depend on reservations to forecast what will be required of them.
The reservations forecast may impact:
• Asset allocation—hotels can predict from the forecast what demands may
be placed on its infrastructure. How the depreciation of high occupancy
will affect the renovation cycle of sleeping rooms is one example.
Engineering can use forecasts to schedule repairs as well as predict what
the costs of heat, light, and power will be. Forecasts also provide data to
the group sales department notifying them well in advance of low
occupancy-need periods. This enables the group sales effort to allocate
resources in filling those need periods.

RESERVATION SALES MANAGEMENT
• Staffing levels—the front desk, the bellstand, the outlets, and ancillary Notes
venues in a hotel use the reservations forecast to determine future demand.
The forecast aids in anticipating required staffing levels to meet his
demand. A fully staffed front desk may not be necessary when the hotel
is only half full. The forecast will note the arrivals and departures on a
given day so that housekeeping and the bellstand will be aware and ready
ahead of time. The health club and golf course know from history, how
many people they can expect based on these forecasts as well. Human
resources can step up recruitment efforts if the forecast shows a large
increase in demand.
• Inventory availability—in addition to asset allocation and staffing,
forecasts aid in determining what inventory each of the departments must
keep on hand. The restaurants and lounges can order the requisite food
and beverage based on the forecasted occupancy levels. Again, based on
history, the outlets can calculate how many guests called ‘covers’ they
can collect from the forcasts of housekeeping will know how many sheets
and towels they would need.
Any major swings in a forecast must be communicated to all levels as soon
as the data is verified. An unforeseen group cancellation two days out will
impact bellstaff, front desk staff, housekeeping, and others for the duration of
the group pattern. Timely notification of these changes allows the affected
departments to alter personnel schedules and withhold pending inventory
orders as needed. The further out either a potential area of low occupancy or a
need period is identified, the sooner yield management tools can be applied to
attempt to rectify the situation. With this in mind, continuous accurate
forecasting is the key to a successful hotel operation.
In forecasting hotel occupancy, the reservations department determines how
many rooms of the available inventory will be sold on a particular night. This
number is then divided by the total room inventory to produce the occupancy
percentage.
Rooms sold
× 100 = Occupancy percentage
Rooms available
Perhaps the most fundamental forecast, the occupancy forecast affects the
asset allocation, staffing, and inventory requirements of many departments.
Because all hotels are in the business of filling sleeping rooms, occupancy
forecasts look at the core of the hotel business.
The reservations forecast incorporates other factors as well as occupancy.
Hotel owners and investors also want to know forthcoming room revenue data.
Because the forecast combines both group and transient rooms, it allows for a
Notes detailed breakdown of each segment. The groups on the books will yield their
own average rate. Transient rooms will do the same. Each segment will also
encompass its own portion of the overall occupancy. By determining occupancy
by segment and applying the correct average rate per segment, the hotel can
then calculate total room revenue. We know that ADR (average daily rate) is
simply total rooms revenue divided by occupied rooms. Rev-par, (revenue per
available room) can also be obtained by multiplying occupancy by ADR. Rev-
par, addressed in detail in another chapter, simply put, is the universal method
of comparing hotel productivity regardless of product type, location and size.
The last primary component of a forecast is to determine arrivals and
departures. Forecasting arrivals and departures is close to the process of
determining availability. Arrivals are based on reservations already on the
books, plus anticipated walk-ins and early arrivals, less early departures and
“no-shows.” Forecasting departures is a little different. The hotel’s house count,
which was reviewed earlier, now comes into play. Departures can be forecasted
based on the following formula:
Previous night’s house count
plus
Current day’s arrivals
minus
Current night’s house count
equals
Current day’s departures
(This formula can be applied to any date in the future once the house count
and arrivals have been determined.)
Forecasting Factors
Forecasting is a time-sensitive process. Forecasting in reservations is analogous
to weather forecasting. With predicting weather, the farther out the forecast,
the less accurate it becomes. This is due to the many variables in weather
patterns. Hard, quantifiable data become less prevalent. The same can be said
about reservations forecasts. The reservations forecast is quite accurate in the
short term, and less so in the long term. Weather forecasts also use history in
much the same way reservations forecasts do. Looking back at weather patterns
for the same date in past years can be a good starting point for future forecasts.
Reservations historical data can be viewed in the same way.
History in Forecasting. History plays a big part in forecasting future
occupancies. The quality of historic data is critical. Having the ability to look
back in time and see how many corporate rates were typically booked on a
Tuesday in March will be very helpful. Also, knowing that this same date last
year had the biggest snowstorm of the year will help the manager know not to Notes
view the data as typical. Historical transient data is best reflected in the transient
booking cycle. Questions like “How far out from arrival are transient rates
booked?” and “Is the hotel in that window of opportunity now, or was it already
missed?” are mirrored in the transient booking cycle. Fig. 1 illustrates a transient
booking cycle analysis for a sample hotel. The number of rooms booked was
low 60 or more days before arrival, but it increased dramatically within a
30-day window. But close analysis shows that not every month was the same.
Each month had a slightly different booking cycle. Some reflected a farther out
cycle, whereas others were more short term.
History, of course; cannot be used as a forecasting tool for newly built hotels.
Although new hotel managers make use of some tools at their disposal (namely,
citywide convention calendar of events, call around shopping, and future group
bookings), the benefits of history do not come into play. It is for this reason that
new hotel forecasts are generally not very accurate for the first 12 months of
operation.
Days From Arrival
Actual 15 Days 30 Days 45 Days 60 Days 75 Days 90 Days
January 723 592 402 319 200 97 79
February 1772 1451 1044 551 347 219 175
March 3324 3304 2706 2035 1602 1109 779
April 2912 2992 3010 2577 1723 1350 1009
May 2383 2415 2292 1670 1176 831 545
June 2465 2356 1998 1920 1489 956 815
July 4425 4479 4472 3384 2391 1386 1193
August 4039 4060 3621 3054 2585 1940 1567
September 1624 1601 1697 1475 1050 766 602
October 1899 1842 1601 1221 873 625 466
November 1796 1699 1385 581 307 199 92
December 1286 1201 1051 599’ 420 186 101
Total 28648 27992 25279 19386 14163 9664 7423
Fig. 1: Transient booking cycle

Notes There are several factors to consider when forecasting occupied rooms. The
rooms-on-the-books figure is the best place to start. This is a combination of
group and transient rooms. Booking cycle analysis provides the transient data.
The group data are forecasted a little differently. With group history, the data
are specific to each group. That means that unless the hotel books the exact
same groups, on the exact same dates, and for the exact same number of rooms,
the data won’t be accurate enough to use in a forecast. Group history can be an
aid to the forecast, but it cannot stand alone. History for specific groups is useful
for the group salespeople in their booking analyses (e. g., how many sleeping
rooms are typically contributed by the group). But for a forecast, the director of
transient sales must complete a group rooms worksheet.
Group rooms worksheets is a tool the reservations department uses to aid
in forecasting. It breaks down each booked group’s characteristics. Fig. 2 shows
a sample worksheet.
A tremendous amount of information is contained within the group
worksheet. For a given week, each group is listed, and the information relevant
to a forecast is highlighted. The first column lists basic information such as the
group name, market code, the start date, the reservation method, and responsible
salesperson:
Worksheet Example Information Provided
Group: Sunny Tours Group name
Code: Sun Market code
Start Date: 4/17 The date the group arrives
Res Meth: List Reservation method
Salesp. John Group salesperson responsible for the booking
The reservation method is a very important piece of information. There are

three primary ways a group can make reservations. (1) Rooming list—simply a
list of names provided by the group indicating who and how many will require
sleeping rooms. Typically, hotels will require a rooming list before the cutoff
date. The cutoff date is the last possible date the hotel can hold contracted rooms
for a group before releasing them. The cutoff date is required to give the hotel
advance notice of how many rooms the group will utilize. If a group will not
need as many rooms as contracted, the hotel still has time to fill them using the
yield management strategies available to reservations. Therefore, the cutoff date
often mirrors a hotel’s transient booking cycle. A resort may impose a cutoff
date of up to 69 days in advance, whereas an airport hotel may require a 30-day
cutoff . (2) Individual call in—another way group guests can make reservations
is by calling directly into the hotel reservations department. The reservations
staff is made aware of the group booking by the sales department and inputs
into their computer system how many rooms are being held and what the rate
ABC Hotel Group Worksheet
Week of 4/17/00
Sat. 4/17 Sun. 4/18 Mon. 4/19 Tue. 4/20 Wed. 4/21 Thu. 4/22 Fri. 4/23 Revenue Comment
Rooms GST Rooms GST Rooms GST Rooms GST Rooms GST Rooms GST Rooms GST
Group: Sunny Tours Blocked 10 10 10

Code: Sun Booked 8 8 8 Total Rooms: 24
Start Date: 4/17 Forecast 7 14 7 14 7 14 Avg. Rate $99.00 Series group
Res Meth: List Actual Total Revenue: $2,376 Double Oc.
Salesp. John Arrivals 7 14
Group: 123 Tools Blocked 30 30
Code: Tool Booked 30 30 Total Rooms: 60
Start Date: 4/18 Forecast 28 28 28 28 Avg. Rate $125.00 Repeat
Res Meth: Ind Actual Total Revenue: $7,500 group.
Salesp. Sally Arrivals 28 28
Group: Model Club Blocked 10
Code: Mdl Booked 5 Total Rooms: 5 SMERF
Start Date: 4/18 Forecast 5 10 Avg. Rate $89.00 Group. high
Res Meth: List Actual Total Revenue: $445.00 no-show
Salesp. John Arrivals 5 10 factor
Group: Smith Gears Blocked 125 125 125
Code: Smith Booked 120 120 120 Total Rooms: 360
Start Date: 4/20 Forecast 120 135 120 135 120 135 Avg. Rate $109.00 High outlet
Res Meth: Ind Actual Total Revenue : $39.240 usage
Group: Math Assoc. Blocked 55 55
Code: Mth Booked 55 55 Total Rooms: 110
Start Date: 4/22 Forecast 35 35 35 35 Avg. Rate: $118.00 Group of
Res Meth: Ind Actual Total Revenue: $12,980 teachers
Salesp. Bill Arrivals 35 35
Group: Jones Wedding Blocked 15
Code: Jns Booked 7 Total Rooms: 7
Start Date: 4/23 Forecast 6 12 Avg. Rate: $79.00 Wedding on
Res Meth: Ind Actual Total Revenue: $553 Saturday
Fig. 2: Group rooms worksheet

Notes

Notes is. The same requirements regarding adherence to cutoff dates apply here as
well. Some hotels feel the call-in method puts undue demands on the
reservations staff, by taking them away from transient reservations. Other hotels
think they get a better “feel” for the nature of a group by speaking to the members
directly. (3) Reservation cards—the least used method of reserving group rooms
is by mailing in reservation cards. A reservation card is a preprinted form that
group guests would fill out to make reservations. The guest would supply name,
arrival/departure dates, and any special requests. This method is time-
consuming, and the cards risk getting lost in the mail.
Worksheet Example Information Provided
Blocked Number of rooms set aside for group
Booked Number of rooms actually booked
Forecast Hotel’s estimate on actual usage
Actual Actual numbers are completed after the group departs.
It will become the foundation of history for future book-
ings of the group.
Arrivals How many of the group are due to arrive that day
The second column lists information pertaining to the number of rooms
being held for the group. A group block is the number of rooms the hotel is
contractually required to provide a group. (The group base of rooms at any one
time is made up of all the group blocks.) The blocked number in the worksheet
reflects the group block. The booked number shows how many actual group
reservations were made. This figure may be lower or higher than the blocked
number due to the demand of the group participants. If the group demand or
“pick up” exceeds the block, it is up to the director of transient sales to decide if
and how far over their block the group can go. The forecasted number takes
several factors into consideration. First it looks at the group’s specific history
(if applicable). Knowing how many rooms this specific group utilized in the
past gives a good indication of how they might do in the future. Second, it
looks at the slippage factor. Slippage is the term used when analyzing the group
room performance. It is the difference between what is contracted and what
actually arrives. Often, what is contracted for is not realized. Hotels know this,
and they make forecasts that reflect it. Slippage is actually the group equivalent
to the transient wash factors discussed earlier. The reservation method can be a
good indicator of potential slippage. The rooming list is a very good indicator
of how many rooms the group will bring in. Because the attendees are
“prescreened” (i.e., committed verbally or in writing to the meeting planner)
before they are placed on the rooming list, they are more likely to arrive. The
individual call-in method tends to “slip” more than the rooming list method
because control is taken out of the planner’s hands. In this method, individuals
must be counted on to make their own reservations. The reservation card
methods tend to have slippage factors even greater than the call in method.
Filling out a card and mailing it in takes more time than calling in does. As a Notes
general rule, the following figures apply when determining slippage based on
the reservation method:
Reservation Method Slippage Percentage
Individual call in 10 to 15
Rooming list 5 to 10
Reservation cards 15 to 20
Slippage is an important factor to consider when determining yield strategy.
The reservations department must accurately determine group slippage if it is
to engage in overselling. Mismanagement of group room performance can
adversely affect yield management results.
Sat. 4/17
Rooms GST
Group: Sunny Tours Blocked 10
Code: Sun Booked 8
Start Date: 4/17 Forecast 7 14
Res Meth: List Actual
In this example, the group “Sunny Tours” has contracted for 10 rooms, but
actually reserved 8. The hotel forecasts 7 actually used based on the criteria
discussed earlier. The GST figure is how many people are expected. This group
shows that there will be twice as many guests as there are rooms, so obviously
all the rooms are double occupancy. The number of guests is important to the
forecast because the outlets and other areas of the hotel need to know what the
potential demand may be.
Revenue Comments
Total Rooms: 24
Avg. Rate: $99.00 Series group.
Total Revenue: $2,376 Double Occ.
Each group is summarized at the end by tallying the total number of rooms
and the total revenue generated by the group (rooms multiplied by average
rate). Comments from the salesperson are included that may help in the forecast.
Here, “Sunny Tours” was noted as a series group. That knowledge may provide
solid history, assuming that the group has been there several times in the past.
Contract Rooms: A variation of group booking is called the contract room.
Airlines, for example, have certain cities they fly to most frequency (called
hubs). These cities often become the final leg for a certain flight crew. The flight
crew (pilots and flight attendants) fly together throughout the day on various
flights. The Federal Aviation Administration puts strict limits on the length

Notes and duration of flights a crew may undertake in a day. Hotels in these hub
cities are needed for overnight accommodations.
Airport location types, are the most obvious first choice for these
accommodations. Flight crews aboard long-distance flights or long-haul flights
(e.g., Asia to Europe) may be mandated a certain number of days between shifts.
They may prefer to have their accommodations in areas with several dining
and recreational options, thus downtown and suburban location types may be
options as well.
Because the flight schedules are known far in advance, the airline will
negotiate with a hotel in that hub city for a certain amount of rooms each night.
This block of rooms, called contract rooms, are set aside for the airline each and
every night, whether they are occupied or not. The airline benefits in that they
have guaranteed accommodations that do not require reservations. No rooming
list is needed; the airline manages the assignment of rooms instead of the hotel.
Each night the flight crews may be different, but the number of rooms needed
will remain the same. This is because airlines schedule flights based on the
demand to certain cities. This demand equates to a specific number of seats.
Knowing this, airlines schedule specific types of aircraft for each flight that can
accommodate the required number of seats. These aircrafts will each have a
specific number of personnel in the flight crew. It is that number that the airline
uses to determine the number of contract rooms needed.
The airline is billed directly for the rooms, so the flight crews do not have to
pay for the rooms out of pocket. The hotel benefits in that the airline pays for
all these rooms each night. In exchange for this guaranteed occupancy, the airline
will receive a drastically reduced rate. Often, that rate is marginally above room
cost. In some states, contract rooms are exempt from certain taxes because they
are considered a form of housing, not lodging. Occupancy taxes, which are
added to, a room rate by the state or local government, do not apply to long-
term temporary housing, such as apartments. Contract rooms can be viewed as
long-term temporary housing as well. Those tax savings are passed on to the
airlines. Other organizations, such as overnight delivery companies, bus
companies, and cruise lines may use contract rooms.
In regards to forecasting, contract rooms must be accounted for. Because,
these rooms are set aside each night, they have the effect of removing that
number of rooms from inventory at the hotel. In essence, contract rooms shrink
the size of a hotel. They are included in the forecast a little differently than
regular groups. Because they are guaranteed and paid for, the hotel cannot
release any unused rooms. Therefore, there is no reduction in what is forecast.
The number of contracted rooms must be listed as occupied. The group rooms
worksheet will reflect contract rooms as illustrated in Fig. 3.
ABC Hotel Group Worksheet
Week of 4/17/00
Sat. 4/17 Sun. 4/18 Mon. 4/19 Tue. 4/20 Wed. 4/21 Thu. 4/22 Fri. 4/23 Revenue Comment
Contract Rooms GST Rooms GST Rooms GST Rooms GST Rooms GST Rooms GST Rooms GST
Blocked 10 10 10 10 10 10 Total Rooms: 70
Booked 10 10 10 10 10 10 Avg. Rate: $49.00
Group: Sunny Tours Blocked 10 10 10
Code: Sun Booked 8 8 8 Total Rooms: 24
Start Date: 4/17 Forecast 7 14 7 14 7 14 Avg. Rate $99.00 Series group
Res Meth: List Actual Total Revenue: $2,376 Double Oc.
Group: 123 Tools Blocked 30 30
Code: Tool Booked 30 30 Total Rooms: 60
Start Date: 4/18 Forecast 28 28 28 28 Avg. Rate $125.00 Repeat
Res Meth: Ind Actual Total Revenue: $7,500 group.
Group: Model Club Blocked 10
Code: Mdl Booked 5 Total Rooms: 5 SMERF
Start Date: 4/18 Forecast 5 10 Avg. Rate $89.00 Group. high
Res Meth: List Actual Total Revenue: $445.00 no-show
Salesp. John Arrivals 5 10 factor
Group: Smith Gears Blocked 125 125 125
Code: Smith Booked 120 120 120 Total Rooms: 360
Start Date: 4/20 Forecast 120 135 120 135 120 135 Avg. Rate $109.00 High outlet
Res Meth: Ind Actual Total Revenue : $39.240 usage
Group: Math Assoc. Blocked 55 55
Code: Mth Booked 55 55 Total Rooms: 110
Start Date: 4/22 Forecast 35 35 35 35 Avg. Rate: $118.00 Group of
Res Meth: Ind Actual Total Revenue: $12,980 teachers
Salesp. Bill Arrivals 35 35
Group: Jones Wedding Blocked 15
Code: Jns Booked 7 Total Rooms: 7
Start Date: 4/23 Forecast 6 12 Avg. Rate: $79.00 Wedding on
Res Meth: Ind Actual Total Revenue: $553 Saturday
Fig. 3: Contract rooms
Notes

Notes Completing Forecasts

Once the group data are gathered, it is combined with transient data to create
the reservations forecast. There are several types of forecast; each is generated
based on a specific time period. As was discussed earlier, the best forecasts are
short-term. The farther out the forecast, the less accurate it becomes. Hotels
differ as to which time periods they forecast, but most commonly, forecasts are
broken into two types: short-term and long-term.
Because short-term forecasts are understood to be the most accurate, they
are the most widely used within the hotel. Crucial staffing and inventory
decisions are based on these short-term forecasts. The most common time
periods used in short-term forecasts are:
• 3 day
• 7 day
• 10 day
• 14 day
Fig. 4 illustrates what a short-term 10 day forecast may look like. At a glance,
this forecast supplies all the relevant group, contract, and transient data. Each
department can glean from this document valuable information of the future.
10 Day Forecast
Week of 4/17/00
Day: Sat. Sun. Mon. Tues. Wed. Thur. Fri. Sat. Sun. Mon.
Date: 4/17 4/18 4/19 4/20 4/21 4/22 4/23 4/24 4/25 4/26
Occupancy % 99% 73% 34% 39% 41% 69% 78% 90% 90% 70%
Rooms Occupied 454 336 157 179 190 319 358 414 415 318
Comp. Rooms 3 5 7 7 4 1 1 1 1 1
Guest Count 498 389 230 279 257 366 381 454 483 355
Arrivals 271 165 114 99 103 222 227 233 258 210
Departures 227 284 292 77 92 83 108 177 257 265
Group Rooms 55 20 65 100 115 93 52 35 19 79
Contract Rooms 10 10 10 10 10 10 10 10 10 10
Transient Rooms 386 301 75 62 61 215 295 368 385 228
Total Rooms Sold 451 331 150 172 186 318 357 413 414 317
Group Guests 69 32 110 150 175 105 63 45 30 99
Transient Guests 429 357 120 129 82 261 318 409 453 256
Total Revenue: $379,512.09 Average Occupancy = 73% Rooms Sold = 3109
Fig. 4: 10-day forecast

Long-term forecasts are not as useful for other departments but can be
beneficial to the group and transient sales teams. Long-term forecasts are used
to shed light on preliminary yield management strategies. Reservation
departments use these to prepare for upcoming events. The group sales effort
can see how their production is compared to expectations. There are three main Notes
types of long-term forecasts:
• 30 day (or comparable cutoff date)
• 90 day
• 12-Month Rolling-Annual Budget/Marketing Plan
The 30-day forecast is used primarily to monitor individual group pickup.
At this point (assuming that 30 days is the cutoff date used), all groups should
have their rooming lists in or have made all their reservations via call in or
reservation cards. Groups that do not have their information in can be in danger
of losing their allotted rooms. Due to the transient booking cycle, it may be
difficult to rebook rooms left unused. The 30-day forecast is used by the director
of transient sales often to remind the group salespeople to follow up with their
group(s).
The 90-day forecast is the primary yield management indicator. It is at this
point that the reservations department makes their first estimate of group usage.
Using the slippage and historical factors reviewed earlier, the reservations
department can estimate the total number of group rooms needed. He/she can
then begin to tailor yield management based on what is left to sell. If there
seems to be few available rooms, the rate triggers may be set high. Too low, and
no restrictions may be placed on transient booking at all. Again, in order to
maximize total room revenue, the reservations and group sales departments
must communicate.
Forecasting Frequency
The 30-and 90-day forecasts may be prepared more often than their time frames
indicate. The 30-day forecast may been completed weekly, and the 90-day
forecast may be done monthly. This will cause obvious overlaps in the days
being forecast, but that is beneficial. This overlap allows for continual monitoring
and revision. Trends not seen in one forecast may be picked up in another.
Waiting 30 to 90 days between forecasts may cause the hotel to miss recent
developments (e.g., a group cancellation or new booking). Continual revisions
also allow for checks of the competition and their pricing strategies. Adjustments
to a hotel’s yield management may be warranted if it is known that competitors
are sold out in advance. A hotel can certainly “drive rate” in those circumstances.
Forcasting Importance
Forecasting can have an impact on more than just the hotel. Hotels in a chain,
for example, will forward their forecasts to their regional controllers for
compilation. These controllers, in turn, combine their forecasts into one complete
chainwide forecast. That forecast reflects how the chain as a whole will perform.
Notes Publicly traded companies, like Hilton and Starwood, report these forecasts to
Wall Street. Industry analysts with organizations such as Morgan Stanley,
Solomon Smith Barney, and First Call Financial will make recommendations
on the chain’s stock based on these forecasts. Chains that do not meet projections
based on forecasted numbers may see their stock price drop as a result. Therefore,
the hotel forecast must always be as accurate as possible.
The last-long range forecast goes by many names. Its primary use is to assist
in planning for the annual budget, or marketing plan. A marketing plan is a
document put together by a hotel’s senior management to chart a course for the
next year. It summarizes departmental goals, advertising schedules, financial
targets, and market conditions. Also referred to as the “budget,” the marketing
plan is created each year at the same time to determine how the hotel will
perform in the coming year. This can be done on a fiscal or annual year basis.
This forecast helps lay the groundwork for the sleeping room portion of the
budget. Using historical data and other tools, this forecast provides management
with a starting point for the marketing plan.

The data collection and analysis role of the director of transient sales is important
to any hotel. The other crucial role he or she plays is managing the reservations
sales team. A properly managed reservations department will maximize
transient room revenue using the tools reviewed earlier. Managing the transient
sales effort requires proper staffing, training, call management, and sales
strategy.
STAFFING
Staffing and scheduling are critical in reservations. Within the reservations
department, the director is the leader. In large and mega-hotels, a reservations
manager may also be on staff. Reporting to these managers are staff reservations
agents also called “reservationists”. The agents may implement all the yield
management strategies laid out by management. The reservation’s staff may
consist of just two or three agents, or a few dozen. This is one of the few
departments where the daily occupancy of the hotel does not effect staffing
levels. The reservations department is proactively booking rooms, so they are
not affected by occupancy as are the reactive departments (i.e., housekeeping,
outlets, and ancillary revenue sources). These departments rely on the forecasts
generated by reservations to determine their staffing levels.
Hours of operation in reservations must be reflective of the hotel’s calling
audience. A missed call equates to missed ‘revenues. If the hotel is physically
located on the west coast but has a large east coast customer base, the time zone
difference must be taken into consideration. The general ‘rule of thumb’ for
reservations staffing is to adhere to prime selling time. Prime selling time is Notes
defined as the specific hours during the day when the transient guests are most
likely to call in for a reservation. Fig. 5 illustrates the traditional peak-demand
hours. Prime selling time will differ from hotel to hotel based on their group
versus transient mix and traditional booking cycle. Weekends and evenings
may require reservations staff because those are also times when transient
reservations are made. Another factor to consider in staffing is the hotel’s
advertising schedules. Special packages, discounts, and other promotions may
increase volume during their runs.
The number of agents required is dependent on these call volumes.
Reservation calls are routed to available agents via an automated call distributor
(ACD). The ACD monitors the available and busy extensions and routes the
calls accordingly. All good ACD systems produce call volume reports at regular
intervals. The director of transient sales or the reservations manager will review
those reports frequently, as often as every hour. The data in those reports
identifies how long calls are kept waiting, among other things. Armed with
this data, proper staffing and scheduling will fall into place.
Fig. 5: Prime selling time
The reservations department is often viewed as an extension of the sales

department. Each call is a sales opportunity. Not long ago, reservation agents
were viewed as nothing more, than operators or order takers. Those days are
long gone. The amount of transient revenue that is produced in reservations is
unquestionable. When hiring for reservations, a sales or customer service
background is preferred. People can be taught software systems, but it is much
harder to teach someone to be enthusiastic, friendly, and eager to please. A
good phone voice is also important for a reservations agent. Proper grammar
usage is vital. In some markets, bilingual agents can be very valuable.
In any sales capacity, knowledge of the product is vital. Because reservations
agents sell the hotel, knowledge of the facility is paramount. The ability to
describe all aspects of the guest experience is needed. The agent is often the
first hotel employee a guest comes in contact with. This first contact must begin
the process of satisfying the guest. This time honored adage applies: “You can
Notes only make one first impression.”

Firsthand product knowledge (refreshed on a regular basis) will help the
agent sell the property on every call. Each agent should compile a fact sheet or
computer file listing as much hotel information as needed. Some questions will
come up again and again, still others may be very unique. The information for
this fact sheet should include, but not be limited to, answers to the following
common questions:
Food and Beverage Outlet Information

• Has the local food critic commented about the restaurant?
• Does the hotel offer buffets at set times, or based strictly on occupancy
levels?
• What are the hours of operation for each outlet? Do these times change
during the week or during seasonal shifts?
• Is there a dress code? What is the average cost for each meal?
• Does the Chef prepare daily specials?
• Do holiday hours differ from normal hours of operation?
• Is room service available 24 hours a day?
• Is there a happy hour?
General Hotel Information

• When was the hotel last renovated?
• Is the hotel ADA (Americans with Disabilities Act) compliant?
• Does the hotel offer automatic checkout?
• Is there a business center on site?
• Are there coffeemakers, fax machines, data ports in the rooms?
• What TV channels are available in the rooms?
• What are the hours of operation for the fitness center?
• Are children’s activities available?
• Is there an airport shuttle service?
• Does the hotel participate in frequent stay programs and airline/car rental
tie-ins?
• What major airlines service the local airport?
• What are the in-room amenities?
• What are the costs for roll-away beds and cribs?
• Are there any nearby restaurants or attractions and what are their costs
and hours of operation?
• Who owns the hotel?’ What are the names of the executive commitee Notes
members?
• What are the directions to the hotel from major thoroughfares?
• What is the average cab fare to downtown or the airport?
• What are the phone numbers for other nearby hotels (in case of a sold-out
situation)?
Reservation Evaluations
Employing an evaluation system via mystery callers is an excellent way to
provide objective feedback to reservations agents. Sometimes called “shops,”
these test calls can be made at various times over a given period. The agents are
evaluated on how they handled the call, and other criteria deemed appropriate
by the director. Need areas or weaknesses can be identified based on these test
calls. Constructive retraining may be required if the need is identified. As part
of the hotel’s training program, agents are made aware of the existence of these
test calls and are told to always expect them. These test calls are sometimes
made by other managers in the hotel, or by a professional outside evaluator.
The agents are made aware of their individual evaluations after results have
been tabulated. Team scores can be shared and used as part of an incentive
program.
The training of reservations should be on going. Some aggressive hotels
allow their agents to work in other departments from time to time. The ability
to learn other jobs within the hotel can be rewarding to the employee and
valuable to the hotel. Referred to as crosstraining, this allows the agents to
learn and grow professionally, at the same time expanding their hotel
knowledge. Crosstraining is also valuable to the hotel because it creates a pool
of multiskilled employees who can be used in other departments as needed.
Reservations agents, simply by the nature of their work and their familiarity
with PMS’s, often serve as backup staff to the front desk. The reservations
department can also crosstrain other employees in transient sales.
ROOM INVENTORY
Perhaps the most fundamental aspect of hotel analysis is the determination of
occupancy and availability. Occupancy and availability are mirror opposites of
each other. In most cases, what is not occupied is available for sale. Out of
order rooms may skew that number somewhat (they are not occupied, but they
are not available for sale either). How one looks at occupancy versus availabil-
ity can be summarized with the old adage “Is the glass half empty or half full?”
Within the world of reservations, the interplay between occupancy and
availability is crucial. The goal of reservations, in conjunction with group sales,
Notes is to fill all the sleeping rooms. The first step in achieving that goal is to determine
how many rooms are available for sale. There are many factors that go into
determining availability. Availability is never constant; it is always in a state of
flux. On any given night, reservations are being made, and others are cancelled.
People who initially checked in for multiple nights leave early; others stay longer
than expected. Availability can literally change from minute to minute.
Determining availability’ requires both hard data analysis and a level of
instinctual guesswork. It is the ever-evolving nature of availability that makes
its determination both a skill and an art.
Assigned the task of determining availability is the reservations department.
It is they who use the levels of availability and occupancy in implementing the
rate structure. Determining, availability should not be confused with forecasting.
Forecasting, which is covered later in this chapter, is a much more detailed
analysis of the future. Availability though similar to forecasting, looks at the
present moment in time. In the modern hotel, property management computer
systems assist the director of transient sales in determining the levels of
availability and occupancy. Although computers are useful, one should know
what factors the computer considers in making these determinations.
AVAILABILITY FACTORS
Current Number of Reservations

Often referred to as the number of rooms “on the books", the number of cur-
rently reserved rooms is the starting point of availability determination.
Historical Factors
One of the best ways to predict future outcomes is to look to the past. The term
history is used in both group and transient room analysis. History is defined as
the documented record of historical data. Looking at how a hotel performed in
the past is a good way of predicting how it may perform on a people look to a
group’s history in determining how many rooms will actually be used in relation
to how many they have committed to. A group’s outlet usage history gives a
restaurant manager an idea of how many covers to expect. With determining
availability, history can guide decision-makers in limiting the pure guesswork.
Sometimes, referred to as “wash factors,” historical factors are vital to an accurate
determination of availability. Without history, the following historical factors
would be unsubstantiated guesses:
• Early arrivals—Making an allowance for guests who check in before they
are due helps ensure that availability is as accurate as it can be.
• Early departures—Along the same lines as early arrivals, allowing for a

certain number of guests who check out earlier than expected is important Notes
in determining accurate availability.
• Cancellations—Guests may cancel a reservation for many reasons. No
hotel can say with absolute certainty how many reservations will be
cancelled, but a good historical record of past years can give a fairly good,
determination.
• “No-shows”—Within transient room sales, there are two types of ways a
reservation is held for a guest. (1) A reservation can be held on an arrival-
time basis. This means ‘that the hotel and guest have agreed that if after a
certain time the guest has not arrived, the reservation is released. Typically,
these types of reservations are held until 4:00 to 6:00 P.M. Once that
reservation is cancelled; the guest assumes no liability. The hotel is then
free to sell that room to another guest. (2) A guaranteed reservation is
held for a guest the entire night. The guest ‘will guarantee arrival by
providing a credit card number when the reservation is made. Both the
hotel and guest understand that the credit card will be charged, whether
it is occupied or not. A guaranteed reservation that is not occupied is
called a guaranteed no-show (GNS). Because these reservations actually
charge the guest, they are counted as occupied rooms even though no
one slept in the room. Whatever type of reservation it is, availability is
affected by these “no-shows.”
• Stayovers—Guests who stay longer than planned must be accounted for
in some way. History is the only- good way of predicting how many may
do so.
• Out of order rooms-Rooms that are held out of inventory for any reason
diminish the number of rooms available for sale. Again, they do not affect
occupancy calculations because no guests actually stay in them.
Although history can shed some light on how many walk-ins to expect,
the many variables that affect this number make their prediction difficult.
Market factors such as compression of demand, weather, transportation
disruptions, and others can affect the number of walk-ins.
Each of these factors will affect the determination of availability at any given
point in time. Some of these factors have a positive effect on the number of
rooms available, others have a negative effect. Fig. 6 illustrates this positive/
negative effect on availability.

Notes Fig. 7 uses this positive/negative relationship in an example. In this example,

the XYZ hotel has 100 rooms and the director of transient sales has been assigned
the task of determining occupancy.
Determining Availability Factors
(Counted at the time of determining availability)
Each of these availability, factors combine to positively
or negatively affect the number of available rooms.
Factor Affect
• Early Arrivals Plus
• Cancellations Minus
• No-Shows Minus
• Early Departures Minus
• Stayovers Plus
• Other Factors
Out of Order Minus
Compression Plus or Minus
Fig. 6: Determining availability factors
XYZ Hotel
Starting Point: On the Books 50 Rooms
Availability Factor Resulting Effect
Projected Early Arrivals; 10 (add 10)
Cancellations: 12 (minus 12)
Projected No-Shows: 8 (minus 8)
Projected Early Departures: 5 (minus 5)
Projected Stayovers: 10 (add 10)
Other Factors:
No out of order rooms, city 6 (add 6)
is not busy; but history
shows that an average of 6 51 Projected Occupancy
walk-ins occur
Therefore, availability is: 49 (100-51)
Fig. 7: Availability exercise
House Count
The hotel house count is similar to the availability determination but differs in
a few fundamental ways. The house count does not take into consideration
historical factors, market factors, or any unknowns. The house count is an actual
quantifiable number. The house count looks at how many rooms are in-house,
how many are due to arrive and how many are due to check out. That number,
less any OOO rooms, yields a house count. The house count does not use any
projections. The house count is used in many ways as the starting point of
determining availability.
OVERSELLING Notes
Based on the availability on any given night, a hotel may sell more rooms than
are actually in inventory. This practice is called overselling. Using the historical
record, a hotel may oversell in order to offset the effect of the minus (or negative)
factors that determine availability. Though some consider over-selling an undue
gamble, many hotel managers strive to fully sell out the hotel using this practice.
There are drawbacks to overselling. The most obvious of which is not having
enough rooms for guests with reservations. When a hotel aggressively oversells
and does not have enough rooms for confirmed reservations, it must “walk”
the guest. A walked reservation is a guest who must stay somewhere other
than where they were initially booked to be. A confirmed reservation refers to
guaranteed reservations, not those held on a time-of-arrival basis. The hotel
that walked the guest must honor its obligations by compensating them in some
way. There are no hard and fast rules as to how the hotel must compensate the
guest, but most reputable hotels will:
• Pay for the room at another facility of the same or better quality.
• Pay for a phone call so that the individual can notify others of the change
in accommodations.
• Provide transportation to the new facility, and back if applicable. A guest
who is part of a group will,want to return in the morning to attend group
functions. A transient guest who has more than a one-night stay should
be allowed to return to the original hotel to complete the stay if they wish.
• Other incentives can include a free breakfast, an upgrade upon return, an
in-room amenity, an apology from management and even some type of
direct monetary compensation.
It is up to the reservations department to monitor the extent to which a
hotel may oversell. A hotel that is oversold many days in the future may find
that wash factors have reduced the number of reservations as the date
approaches. Had that hotel not oversold in the first place, it would find itself
with too few reservations. Upper management largely dictates the extent to
which a hotel may oversell. Some hotel managers feel the risk of walking guests
does not justify the potential return of a sold-out hotel. After all, a guest who is
upset about being walked may never return.
The determination of how far to oversell differs from hotel to hotel. The
criteria used will differ as well. Fig. 8 illustrates what factors a director of
transient sales may consider in determining how far to oversell a hotel.
• Line 1 lists the number of rooms currently on the books for that date.
• Line 2 lists the number of guests due to arrive on that date.
• Line 3 lists the number of nonguaranteed reservations for that date.
Notes Nonguaranteed reservations play a role in overselling because they often

do not arrive.
• Line 4 lists the estimated number of guests who will not arrive even though
they have guaranteed reservations. History may provide a percentage by
which the number of the no-shows can be estimated. In this example, the
hotel has a historical 5 percent rate of no-shows with guaranteed
reservations.
• Line 5 lists the number of guests who may depart earlier than their
reservations dictate. Again, history can be a guide. In this example, the
hotel uses a different percentage for each day of the week.
• Line 6 lists the estimated number of guests who will stay longer than
expected. The percentage used here to calculate this figure is unique.
OVERALL ANALYSIS
(This Sample Hotel has 420 Rooms)
Day WED THU FRI SAT SUN MON TUE

Date 7/1/01 7/2/01 7/3/01 7/4/01 7/5/01 7/6/01 7/7/01
Rooms on the Books 331 247 126 211 200 290 422
Due to Arrive 123 121 67 107 134 183 282
Non Gtd Reservations 2 0 6 12 1 3 15
Est. No Shows 6 6 3 5 7 9 14
Est. Early Departures 10 11 9 8 8 6 9
Est. Stayovers 4 4 4 2 3 4 5
Due to Depart 206 203 212 38 117 78 148
Revised on Books 317 234 111 188 188 276 389
Variance 14 13 15 23 2 14 33
#Rooms to Fill 103 186 309 232 232 144 31
Oversell # 434 433 435 443 432 434 453
Fig. 8: Overselling
This hotel has determined that their number of stayovers often resembles
60 per cent of the no-shows of the previous night. Again, there are no
hard and fast rules; each hotel will tailor their analysis to suit its own
needs.
• Line 7 lists the number of guests who are due to depart.
• Line 8 reflects an adjusted figure of what the hotel estimates will be their
actual number of rooms on the books by using the positive/negative effects
of the availability factors. It takes the original on-the-books figure and
subtracts the nonguaranteed number, no-show number, and the early
departing number. It then adds the stayover number because that has a
positive effect on the number of rooms.
• Line 9 shows the difference between the original on-the-books number Notes
and the revised figure.
• Line 10 subtracts the revised on-the-books figure from the total number
of rooms the hotel has (in this case 420). This yields how many rooms the
hotel needs to fill.
• Line 11 determines the oversell target, which this hotel should try to reach
by adding the number of rooms to fill to the original on-the-books number.
If a hotel managed its overselling perfectly, it is said to have achieved a
perfect sell. A perfect sell is reached when every room is occupied and no guest
was walked. Some conservative hotel managers have lowered the level at which
they consider the hotel perfectly sold. To reduce the risk of walking, some
managers accept a 99 to 98 percent occupied hotel as fully sold. Wherever the
threshold is set, the reservations department always prides itself on achieving
a perfectly sold hotel.
CALL MANAGEMENT
The ACD system aids the director of transient sales in managing call volume,
but it also can aid in other measurements. Reservations agents are measured in
their ability to make a reservation on every call. The ACD system can provide
data specific to each phone extension, thus each agent. The ACD data are limited
to the length and scope of the call, but it cannot measure what is said on each
call. These ACD data, coupled with other tools, are used to measure the
productivity and efficiency of the agents.
The ACD data most useful to the director of transient sales are call length,
wait time, and dropped calls. Call length is important because long calls preclude
agents from taking other incoming calls. It is for that reason that agents are
taught to keep calls as short as possible, without rushing the guest. Wait time is
a good measurement of demand versus staffing. If people are waiting a long
time to reach an agent, then more staff might be necessary. Wait time can also
be related to call length. If it is determined that staffing levels, are appropriate
based on historical data, but wait time is going up, it is a logical assumption
that the staff are taking longer, with each call. Dropped calls (sometimes referred
to as abandoned calls) are the number of people who simply got tired of waiting
and hung up. This obviously is detrimental to any hotel. As a percentage of all
calls, most hotels strive to reach a dropped call level of 2.5 per cent or less.
Some hotels try to make use of the wait time. Hotels may incorporate a
recorded message into their ACD system. Recorded messages that inform the
guest of the hotel’s products and services begins the sales process before they
ever speak to an agent. They can be a good way of creating interest in the outlets
and ancillary services. Messages that ask the caller to “please wait” and that
Notes reinforce that “your call is important to the hotel” are common. other hotels
have moved away from these recorded messages. Data from several customer
focus groups have revealed that guests feel that the messages are redundant
and somewhat intrusive. Many people do not want to be “sold to” while on
hold. Hotels run the risk of increasing their dropped call volume as well with
messages because once a message repeats, the caller senses that they have been
on hold longer than the hotel may have intended.
Although the ACD data are useful, they do not provide a complete picture
of the agents productivity and efficiency. The primary measurement for all
reservations agents is called the conversion ratio. The conversion ratio is defined
as the number of transient bookings made versus the number of calls received.
The conversion ratio is sometimes referred to as the “closure rate.” Because the
ACD can list how many calls came in to an agent’s extension, and the PMS
computer can list each reservation made, a simple calculation can be made to
determine conversion. A good agent has an average closure rate of 45 per cent
or more. An agent’s ability to close every call with a booking is para-mount to
their success. Another important measurement is the agent’s ability to upsell.
Upselling is the ability to move a guest from a lower-priced product to a higher-
priced product. The ability to convince a guest to reserve a suite versus a regular
room is a good example. Upselling is difficult to measure. Because so much is
done verbally on a reservations call, it is hard to document the act of upselling.
The best way to track upselling is to measure the number of “regular” rooms
available at the time of the call. If lower-priced rooms are available, but the
agent convinced the caller to buy a higher-priced room, then a good job of
upselling was done. Upselling is not done when the only remaining available
room is a high-priced suite. The director of transient sales will use a reservations
map to determine what types of rooms are available and when they are available.
These maps can show specific room numbers and their availability for specific
dates. The agents themselves also use other types of reservations maps to check
availability of certain room types, designations, and configurations. Figure 12-
15 illustrates what a room number reservations map may look like.
Motivation
Motivating reservations agents goes beyond effective training and strong
leadership. Some type of incentive compensates the group sales department
within every hotel in part, or in whole. Just as the sales managers sell group
rooms, reservations agents sell transient rooms. As stated before, the transient
sales effort is viewed as an extension of the group sales effort. Therefore,
reservation agents should be given some type of incentive to sell transient rooms.
Incentive programs run the gamut from upsell programs, to conversion
programs, to revenue production programs. Return on investment should be
measured with any incentive program. Although cash is usually the number Notes
one incentive for most people, other “soft dollar incentives” can be appreciated.
Soft dollar incentives are those goods or services the hotel itself can offer. Those
can include a weekend stay at the hotel; a membership in the health club, dinner
in the restaurant, or something similar.
ABC Hotel Reservation Map
(room number specific)
Room Date
Number 2/4/01 2/5/01 2/6/01 2/7/01 2/8/01 2/9/01 2/10/01 2/11/01
100 .. .. .. .. .. .. .. ..
101 IN ** ** .. .. .. .. ..
102 .. .. IN ** ** ** **
103 .. .. ... .. .. .. .. ..
104 .. IN ** ** .. .. .. ..
105 .. .. .. .. .. .. .. ..
106 .. .. ## ## ## ## ## ..
107 .. .. ## ## ## ## ## ..
108 .. .. ## ## ## ## ## ..
109 .. .. ## ## ## ## ## ..
110 .. .. .. .. .. .. .. ..
Screen Icon Meaning

.. Indicates the room is not reserved for anyone, thus it is available
IN Indicates the room is being checked into that day
** Indicates the room is occupied on that day
## Indicates the room is out of inventory for that day (out of order)
Fig. 9: Reservations map
Proper call management includes knowing what to say on the phone. The
phone call is the primary transient avenue to any hotel. Although faxes play a
minor role and the Internet is, arguably growing in its role as a transient avenue,
the phone remains the dominant method of making a reservation. It is for that
reason that the agents must have a good speaking voice and know how to
speak eloquently. A reservations agent must be able to communicate and use a
computer at the same time. A quality call results when the agent communicates
with the guest and uses the computer seamlessly.
There are a few rules most successful agents follow to ensure a quality call.
Certain words and questions help ensure conversion and limit call length. The
mannerisms and tone of the agent can literally “make or break” the call. The
actual words used will differ from agent to agent and hotel to hotel. It is
important to allow differing personalities to show through. There are, however,
certain basic qualifying questions each agent should cover and a few “do’s and
don’ts” all agents should remember.
Notes The purpose of asking qualifying questions is to ensure that the agent
understands the guest’s needs. The agent needs to ask the proper questions to
give the front desk and other front office departments as much information as
possible. The check-in process will be smoother for the guest if relevant data
are accurate Proper qualifying questions also limit call length because they
immediately get to the needed information and avoid pointless questions. Basic
qualifying questions include:
• “Are you attending a group or convention?” The purpose of this question is
to ensure that the caller receives the appropriate rate and that the group
gets credited with the reservation. If the reservation is not credited to the
group, it may affect the hotel’s forecast. The group rooms worksheet must
reflect accurate group pickup.
• “How many people in your party?” This question alerts the agent to quote a
rate based on the room occupancy. The proper rate designation that applies
to doubles, triples, and quads can be quoted accurately.
• “Are you a member of our frequent stay program?” This question may remind
the caller that there are other benefits to staying with this particular hotel.
• “Have you stayed with us before?” Most PMS’s store previous guest
information. Called guest history, this information, if managed properly,
can alert the hotel to guest preferences. By asking this question, the agent
may be able to check on a favorite room, or know ahead of time that the
guest will require a crib, and other special needs.
• “Do you prefer smoking or nonsmoking?” Again, a question to provide a
better sleeping room experience.
• “What is your estimated time of arrival?” This question is asked on behalf of
other departments within the front office. The front desk can allocate the
first vacant/ready rooms to the guests arriving earlier than others. The
bellstand will need to know arrival times to staff properly.
• “What credit card would you like to use?” This question serves two purposes:
(1) It makes each reservation a guaranteed reservation. This is the preferred
type of reservation because it is confirmed. The agent should follow this
question with a notice of the hotel’s guaranteed reservation policy.
(2) Providing a credit card during the reservation process makes the check
in process quicker because guests do not have to produce the card. They
can simply leave their charges on the card number provided.
• “Let me reverify this information for you.” Though not actually a qualifying
question per se, this statement allows the agent to go back and verify the
accuracy of each of the other questions. This statement also begins the
closure process by cementing the sale in the mind of the guest.
Overtime most agents develop unique ways of answering qualifying Notes

questions. individual style helps to keep the process more human and less
structured. Throughout a reservations call, the agents may find themselves
answering questions instead of asking them. This is an important part of the
reservations agent’s role. It is why hotels spend so much time on training and
educating agents on the facility’ itself. This is again where individual personality
and style enhance the guest experience. There are, however, certain phrases
that agents should avoid. Some “do’s and don’ts”:
Don’t Say Do Say

I don’t know. I’ll be happy to check on that
for you.
We are oversold. We are sold to capacity.
I can’t confirm a king bed room. I would be happy to request a king
for you.
This computer system is new, My computer is down right now,
and I don’t know it well. please bear with me.
We still have many rooms available. We are filling up, but I am confident
we have a room for you.
Bye. Thank you for calling the ABC Hotel.
Other “rules of thumb” include avoidance of silence. Dead air can lead to
confusion and hesitancy in the guest. Agents should make conversation as best
they can. The only time silence is acceptable is after a rate quote. Once a rate is
quoted, the guest may need time to consider it. Inexperienced agents perceive
this silence as reluctance and quickly jump in with a lower rate. This should be
avoided. Another tool for agents is to quickly give their first name upon greeting
the caller. This begins a rapport-building process that will make the rest of the
call much easier.
A canned-speech type of selling is quickly picked up on by callers. A
conversational tone adds a personal touch and allows the agent to tailor his or
her approach to each callers needs. The best way to tailor sells is to begin by
asking open-ended questions. Open-ended questions are those that require more
than a one-word answer. “What brings you to the hotel?” is an open-ended
question that will also alert the agent to the guest’s goal. The guest may be
attending a convention or might be looking for a romantic anniversary get-
away. The proper group rate or “honeymoon” package would be appropriate
rate quotes in those cases. These qualifying questions help zero in on what the
caller wants, reduce call length, and improve the conversion ratio.
Recapping the reservation with the caller is a step the agent never wants to
skip. Verifying the name spelling, restating the arrival and departure day and
date, repeating the room type and room rate, and confirming the method of

Notes guarantee can avoid customer service issues down the road. A caller may initially
state a need for a two-night stay, but when recapping with day and date, the
guest may find his/her own error. Misspelling a name is also a common way to
create problems. An example of this might occur on a sold-out night when a
guest is turned away as not holding a reservation, when in fact the agent simply
misspelled it.
Arguably, the most important point in a reservation call comes at the end.
This is the time where a decision must be made. The reservations agent must
always ask for the business. Many times, the caller is ready to make a decision,
but the agent either doesn’t ask for the booking or offers another option or a
lower rate. A caller’s silence doesn’t always mean they do not want to book a
room. Agents must give callers the time to absorb the information provided,
and then ask for the booking. When objections do arise, savvy agents come
armed with useful answers. “Do your rooms have Jacuzzi’s?” could be answered
with “No, unfortunately none of the hotels in our area have them. We do have
a hot tub in the pool area however.” This reply has provided the guest with
both a reason to stay at the hotel even though there were no Jacuzzis and a
reason not to bother calling the competition. Directors of transient sales should
implement role-playing exercises into ongoing training sessions. Making agents
aware of different types of objections is a great way to get accustomed to them.
Overcoming objections virtually ensures a high closure rate.
SALES STRATEGY
By providing reservations agents the tools of training and education, and
enhancing that with motivation techniques, the director of transient sales can
be confident that the hotel’s vision is being implemented. Proper call
management allows the director to verify that each agent shares the vision.
That vision, the primary driver of all activities in reservations, is the transient
sales strategy. The implementation of all these concepts in an effort to maximize
transient room revenue is the primary goal.
There are several different selling strategies when it comes to reservation
sales. The “top down” strategy is the most widely used. This strategy has the
agent quoting a rate for the hotel’s best room type (i.e., most expensive) and
moving down to a lower rate if not accepted. This strategy is used in situations
where the hotel wants to drive rate. It is not successful in a highly competitive
market with low guestroom demand. It is successful, though, when buyer
confidence is high. Buyer confidence is defined as a hotel guest’s predetermined
desire to book a room at a hotel at almost any cost. Buyer confidence prepares
the caller to expect a higher price,because of preconceived notions about the
hotel. Hotels with a reputation for high quality and service invoke buyer
confidence.
The “bottom up” strategy is just the opposite of the “top down” strategy. Notes
The agent begins by quoting a rate corresponding to the lowest room type (least
attractive or least expensive of the available rooms). The agent then lets the
caller know that better rooms (i.e., more expensive) are also available. The agents
inform the guest of the incremental rate increases corresponding to the next
level of guestroom. This bottom-up strategy is also called “menu quoting”
because it gives the caller a choice of different rate options. This strategy is the
best way for agents to upsell. As each successive rate is quoted, the agents have
another opportunity to convince the caller that this is the room type or
configuration best suited for them. The bottom-up strategy is also successful
when buyer confidence is low. Guests who do not feel a specific need to stay at
any hotel may have low buyer confidence. Guests simply looking for the lowest
rate, called rate shopping, may not give an agent the time to upsell to the next
level of rooms. Agents using this method must be careful not to convey any
room type as inferior, as can happen in aggressive attempts to upsell.
The “mid-range” strategy suggests that the agent quote a rate from middle
room type, going either up or down a tier based on acceptance or opposition of
the guest. Agents using this strategy have the flexibility to tailor their approach
to the guest and the progress of the call. Experienced agents are best suited for
this strategy, because it requires experience and the ability to implement either
the top-down or bottom-up strategy as needed.
Different agents may have varying success with each strategy. It is usually
best to allow the latitude to find the selling method best suited for each agent.
This would not apply, of course, if the hotel’s yield management strategy
dictated a specific course of action (e.g., drive rate or increase occupancy). The
director of transient sales should make every effort to inform the reservations
agents when changes in strategy will occur. If new rate triggers are to be imposed,
agents should be informed—to avoid surprises.
INDUSTRY PERSPECTIVE
Yield Management in Practice

Glenda Arnold
Director of Reservations
Indianapolis Marriott North
Supply versus demand is the basic discipline behind yield management. To
take the fixed amount of inventory (supply) and to determine the guests’ needs
to utilize that inventory (demand) is the objective of yield management. To
exhaust the maximum amount of inventory available and to realize maximize
dollar value of that inventory is the goal.

Notes We use all pertinent information at hand, such as current pace trends,
historical data, group activity, city events, competitors’ rates, and availability—
are all valuable tools in determining whether there is a need to yield the available
supply. For example, if there is a slow demand time and inventory is abundant,
every opportunity should he left open for the guest to book rooms at a rate that
is “market friendly”—in other words, open your doors to allow everyone in
you can! If there is a high demand time and inventory is limited, it then becomes
beneficial to sell rooms based on more rigid guidelines such as minimum length
stays and at more lucrative rates such as concierge or rack. Most hotels offer a
variety of rates to accommodate the budgetary needs of various customers.
Groups may offer a discounted rate based on a volume booking; negotiated
rates are offered to corporations based on estimated yearly volume; special
interest groups such as government employees and special member
organizations may also have a preferred rate. In addition, there is typically a
general population rate or corporate rate offered. Deciding which rates to offer,
and on which days of the week, is all part of the yield process. There are occasions
when it may be necessary to actually slow down the booking process because
of a “peak night” situation. Typically, in a corporate environment hotel, Tuesday
and Wednesday nights are considered peak nights. Those are the most often
utilized nights for business travelers. To prevent filling only those nights and
to prevent guests who want to arrive prior and depart after those nights, it may
be necessary to put restrictions on the Tuesday and/or Wednesday to accept
only multiple-night stays and at a higher rate. This method of yield management
helps to even out the pattern of arrivals and departures, thus increasing revenues
and occupancy.
Watching the trends, booking pace, and nonprice turndowns is critical in
understanding whether the restrictions for booking are too aggressive or too
lenient. Changes to the booking guidelines and/or rates may need to be made
daily to achieve optimal revenues.
Yielding inventory for special events such as the Indianapolis 500 Race,
Brickyard 400, and Formula one is typically managed a little differently than
day-to-day reservations. Where there may be an offering of multiple rates on
an average day, there may be only, one rate offered during a special event.
Whether the reservation is booked as part of a group or as an individual, the
criteria for booking are the same.
There is greater opportunity to increase revenues during special events
because the basic principle is the same-supply versus demand. Special events
draw attention, so the demand for inventory is greater. Much more rigid booking
requirements such as pre-pay/nonrefundable packages and multiple-night stays
may be put into place to guarantee the anticipated or even budgeted revenues.
Knowing your competitors’ rates, booking requirements, and availability Notes

is important in helping to dcclde if your rates and requirements are “in line”
with what the market will bear. Historical data, as well as current trends, are
valuable in making an informed decision. Of course, it is important to balance
that information with the profitability margin expected at your hotel to set the
rate.
The simplest (but not necessarily the easiest) way to secure sales is to contract
group bookings, which meet the predetermined requirements such as minimum
stays and nonrefundable advance payments. Utilizing minimum stays ensures
that throughout the event time frame; maximum revenues will be realized.
Requiring nonrefundable prepayments helps to guarantee the guests’ intent.
During non-special event times, a reservation may be guaranteed but not
prepaid. The guest simply has to call within a certain time frame to cancel
without fear of penalty. During special events, and in many cases, because higher
revenues have been budgeted, there is a need to prevent a mass cancellation
effort and lost revenues.
For overall successful yield management, the balance between group sales
and individual sales is critical. The interplay and understanding of both entities
make the process of yield strategies ever changing. Being flexible and quick to
react to the current trends helps to increase revenues and occupancy at an
immediate level. Using all the aforementioned tools to see how future demand
is trending helps in making proactive decisions for long-term growth in both
revenues and occupancy. Know the market, shop the competition, watch the
trends, and be flexible. Yield management can definitely make a difference to
drive occupany and increase profitability, which are the ultimate goals.

Notes
5 HOTEL SALES
MERCHANDISING
Element of marketing concerned especially with the sale of goods and services
to customers. One aspect of merchandising is advertising, which aims to capture
the interest of the segment of the population most likely to buy the product.
Merchandising also involves product display; companies provide.
Merchandising refers to the methods, practices and operations conducted to
promote and sustain certain categories of commercial activity. The term is
understood to have different specific meanings depending on the context. In
the context of digital commerce, it refers to advanced marketing solutions used
by service providers to incentive users to buy more such as multi-merchant
bundling, subscriptions, promotions, discounting and loyalty programms.
Merchandization is a derogatory term coined by the anti-globalization
movement to designate the growing importance of global market forces in the
daily lives of citizens, everything, including hospitality, health care, culture or
education, becoming mere merchandise.
ATTAC’s slogan is “the World is not Merchandise” (“le monde n’est pas
une merchandise”).
Method of merchandising in which the seller’s offer is made through mass
mailing of a circular or catalog or through a newspaper or magazine
advertisement, and in which the buyer places an order by mail, telephone, or
Internet.
One of the most important commodities that the hotel sale is the rooms,
and we know that rooms are most perishable, much more then the food and
beverage even. Hence, it is very important that we are so geared that we are
able to sell all the rooms at all times, and if not that, we are able to sell the
maximum number of rooms at all time and not only that we are able to sell
them at the optimum revenue generation situation. Although the liberalization
policy of the government has helped in bringing more foreign visitors, yet to
get and maintain a competitive edge over others every hotel needs to be sold

HOTEL SALES
and marketed very well. Hotels even in a monopoly market needs to listen to Notes
the customers and constantly upgrade its facilities and services and products,
particularly rooms to combat competition in the future.
Hotel is a ‘proactive business’ that means a hotel customer must be
welcomed, made comfortable and secure, looked after and made to feel special
because given a choice between two similar quality properties (productwise) a
guest would prefer to go to the one which presents a more hospitable or friendly
and caring face to him. Of course this he will learn by his experience of staying
at the hotel once and also on hearing from some friend or relative who has
stayed in that property earlier. The hotel should be appealing to different types
of guests/travelers (be they are on business trip, on a vacation, to some other
destination) or a group market.
What actually a hotel is selling to its customer/guests? Is it a product such
as room, or is it services? Is it attention and pampering or is it the facilities and
amenities, or is it both service as well as product? Actually, a hotel means
different things to different people. To be able to sell better a hotel sales person
must understand the specific needs of the customer. For example, a receptionist
shall be able to sell a room to a walk-in guest only if he is able to judge and
assess the requirements of the guest. Apart from its main functions of handling
check-ins and check-outs, the front desk staff is also responsible for the sale of
rooms of the hotel.
In general, when we talk about the marketing and sales department of a
hotel we understand that the function of this department is to sell the hotel in
totality, i.e., the sales of its product and services such as rooms, restaurants,
conferences, banqueting space, etc. Further, when we talk about the sales of
rooms in particular we find that the aspect of sales is normally taken care of by
marketing and sales department, reservation section and front desk section of
front office. For improved and enhanced sales of rooms the front desk staff
must know about nearly every guest who stays at the hotel. During the stay the
front desk must make efforts to know what all amenities and services other
than room, the guest needs, such as extra towels or may be a wake up call. The
front desk staff is truly instrumental in ensuring the guests comforts. More
than any other group of employees, the front desk staff really feels the pulse of
market-place most. The front desk employees which are the first and last persons
always to come in contact with the guests, have tremendous opportunity to
make those impressions that keep guest coming back.
As already said the responsibility of selling of rooms in hotels is the one of
the primary functions of the front office department. Further, depending upon
the size of the hotel this function may also be taken care of by marketing and
Notes sales in a large hotel. Also in small hotels where there is no separate reservation
section the sale of room may be looked after by the front desk of the hotel.
Selling is individualised and personal. Effective salesman does not sell, infact
he induces people to buy. Successful salesman have known for a longtime that
productive selling involves a continual exchange of values. The reason any
business, including the hospitality business exists today is that it provides certain
values that the customer wants. The values may be, distinctive and luxurious
lodging, convenient location and courteous service, etc. Hence, the basic purpose
of the front office staff is to relate the values in terms of rooms that the staff
offers in response to the demands of his values in terms of rooms. The degree
of success enjoyed by any hotel is measured by this relationship, in other words
on this continual exchange of value. This will be reflected when the guest keeps
coming back. The selling efforts of the room by the staff are made keeping in
mind primarily the interest of the seller which means the hotel, while marketing
identifies existing or anticipated needs of customer and then attempts to
satisfy them. The hotel must decide which segment of the diverse market place
it wants to do the business with and find out the specific needs of each of these
segments and then should cater to these needs (For this the hotel may have to
change its services amenities and facilities from time to time). Hotel should
market itself to the desired segment. Marketing and sales (with in the frame
work of the hotel) are two distinct, yet interrelated functions, and both are
equally important.
The hospitality industry is concerned with basically the provision of two
things, (a) lodging and (b) Food and Beverage. The term lodging means room,
and lodging is directly sold to guests either by central reservation office or by
the marketing department and the reservation staff of the hotel. Sometimes, an
outside agency such as meeting planner, conference organisers, travel agents,
tour operators and hotel representatives etc., also are instrumental in room
sales. Anything that is offered for sale is a product for example a room in case
of a hotel. Further, the term market refers to the potential population from
which the customers for a product are derived. A source that sells products
directly to the public is a retail outlet, for example, individual guests, whereas
a source that sells to retail sources but not to the public is a wholesale outlet, for
example, a tour operator who purchases rooms space from the hotel, and in
turn sells them to retail travel agent. The person who purchase and use the
product are called consumers or end users. Now, a tour operator who purchases
rooms from the hotel is the customer and further the individual persons to
whom he sells the rooms and who come and stay in the hotel (guests) are called
end users.
HOTEL SALES
ELEMENTS OF MARKETING Notes

Marketing consists of activities that are concerned with attracting the customers
and further are able to motivate them to buy. Marketing basically has three
elements:
A. Product
B. Pricing
C. Promotion
A. Product. Usually, a term “Room is sold” to the guest is used when we refer
to a guest occupying a room in the hotel, but actually this guest occupies it only
temporarily and does not assume any physical ownership. The hospitality
product in fact here is not the physical room but is the experience created by
the physical surrounding and all the associated services that the hotel staff
provides during the guests stay. It is important to note that a product based on
experience depends largely on the ability and the personality of the seller (the
receptionist). Now since the experience (which may be grossly negative) can
not be reversed the attitude of the selling staff is very important. Customer
needs are satisfied by the benefits and not by the products themselves, for
example, the security, comfort and convenience provided to the guest when he
stays in the room.
B. Pricing. This is another element of marketing. The main basics of pricing is
costs and competition. The term cost in relation to room means construction,
furnishing, maintenance and operation cost, while competition means, the price
study of other hotels of the same category and with same guest and product
profile. Here it is important the accommodations and furnishing may range
from basic to luxurious, and more the services and luxury a hotel provides the
higher will be the room rate. Another important point to note here is that the
same room may be sold at different rates to different guests. For example, the
same room may be sold at ‘Rack rate’ to a F.I.T. while at a discount to a guest
sent by travel agent or a corporate company. Not only this the room may be
sold at a higher rate during full season and at a high discount during off season.
The pricing usually depends on distribution channel and end user also. Yield
management principle act as an important guide in pricing policy.
C. Promotions. Promotion basically means attracting more and more customer;
promotion activities are usually classified into four basic groups : (i) Advertising.
This means attracting the attention of a buyer by signboard, print media such
as newspaper magazines and brochures etc., and the audio visual media such
as radio, television and cinema, etc. It also includes give away items such as
pens, match boxes, and stationery with hotel names, etc. (ii) Public relations.
This group of promotional activities usually include press releases, general
speeches of awareness of the product and charity sponsorship, etc. (iii) Sales
Notes promotion. Usually covers promotional activities such as promotional videotapes,

slide presentations and mail shots of the hotel. (iv) Personal selling. Efforts made
by the staff by their conversations to customers to persuade customers to buy.
Sales presentations and business lunches examples are of this group.
Marketing Strategies. The term marketing strategy means the method that
the seller (hotel staff) uses to persuade a customer (guest) to buy a product
(room). It is obvious that when selling efforts will be made by the seller then
the buyer will have some response to that and the way in which the customer
responds are called ‘Buying behaviour’. The buying behaviour consists of a
series of actions and reactions, which are indications to the seller about his next
course of action. In management terms the efforts and the strategies used by
the seller are called ‘Stimulus’ and the reaction of the buyer is called ‘Response’
which may be positive or negative. A customer must make three basic
commitment to himself before making a transaction. The three commitments
are the rational commitment, the financial commitment and the emotional
commitment.
Organisational Buying Behaviour. Talking about it means that the product
(room) is purchased by an organisation such as corporations, associations,
government agencies and likewise. Some hotels that market to groups have a
rate formula based on the number of rooms booked and the number of guests
occupying those rooms (a room in this case is usually occupied by more than
one person and hence the number of rooms sold would be approximately half
the number of guests of the group). In marketing to corporations, it is important
to remember that economic benefits are essential. The seller, i.e. the hotel must
understand here that if a corporation/company etc., plans to hold its annual
conference, meeting or convention, then the company will select a hotel
according to its standard and its public image. For example, a successful
company will select a high class hotel for their meeting, i.e. a high priced (up
market) hotel, and hence the seller should quote the rate accordingly. Keeping
this fact in mind some large hotels have corporate rate contracts. For example
(i) ETVP (Executive Travel Value Plan) of Welcomegroup hotels, (ii) TRRB (Taj
Room Rate Benefit Plan) of Taj group of hotels and (iii) OCTHP (The Oberoi
corporate travel and holiday plan) of Oberoi hotels Organisations. Buying
decisions are also influenced by the formal structure and several individual
acting independently or as a committee. Hospitality marketing requires a sound
knowledge of buying behaviour.
Client Behaviour and the Buying Decision. The buying behaviour can be
viewed in three basic categories as follows:
I. Complex Buying Decision
Selection of a convention or conference site, for example, is a complex buying
decision and involves various factors which must be very carefully evaluated.

HOTEL SALES
A complex buying decision involves various factors which must be very carefully Notes
evaluated. A complex buying decision has the following five stages: (i) Need
arousal, (ii) Information processing (iii) Evaluations, (iv) Selection, and (v)
Outcome.
(i) Need arousal. This means that the prospective buyer realizes that he has
a need or a set of needs to be fulfilled. Basic need of course is shelter, and
a desire for recreation or change is sometimes important in need arousal.
Further, it is important to note that a prospective guest searches for a
property to stay on the basis of his needs. For example, matching the
needs of a business traveller the property choice may be a downtown
hotel while for a recreational tourist it may be a hill resort.
(ii) Information processing. This refers to the probing and analysis of
information which a prospective buyer collects about various properties,
once the guest has need. The information is usually collected from media,
friends directories, travel agencies, and other such sources of information.
In collecting the information, three basic phases occur—(a) Specification,
(b) Information gathering, and (c) Comprehension.
(a) In specification phase, the prospective guest breaks down the overall
need into more specific underlying needs. For example, the basic
needs of a doctor attending a conference shall be a room near the
conference centre (presented need) and other needs shall be food
and beverage and further needs may be a tennis court or a golf
course.
(b) Information gathering shall be by toll free call to a CRO or study of
various property offers collect to though internet surfing or by
directories, or through yellow pages, etc. Services of a travel agency
may be engaged in comparison shopping before recommending a
particular site.
(c) The comprehension phase of information process involves
interpreting the information and if necessary gathering additional
data. Empirical data is based on first hand observation or a
experience as opposed to merely reading or hearing about a product.
Data that is acquired from advertisement, reviews or
recommendations by other parties is perceptual.
(iii) Evaluation. This factor is also very important in making a complex buying
decision. It is in this stage that the prospective buyer will evaluate the
collected information on the basis of the plus and minus points.
(iv) Selection. After evaluation, the next step is selection from the available
products, i.e. various conference and convention sites.
(v) Outcome. The last stage in making an outcome, i.e. finally going in to
buying the selected site.

Notes II. Low Involvement

A simple process where the client does not have any specific need and objective
of buying the product and the selection is based only on what best is available
within the price range. A little adjustment between the perceived image of
product and what is offered may also be made. Here, in this case, the selling
comparatively becomes easy for the sales persons and his salesmanship and
wit may result in good business.
III. Repetitive
This is the simplest way of selection, and the selection of the product by the
guest is based on his previous experience and if the buyer has good past
experience about the product his behaviour is predetermined and he beings a
pre-tested and trusted product.
Pricing Strategies. From a buyers (guest) point of view, this factor means
how much he will have to pay for the product (room) which is offered by the
seller (hotel staff) and from the sellers’ view point the term price means what
the hotel feels that at what money the product should be sold so that the total
price covers cost of the product plus a reasonable percentage of profit. In every
transaction, the buyer pays other costs besides the monetary price. Product
costs fall into the same categories as benefits and they include: (a) Monetary
costs, (b) Location costs, (c) Time costs, (d) Sensory costs and (e) Psychic costs
(a) Monetary costs. The term monetary cost is purchase price plus cost
of taxes and freight, etc. in terms of room. This can be explained as
daily room rate plus the taxes.
(b) Location costs. The location cost involves the cost involved on
transport in coming and going to and from the hotel.
(c) Time costs. The time cost means the value in terms of money of the
time spent by the buyer in travelling to and from the hotel.
(d) Sensory costs. The sensory cost is a difficult thing to assess, as it
involves the intangible aspect of the guest and means the experience
in adjusting to unfamiliar surroundings.
(e) Psychic costs. The term Psychic costs also is an intangible aspect and
covers the aspects such as stress, discomfort and fear, etc. It is
important that when making a pricing strategy all the above mentioned
factors must be considered.
Pricing Influences. The pricing strategy of a hotel is influenced by basic
three factors: (a) Costs (total), (b) Competition (other hotels of the city/town)
(c) Market demand
(a) Cost. As explained above all the costs of a hotel room, construction
cost, daily operating expenses, utility costs, payroll expenses and so
HOTEL SALES
forth are included in total costs. Total costs are divided by total number Notes
of rooms expected to be sold to determine average cost per room. It is
important to note that the construction cost must be amortized over a
period of several years.
(b) Competition influence. The competition factor includes competition
level from property to property, type of hotel to hotel, region to region
etc. and the rates vary on all these as well as the local economic
conditions factors such as (i) Direct position competition, (ii) Direct
non-position competition, (iii) Indirect competition.
(i) Direct position competition. This means competition from other
properties that have adopted a market position.
(ii) Direct non-position competition. The type of competition the
hotel faces from other properties that have different market
position.
(iii) Indirect competition. Under this category, the hotel faces
competition from alternative lodging properties such as camping
grounds, cruise ship, and other such sectors like trains used for
overnight journey (which eliminates the need of hotel).
Pricing is a powerful competitive feature and by itself creates a monetary
benefit. As competition increases the prices fall down and when there is no
competition the price of the product room tends to be high.
Market Demand. This factor has the application of the theory of economics;
the more the demand, the higher can be the price and vice versa. Further, the
influence of demand depends on the extent to which changes in pricing affect
the willingness of the users to buy. A hotel which is more in demand may set
price at a high level, but hotel must be careful that the price does not become so
high that it will cause damage to the demand and the demand may fall. Similarly,
a hotel with low demand should fix lower price but again being careful that it
is not so low that it may create a loosing situation. The process of lowering and
raising of price to influence is called price elasticity.
Low price will obviously result in high occupancy but not necessarily high
revenue yield. Price has a strong influence on hotels target market. Rates are
set to attract clients with particular income levels and spending patterns.
Pricing strategy for group business: First of all it is important to understand
that shall the hotel take group business or not? The obvious answer to this
question is that if the hotel is able to get good business without groups
throughout the year then why ask for group business (where naturally the price
has to be discounted or special). Many hotels of this category take group business
at normal room rate but at the same time give discount on conference rooms,
meeting space, and on food and beverage service. Some hotel add up to the

Notes benefit of the group by providing one or two rooms either complementary or at
a reduced rate to accommodate the meeting/conference planner.
In case the hotel decides to formulate a special price for groups then usually
it is on the basis of a reduction in normal room rate by a fixed percentage say
30% as a standard policy. Some hotel quote a special price which is based on
the total cost factor of holding a function.
Further, hotels which have a profile of group business may have a fixed
policy of pricing for all groups, and a hotel which uses group sales primarily to
supplement transient sales, the sales department is more likely to offer attractive
group discount. In general, it can be said that pricing influence, cost, competition
and demand all must be considered while making a pricing strategy for a group
as well as transient.
Personal selling. It must be understood clearly that each and every employee
of the hotel is a salesperson, and it is not only the reservation section or
marketing and sales division or the front desk staff who is responsible for the
promotion of rooms sales. All activities, be it of opening of the door, carrying
of luggage or registration of guest or installation of luggage and guest in room,
have opportunity of selling the hotel to the guest. Every action and word of the
employees of the hotel in the presence of guest is considered as selling.
Personal selling involves the following processes as follows:
(a) Sales preparation. A thorough knowledge and understanding of the
hotel product lines, benefits and features is very important for sales
team and only on the basis of this, a professional sales presentation
can be prepared.
(b) Knowledge of market and personalities involved. The salesperson
must research and then only he will be able to make a good sales offer
to the prospective buyer.
(c) Establishing rapport. For communication to occur a feeling of mutual
trust must be established and for this it is important that a
understanding is established between the sales person and the buyer.
People prefer to do business when they feel comfortable with the
people with whom they are dealing. This trust band is called rapport.
The establishment of rapport can be done both by verbal and nonverbal
communication. The first five minutes of personal contact are
important and during the period pleasant personal physical
appearance, facial expression and voice expression, use of names of
the guest, eye contact, smiles and warmth and sincerity through the
speech, of the sales person are of great importance for making a sale.
Establishing a rapport requires taking time to establish comfort zone
HOTEL SALES
in which the buyer and seller feel at ease with each other. Effective Notes
sales person should ask questions and be a good listener. Asking
questions indicates interest in the client and listening to answers given
by the prospective buyer, indicates respect and attentions to the clients
needs.
(d) Determining client needs. It is important and critical in any selling
activity. This process is called qualifying the client and involves careful
accurate analysis and sensitivity to the personal, social, and financial
aspects of buying behaviour. The guest needs can be studied under
the following headings:
(i) Presented needs. It is the apparent need that is initially expressed
by the client. In case of a company or an organization it is
important that the sales person understand the nature and size
of the company and the event for which the booking is needed.
Further, the group rates and availability of room are based on
seven factors:
• Preferred room category and bedding
• Arrival and departure dates
• Estimated number of rooms
• Estimated number of guests
• Function space required (party room etc.)
• Type of function (to decide about the type of party room)
• Budget
The presented needs of users are usually less complex and are
based on four main factors:
• Arrival and departure dates
• Room occupancy or preferred bedding
• Preferred room location or type
• Extra options, meal plans or packages
(ii) Underlying Needs: Also called hidden needs, these may not be
immediately apparent but have an influence on clients
satisfaction. A common underlying need of both users and
organizations is a monetary benefit. Regardless of clients stated
objective, the sales manager or reservationist must be capable of
quoting competitive rates while also satisfying the clients
priorities. The cost factor is not only important to tour operator
but also to rich and affluent class.

Notes (iii) Expandable needs. In addition to presented and underlying needs

many clients also have expandable needs. An expandable need
is also called exchangeable need. An expandable need is one
that can be traded or supplemented. Occasionally, a client’s
presented need can be expanded or exchanged by stepping up.
Another way to accommodate a clients expandable needs is by
adding on service. An important responsibility of the hotel staff
is to educate guests about services, facilities and products offered
by the hotel. These “add on product lines” enhance the groups
event and add value to sale.
(e) Educating clients. One of the obstacles as explained earlier is
knowledge. This may be over come by educating the prospective
buyer. The process of presenting the benefits of the product in such a
way that it fulfills the two needs (underlying and presentable) of the
guest is called educating the client. The presentation of benefits by
the seller will be more effective if the seller is able to collect more and
more information and is able to understand both underlying and
expendable needs
1. Recognize Customers Motive for Buying

• Means get a fair understanding of why a customer wants to buy:
(i) Keep your eyes and ears open
(ii) Ask questions
(iii) Think
(iv) Clarify
Avoid prejudices, biases and prenotions for example, guest is poor, he
can’t afford, and the guest is fussy, etc.
• A good receptionist should be able
• Greets the guest in a manner that will create positive image of the
property.
• Match product and needs.
• Provide correct and upto date information
2. Product Knowledge (Know What You are Selling)

• For efficient and profitable selling “Product Knowledge” is essential.
• Product knowledge for a receptionist is following:
The Receptionist is selling the whole hotel. So the product knowledge in
this case will be, rooms, services and amenities and facilities:
HOTEL SALES
(i) Various types of rooms— Notes

Facilities, situation, amenities, etc. and the U.S.P of rooms.
(ii) Services—
Bank, T.A. Courier, IRS, CRS, etc
(iii) Facilities:
• Medical, shopping, travel and tour, sports, conference facilities
• Book and Magazines, etc.
Modern trend is, know the product you are selling by your own first hand
experience
(iv) F and B outlets and banquets
(v) Meeting and Exhibition facility
(vi) Entertainment
(vii) Transport service
3. Direct Conversation to Sales Lead

Sales lead. Utilizing every opportunity that the receptionist gets during
conversation with the guest to sell the hotel by providing information about
hotels services, facilities and amenities and product to him,
Because:
• Customers may not always ask for what they want.
• They may not realize what is available.
• Products and services may have changed since their last visit.
• They may not have made up their mind.
• They may be embarrassed to ask.
• They may have forgotten what is available.
So in order to create sales lead you may need to:
• Tell them what is available.
• Describe what is available
• Suggest or recommend
• Ask what they would like.
• Offer alternatives (if needed)
4. Understanding What You are Selling

• Try to understand why customer is making an inquiry or visiting the
establishment. Selling will become easy when the receptionist
understands his:
Notes • Culture (nationality, etc)

• Business standing (position be holds in working life)
• Social class (His perception and experience of what is socially
acceptable)
• Group influences (desire to be seen to be doing the right things)
• Colleagues friends and associates
Overcoming obstacles to sales. Various factors which may be considered
as hindrance to sales may be summarised as (i) the prime and most important
is price, (ii) space and time, (iii) knowledge, (iv) value and (v) ownership.
(i) The price. Price is the biggest obstacles to sales. Even though the price
may be competitive, yet when it is told to the prospective buyer, he gets
a psychological feeling that it is high. While quoting the price the
receptionist/sales person should give it in such a way that the guest gets
a feeling that he is getting the product for a reasonable price. For example,
the price may be quoted as Rs 4990 plus taxes instead of Rs 5,000 plus
taxes.
(ii) Space and time. The space and time obstacle are important in case group
sales allotment is not enough to accommodate the requirement of the
organization.
(iii) Knowledge. When the client does not have enough information about
the product and hence is hesitant to commit then this is termed as
knowledge obstacle.
(iv) Value. When the client does not agree to the price, and objects to the
price, then this is called value obstacle finally,
(v) Ownership. When the organization is not willing to pay advance
(requested by the hotel) than the hindrance is termed as ownership obstacle.
It is important to remove these obstacles for making a sale and this can be
achieved by the efforts of the sales person by his focusing the attention of the
prospective buyer on the benefits of the product and still if he is not satisfied
then by making alternative offer. Further, it is important to note that no matter
how well you have understood the needs of the client and are able to fulfill the
needs of the guest by presenting the benefits of your product yet there still will
be some unavoidable obstacles which may be hindrance to sale. In this case the
positive attitude of the seller about the obstacles makes it easier to deal with
them. Also at the same time client who may not be interested in making a
purchase would also actively seek solutions to obstacles.

HOTEL SALES
FEATURES AND BENEFITS Notes

• Features. These are general characteristics/traits of a product.
• Benefits. When a feature if of some use to a prospective client then it is
benefit to the customer.
For example. A hotel having secretarial service and swimming pool both.
Now swimming pool is just a feature to a business traveller while
secretarial service feature is also a benefit to him. At the same time, the
secretarial service is just a feature for a sportsman while swimming pool
will be benefit for him.
• A feature can be perceived as negative or positive, whereas a benefit is
always positive. To explain, in the above example for a business man
swimming pool feature is perceived as negative, to while secretarial service
feature as positive and vice versa for the sportsman.
• Features deal with the product/service whereas benefit deals with
customers needs and wants.
• A feature can do without any reference to the customers needs (wants),
whereas a benefit always has reference to customers needs and wants.
• A client/guest purchases a product because of the benefits he derives
from them and not because of the features, for example the business man
takes room in the hotel because of the benefits he would derive from
Sectarial Services, Restaurant and not because of swimming pool.
• A feature is of no use unless it is used as a benefit by the guest for a tennis
court (feature) of a hotel is of no use unless utilized by the guest.
Objectives. The objective is to understand the difference between features
and benefits and to translate the features of your product into benefits for the
guest.
Prepare an effective presentation of benefits which should be fact finding
as well as feel finding:
1. Fact finding question. Demanding a Yes or No answer:
(a) What type of room you want?
(b) What date you are arriving?
2. Feel finding questions. Try to find out emotion of person:
(a) You enjoy playing golf?
3. Why is it necessary to know fact finding question early in conversation?
It gives the basics first.
4. Once we know some facts is it necessary to find feel finding question?
Yes. So that the features may be converted into benefits.

Notes 5. List some features/facts of a typical package.

T.V., fridge, swimming pool, indoor and outdoor games, etc.
6. Try and convert the above features into benefits for a customer.
7. Features are objectives (factual)?
Yes
8. Benefits are subjective (open to interpretation)?
Yes
9. Features can be presented without any reference to customers wants/
needs.
10. Benefits must deal with a customers wants/needs.
11. A feature of your hotel can be perceived as a benefit or as a negate.
12. Features focus on a product while benefits focus on a clients need.
13. People don’t buy products because of its features but because they perceive
certain benefits that satisfy their needs or wants.
14. Your hotel may have best feature in market but if it is not perceived as
satisfying guests needs and demands we will not enjoy this business.
15. You need to be a catalyst in converting your features into benefits.
16. To make an effective presentation of benefits, we need to understand four
basic criteria.
(a) Understandable. Need to consider a customer’s perception, attention,
state of mind and your use of terms. Use of technical jargon may
turn off the client.
(b) Interesting use of word, pictures, stories, analogues, colourful words
help in painting a picture to the guest of the product. Fact and feel
finding questions will help you in the case. Brings out own
personality and helps put the human element in the hospitality
industry.
(c) Believable. Knowing and believing your product will help in right
presentation.
Experience your hotel.
Experience your competitor.
Know what you are talking and deliver it.
Too much superlative is transparent.
Don’t make things sound outrageous.
Make it real.
HOTEL SALES
(d) Persuasive. A wishy wash or lackadaisical approach will not conceive Notes
and prospect may go to competitor.
Try to upsell.
17. Persuasiveness is the beginning of a close.
Sales presentation. Sales presentation has the following characteristics:
(i) Understandable. The sales presentation should entail the use of such
vocabulary and communication material which is easily understandable
by the prospective customer. Technical jargon such as retention charges,
sleepers, no show etc. which are not understood by a common should
not be used. They give negative impact to the presentation.
(ii) Interesting. Make the presentation interesting using films, posters,
brochures, slides and such other things. Presentations should be such so
as to create interest in the client.
(iii) Believable. Presentation should be such that the customer has faith in what
the salesperson is saying. For this, the presenter himself should have
faith in what he is saying about the benefits and features of his
organisation otherwise he will make a poor presentation.
(iv) Persuasive. The sales person must be persuasive in his presentation to
attract the attention of the customer to elicit a positive response from
him.
Pregnant Pause. Sales person also earns the right to close if there is a state
of ‘Pregnant Pause’. Pregnant pause is a stage when the guest is concerned
about the amount of benefits he is going to obtain from the features. For example,
a corporate client has been given the talk about the executive club facilities of a
hotel by the sales person. After the client is convinced, there is a pause and
then the sales person knows that he can close.
CLOSE
The concluding phase of every sale is known as the ‘close’. When you ask for
business you are presenting close. It is something which elicits a positive
response from the guest. Process of ending the transaction at the end of a well
carried out sales presentation. It is “zeroing in” on the sales. “Close is not an
abstract term". A close is bringing a guest to the point that you make him buy
and do the business now. It is a realistic and desired step in a sales presentation.
Steps of close:
1. Assumption close: It is one where there is no need to sell. The customer
needs it and is willing to buy it. For example, a customer comes to the
counter with a “confirmed reservation”. There is no need to sell. Similarly,
when the prospect know about the product and asks for a specific room.
Notes 2. Choice close: Offering the customer a choice. For example “would you
take the American plan or modified American plan, Sir"? And then closing
the sale. Another example can be asking “Sir, do you want room of 1st or
5th floor”?
3. Narrative close: A detailed narration of the features of the hotel and
benefits they provide, i.e. explaining to the guest the facilities available in
the hotel.
For example, “We have 3 speciality restaurants for your choice, an indoor
heated pool, 24 hrs room service”, etc. Another example can be, “Let me
summarize, you want a room on top floor, away from elevator, and facing
swimming pool, Sir”?
4. Minor point close: Here the customer has a small request such as a wheel
chair, a baby cot, etc. Meeting to these demands of the guest and finally
closing the deal. Also, small obstacles in close like billing procedure for
the guest, etc.
5. Physical action close: Closing the deal by asking the customer to do
something specific like, “Please send advance for 3 days by the end of
week” (i.e.) to say “Send me confirmation, Sir” and “You send me deposit,
Sir”?
6. Asking the customer: Actually asking the customer “Would you like to
buy?”. For example, “Sir, would you take the room if we offer you 3%
discount?”
Earn the right to close. You earn the right to close when the needs of the
customer can be met with the features and benefits of your organization i.e.
when you are able to convince the guest that your features meet his needs.
For example, a business man (customer) walks up to the hotel and asks for
a room and at the same time requests for early breakfast, secretarial service,
telephone facilities, etc. Hotel earns the right to close if it has such facilities
otherwise not.
How can the sales man convincingly show that we have what the client
needs?
The following words, ESSO and AIDA show the essence of this discussion.
E-Explore needs
S-Spark some interest (describe the benefits)
S-Show and explain
O-Obtain action

HOTEL SALES
A-Attention Notes
I-Interest
D-Desire
A-Action
When will the sales man know when to close

(a) When the customer has no further question
(b) When there is nothing more to tell
(c) When the guest says “O.K. Sounds good to me”
(d) When there is a “pregnant pause"
(e) When all the benefit have been explored
To avoid a “No” can we offer “test the water” first? Explain the possibilities
of close with questions, any “No” means more work is required to sell.
Create an opportunity to close. Summarize the benefits. You can ask if
there are any more questions? Yes, by creating a situation when your benefits
matches his need. Closing is merely the last step in a well organised and well
presented sales story told to a guest.
Follow up. Selling does not end with the close. Follow up is essential to
making clients happy and keeping them happy over a long period. Happy
clients will be a repeat business, while unhappy and disgruntled ones will never
return and worse they will damage the hotels reputation by speaking ill about
the hotel to their friends, relatives and known people.
Marketing communication. This basically means how the prospective buyer
is made aware of the product. Effective hospitality marketing requires the
knowledgeable evaluation of communication, media along with their related
cost and effectiveness. Advertising is any printed or spoken message that praises
a business or persuades customers to buy a product. Advertising has four basic
objectives:
(i) Spread awareness,
(ii) Educate the client,
(iii) Create an image of superiority over competitors,
(iv) Stimulate response.
Following are various advertising media that help in achieving the above
mentioned four aspects of advertising:
(a) Telemarketing. Selling by phone or fax transmission. CRO plays an
important role in making a guest aware of the benefits and features of
the product over a large distances. They are cost effective and through
this hotel has a large reach.
Notes (b) Hotel Directories. This media reaches a wide audience at almost no
cost. Hotel directories are of three types (i) Consumer hotel reference
(These list hotel offering one are sold to general public) (ii) Travel
Industry references (Publications that are used by travel agents, tour
operators and airlines personnel). This is not sold to public. (iii) Chain
directories (These are directories that are published by large chains for
their own properties.
(c) Telephone directories. Many hotels advertise in telephone directories
and yellow pages and through thus this they reach all house holds at
very low cost, but only in the local city and does not reach outstation
prospective buyers who normally make a good percentage of business.
Another disadvantage is that the advertisement through telephone
directory can not be changed frequently.
(d) Business Publications. Advertising through business publication can
be beneficial in getting business traveler client for hotel.
(e) Newspaper. Advertisement in local as well as outside newspapers
will be useful in attracting budget as well as affluent class client,
depending upon the type of advertisement (big block with illustration
or a small advertisement).
(f) Magazines. Advertisements both in trade and general magazines will
also get good business for the hotel.
(g) Cooperative advertising. It is a new concept and in this case the hotel
with airlines and travel agents etc together put up in advertisement
in yellow pages, trade magazine etc. for a package tour of say 3 days,
four night stay, plus airlines fare, plus continental breakfast plus
transfer and sight seeing etc. for a fixed price. All the agents like hotels,
airlines and travel agent etc. share and bear the cost of advertisement.
(h) Point of sale advertising. An internal effort to promote the hotel.
Posters in lobbies and elevators etc. for promoting lounge and
restaurant etc. menus, napkins, match boxes etc. with hotels name
and logs are used.
(i) Direct Mail/Mailshots. Sending letters to the guests particularly to
repeat guest and also to regular guests to update them with the latest
additions in services and products of the hotel. A mailing list should
be compiled from the hotels records, local directories, or a commercial
mailing list. Direct mail shots may include special discount coupons.
It is a low cost advertising media. The disadvantage is that mailing
list quickly becomes outdated and hence the expenditure on mail may
be waste. This can reach a longer audience but the cost is high.
HOTEL SALES
(j) Electronic advertising. This group includes advertising through Notes

electronic media such as Radio, Television and Internet, etc. This can
reach a large audiences but the cost is high.
Public relations. Public relation is the act of generating and managing
publicity through news and information media. The basic aspect of public
relation is press release. A contract list and photographs of the hotel are very
important tools of public relations. The communication skills and public
speaking ability are very helpful. Professional companies, and expert in public
relations activities are there, and their help may be taken.
Press releases. At times it is important for the hotel to inform general public
through press conferences and press releases about the property. It is the job of
the marketing and sales department to create such occasion that may be made
newsworthy. Press releases are commonly issued for the occasions such as
(i) commencing and inauguration of a new service or product or a wing of the
hotel, (ii) Hiring or promotion of new executives, (iii) M.O.U signed with new
corporate offices for business, (iv) Stay of VIP’s and dignitaries in the hotel
(v) Conferences of national and international standard, (vi) Special events, and
exhibitions etc. (vii) Marriages and receptions of the sons and daughters of big
business tycoons, kings, maharajas and VVIPs. (viii) Any other such event.
Distribution Analysis. Usually, the hotel gets business from various sources
such as CRO, travel agents, tour operators, convention organizers, corporate
offices and many other. An analysis of the percentage of incomes from each
source is called distribution analysis. In other words, the distribution analysis
tells about the customer analysis and by customer analysis and products analysis
the hotel management gets knowledge about its market. This further helps in
effective planning. Two types of customer analysis are used by hotel
management.
(a) Geographic distribution. This covers where the customer lives and
works. This helps hotel in planning activities such as planning
advertising campaign in those areas where the prospective client
comes from.
(b) Demographics. Covers personal traits such as age, sex, background,
educational occupation, income, marital status etc. This information
helps the management to sell the product. Hotels location influences
the demographics of a guest for example a hotel located on highways
attracts those guests who travel by their car (guests demographics).
Targeting the market. An important objective of market planning is to
determine the best methods of reaching the hotels target marked. A target market
is composed of top prospects the people who are most likely to buy a particular

Notes product. To define its target market, a hotel must provide answers to the
following questions:
1. The hotel is trying to reach what market (Tourist, business, travelers,
groups or individuals etc.).
2. Who is the decision maker for buying? (Individual himself, secretary,
wife/ husband, top management, planner etc.)
3. Profile of the company or groups the hotel is trying to reach (small business
house, travel agents, corporate officers, educational institutes, charity,
organization etc.).
4. What is the need of prospective buyer (luxury/comfort, low room rate,
professionalism in staff, familiarity, entertainment, good food and
beverage, sports and various other activities etc.)
Selling is important to:
You : No sales, no customers, no job.
You : To encourage customer to comeback - Job security
Your customers : Provide them with what they want.
Your place of work : Increased profiles and development of the hotel.
Why customers visit you (basically for food and accommodation)
Customers buy for various reasons:
Price : Price may suit his pocket
Value for Money : Feeling that they are receiving the best goods or
services for the money spent by them.
Image : Often customers visit an establishment because it
enhance the role in which they see themselves.
Fashion : Because it is the “In Place". The place to be able to
boast about.
Staff Attitude : The staff are friendly and welcoming
Fear people feel they will not find place anywhere
else or get food or drinks.
FRONT OFFICE SELLING TIPS

Telephone salesmanship. Since the caller is not directly in contact with the
front desk staff and can not see him it is very important that the person handling
the telephone call (either a reservation assistant of a large hotel or the receptionist
in case of a small hotel) is able to give a warm and courteous telephonic reception
to the caller, and is able to convey the same through his voice, which become
his principal sales tool. The receptions or the reservation clerk should not have
HOTEL SALES
a tendency to treat such enquiries lightly, and should give his full and undivided Notes
attention. The approach of the staff will be instrumental in gaining or loosing a
potential sale for the hotel. Since the prospective guest is on telephone the
receptionist/reservationist must be able to communicate to the prospective guest
the product or service in such a way that the guest is able to perceive a picture
of this product which matches his requirement and is immediately ready to
buy it. The person describing the product should be specific while describing
the room for example size, location, furnishing, fixtures etc. For making an
effective and acceptable proposition, it is important to understand the needs
and wants of the prospective guest.
Selling rooms to prospective guest who is concerned about the price. A guest
who is not ready to pay more but at the same time expecting a superior product
is very difficult job, and hence it becomes very important for the receptionist to
picture or describe the product (accommodation) when quoting any rate. The
receptionist should not begin with quoting a lower rate, and he should offer a
range of product with ranging price and should allow the guest to make the
selection. Don’t under sell, try upselling, if the receptionist is a good salesman
and is able to high light features and facilities he would always be able to make
a higher sales, while upselling be careful that you are not pushing the guest
towards a higher rate because if the guest gets a feeling that he has been cheated
then although the hotel might get the higher rate sale it but will not get the
repeat business.
Selling during rush hours. Usually, hotels have set pattern of arrivals load,
for example in case of an airport hotel the load of the guest usually is in night
and there is heavy load of arrivals during night periods. The selling ability and
skills of a receptionist, to an unannounced guest, are put to test in such rush
hours. His patience with the guest and how calmly and efficiently, he is able to
deal with such guest is of great importance. The organizing capability of the
staff (to be able to arrange extra help in rush hour) is also important. Give guest
your individual, undivided attention. In order to be able to attend to
unannounced guest efficiently the hotel may open a new and extra arrival
registration counter for the heavy check-ins.
An undecided guest. This category guest provides an excellent opportunity
to the receptionist to upsell the room.
When such a guest arrives without any prenotion it will be easy for the
receptionist to convenience him to buy a higher priced room. For such a guest,
the receptionist should first try to fund out why is he in the city. This could
provide him lead for promoting certain types of accommodations. Offer the
guest a variety of rooms, explaining the features and merits of them. Always
promote a higher rate accommodation first, as it is easier to back down some
Notes what rather then to try to sell up. If possible the prospective guest may be shown
the room also. This may help him in deciding positively.
The basic concept of selling is to relate the values that the business offers to
the values demanded by its customers Productive salesmanship is very essential
for this. The productive salesmanship involves a continual exchange of values.
The values in terms of a hotel product (i.e.) room covers usually, convenient
location, distinctive accommodation, good ambience and atmosphere, and
courteous service. The productive salesmanship is the exchange of values plus
a room in such a manner that a continuous, mutually advantageous relationship
is established - the guest wants to return again and again to the same hotel
because the receptionist in addition to a room has given him other benefits and
values through his personnel contact with him.
In the context of a guest returning to a hotel it is important to note that in
addition to his attitude, and service and behaviour the selling skills of the
receptionist and other factors such as his feeling, which he gets through his
nose, ears, eyes etc. are also very important for the guest to make a decision.
The procedure used to sell a room. Basically three ingredients are needed
to make a sell, (a) product, (b) a customer, and (c) a salesman.
No salesman can be successful unless the salesman has (i) in depth
knowledge and the value of the product which he is trying to sell, (ii) and his
knowledge and understanding of the buyer and (iii) possesses an attitude and
desire of the salesman to serve his customer.
The term knowledge of product for a front office person not only includes
the knowledge of room (location, type, size, furnishing and rate etc.) but the
knowledge of all other features of hotel, because he is not only selling the room,
but is selling the hotel in totality. It is for the front office staff to make the guest
aware of the other services, amenities and facilities etc. (other than room) to a
prospective guest.
Sales and Marketing Teams. For improving sales of rooms it is important
that a large hotel has a separate marketing and sales division which usually is
headed by a Marketing and Sales Director, assistant sales manager and a team
of marketing executives. Marketing and Sales Director is the highest ranking
officer/executive of marketing division. He is responsible for supervising,
evaluating, and coordinating the performance of staff of the department. Makes
both short and long term marketing plans and strategies. He holds meetings
with staff regularly. He establishes the goals of the department. He also holds
regular meeting with Front Office Managers, Reservation Manager, Food and
Beverage Manager, General Manager for marketing strategies. The hotels face
in the market is the team of sales executives which cover the market (which are

HOTEL SALES
most vital part of the team). Sales manager is behind the scene usually. Size of Notes
the team will depend upon size of the hotel and business of hotel. Assistant
manager of this division controls the executives and supervises their daily
activities. He is a link between the executives and manager.
The sales executives should have sharp intelligence and product knowledge
which include technical knowledge such as how it works, what could go wrong,
dangers and maintenance, etc. He must have basic attributes such as courtesy,
politeness and communication skills. Further to this he must have perfect
professional knowledge (steps involved in making sales with ethical code).
These can be summarised as follows:
Profile of a Salesman
Courtesy. Combination of friendliness, politeness, tempered by consideration,
respect and interest in the other person.
Deportment. Physical posture.
Appearance. Dress sense.
Knowledge of product or service. Learning to tell sales story.
Willingness to work. Continuous work.
Personality. Sincerity and all the other above mentioned attributes.
Ten Commandments of a Good Sales Person

1. Speak to people. There is nothing as nice as a cheerful word of greeting.
2. Smile at people. Smile begets smile (72 musceles to frown and only 14 to
the smile)
3. Call people by name. Sweetest music to every ear is to hear his name.
4. Be friendly and helpful. But never be too intimate with prospective buyer.
5. Be cordial. Speak and act as if everything you do were a genuine pleasure.
6. Be genuinely interested in people. You can like everybody if you try.
7. Praise. Be generous with praise but cautions with criticism
8. Considerate with others’ feeling. It will be appreciated always.
9. Be thoughtful of others’ opinion. Be considerate to the feelings of others,
there are always 3 sides to a controversy-yours-the other fellows-and the
rightone.
10. Be alert to give service. What counts most in life is what we do for others.
SALESMAN’S BYE LAWS

A. Common faults to guard against in conversation.
B. How salesman kills sales.
Notes C. Points to remember in selling.

D. Faults to guard against in the sales presentation.
E. Physical faults.
A. Common faults to guard against in conversation
• Don’t imitate any style of speech. Be natural.
• Monopolying the conversation or trying to direct or control the trend when
the prospect wishes to direct the flow of talk.
• Interrupting the prospect
• Lacking attentiveness when the prospect is talking.
• Wasting words (i.e.) talking without saying anything.
• Bringing subjects in conversation that have nothing to do with the purpose
of the call.
• Talking too fast, rushing the sales talk conversational high pressure
• Talking with chewing gum or cigarette etc. in the mouth.
B. How salesman kills sales.
• Talking too much.
• Failing to stick to a planned sales presentation.
• Getting into an argument with the prospect.
• Failing to answer question that prospects raise.
• Knocking the competitor.
• Failing to have a sales argument to prove their product is worth more
money when the competitors quote lower rates.
• Not asking the prospect to give a definite order.
C. Points to remember in selling.
• The prospect is interested only in himself and what your services can do
for him.
• Reflects real enthusian for your merchandise always agree with the
customer. Even if he raises an objection you know is not true, say “Yes”,
“But” and tactfully explain the other side of the story. Never argue.
• Listen carefully.
• Never appologise for a calling on a prospect. Lead him to think that this
is a special call and you came all the way to his house just to see him.
Never tell that you just dropped in.
• Use references and use the names of important persons or organization
who are using your product or service.
HOTEL SALES
• The prospect who is tough can be a best customer. Don’t give up on first Notes
call. The customer who is hard to get alongwith, will invariably turn out
to be one of your most loyal customers.
• Familiarity breeds contempt. The customer wants to be left on a pedestal
at least a shade above the salesman. Don’t try to be pally.
• Never show anger even if he infuriates you. You are there to get his
business.
• Keep record of what happened on the last visit of your prospect. What
transpired on each follow up. You can stay away from possible sore areas
or have the answer ready for an objection you might have failed to answer
satisfactorily before. Have confidence in yourself and think of the successes
you have already achieved and establish a success pattern. Analyse the
sales you missed and try to find out why. Emphasise the approach and
the style of selling that have been most successful.
D. Faults to guard against in the sales presentation.
• Never make a promise which you can’t fullfill. There is no surer way to
kill repeat business than to fail to live up to promise.
• Don’t try to be tricky or unusual. The “solid, stout, feet” on the ground
approach is always best. Don’t try to fool the customer.
• Don’t try to be a big shot. No matter what your position is in your
organization, don’t try to impress the customer with your importance.
He is the only important person in this deal.
• One strong sales point is better than a dozen “so-so” sales points. If your
product has one outstanding quality, emphasise it.
Don’t hope that the prospect will hand you an order. Plan to build upto
actual point of signing an order. Don’t leave the actual order for sometime
in future.
• Don’t loose your nerve. Ask him to buy.
E. Physical faults. This grouping lists things which can be corrected, but which
are sufficiently glaring faults in a salesman to nullify or damage his sales
presentation no matter how good his sales “pitch” might be.
• Sloppy clothes.
• Decayed teeth.
• Fingers heavily stained with nicotine.
• Offensive breath.
• Shifty eyes.
Notes • Serious grammatical errors.

• Poor carriage, drooping shoulders, hollow chest. Any physical action that
reflects laziness or sloppiness—Slumping when standing sprawling out
in chair when sitting, walking lazily.
• Speech impediments.
Usually, the job of a salesperson covers the following three main areas:
(a) Product (which he is selling),
(b) Process (of selling),
(c) The result that he must achieve.
The two of the most important out of these three seems to be the selling
process which consumes most of time and ultimately the result that he must
achieve, but both these factors depend upon the product. Apart from spending
most of his time on developing selling skills he should spend his time on helping
the production team on product development, product analysis and also on
forecasting of results. There never is either a perfect customer or a perfect
product and it is the job of the salesman to bring together the product and the
customer, with whatever imperfections there might be, at the best possible price.
Beyond this basic activity, the sales person must understand the environment
in which he operates and should also realize that he can influence it by keeping
himself informed, alert and proactive. In this respect, information collection as
to what the business is where it exists and how it can be directed to his hotel is
very important. This can be done by market research or personal interaction.
Secondary data can also help to a great extent.
SERVICE AND SERVICE SELLING

• Service is something that is a feeling and hence is essentially intangible
and can not be seen but can be felt only.
• Does not result in ownership.
• Service is something which is offered by one party to another.
• It may or may not result in, or be tied to a physical product.
• It should provide satisfaction to a guest, i.e. should provide the buyer
value for money.
CODE OF QUALITY SERVICES

1. Greet the customer immediately.
2. Give the customer your undivided attentions.
3. Make the first and last 30 seconds, count.

HOTEL SALES
4. Be natural, not phony or mechanical. Notes

5. Be energetic and cordial.
6. Be the customer agent.
7. Think–Use your common sense.
8. Bend the rules sometimes (only in exceptional cases).
9. Stay up-Take good care of yourself.
Service standards are usually classified as, Superb Service, O.K Service, Bad
Service
Expected Provided Expected Provided Expected Provided

by guest to the guest by guest to guest by guest to guest
Superb service O.K. service Poor service
Types of Services. Various types of services can be classified in to following

three groups.
(i) A tangible good with accompanying services. For example, warranties,
repair and maintenance service offered by the manufacturers. The service
provided by the product operator in terms of giving training.
(ii) A major service accompanying minor goods and services. For example,
airlines passengers buy transportation service and arrive at their
destination without anything tangible to show for their expenditure.
However, the trip includes certain tangibles like airline magazines, ticket
stubs souvenirs and food and beverage served during the flight, while
the air-hostess smile during the passing of food and beverage to the
passenger is service.
(iii) A pure service. For example, a psychiatrist or lawyer who provides his
professional guidelines for future to the patient or client is termed as
pure service, as no goods are exchanging hands in such cases.
Unique Characteristics of Services

• Intangibility. Unlike physical products, in most cases they can’t be seen,
felt, tasted or smelt before they are utilized.
• Inseparability. Because of intangibility services have to be produced and
sold simultaneously.
• Variability. Services are highly variable because they depend on
• Who provides them.
• What are the frames of mind of both server and service.
• Where are they provided.

Notes • When are they provided.

• Environment in which they are provided.
• Perishability. Highly perishable and can’t be stored. (If a service is not
utilized when offered, it can not be stored)
• Fluctuating Demand. Most services experience fluctuating demand based
on factors such as season, day of the week, hour of the day.
• Customer Involvement. Customer involvement in the production of
service is very high.
• Inability to Recall. If temporarily produced the service cannot be recalled
(i.e.) corrective action cannot be taken on the service that has already been
produced.
Factors Upon Which the Service Strategy will Depend

(a) Nature and type of service—
• Accommodations (quality and quantity)
• Comfort (A/C, T.V. Fridge, Carpet, Telephone, etc.)
• Decor (Colour, articles kept in a room)
• Size, (single, double, etc.)
• Location (floors, view outside the room).
• Furnishing (bed, tables, chairs, etc.).
• Special needs (hard bed etc.)
(b) Guest and his needs
• Who is the guest?
• His needs and wants
• Nature and type of guest (business class, tourist class, conference and
meeting customers etc.)
• Security and safety
• Confidence in the hotel
• Hygienic and whole some meals
• Caring and helping staff
(c) Location of properly
• Down town
• Uptown-suburban
• Resorts
• Transit, etc.

HOTEL SALES
Some examples of service: Notes

1. In Hongkong even if the taxi driver does not know english, his endearing
smile and flickering eyes and nods speaks of welcome and guests become
comfortable.
2. Room maids folds clothes of guest neatly and puts the underwear etc. in
the laundry bag without being asked.
3. Smiling lift operators sometimes even escorts the guest in the corridors.
4. Multiskilling. (Receptionist, reservationist and informationist etc. the same
person to perform various duties).
5. Aggressively selling staff, missing no opportunity to sell tea/etc. the
lounge (large portion of lobby is lounge).
6. Staff morale is high and staff has high self esteem.
THE SERVICE PYRAMID

Basic concept.
• Customer as basis for defining our C usto m er
business. This means that we define the
objectives of our business on the basis of
our customers’ profile and needs.
S y sem
System
• Business exists to serve the customers that
is to say that we are in existence only
P eop le S erv ice
because of our customer to whom we have strateg y
Fig.: 1
to serve and satisfy his needs.
• Organization exists to serve the needs of people who are serving the
customer. This is a very important aspect of running an organization or
comparing that we take good care of all those who are working in the
company for providing services to the guest.
• Service model is based on the assumption that we have a clear conceptions
of the motivational structure of the customer, what the customer wants
and what has motivated him to buy and his main motive in buying this
service. Motivational structure of the customer service and a concept of
service and how we organize our service to see that customers’ motives
are fulfilled.
Customer Perception—The Only Reality in the Hospitality

Business
Model explained
• Each line in the model represents an important dimension of impact.

Notes • Line connecting the customer and the service strategy represents the critical
importance of building the service strategy around the core needs and
motives of the customer.
• Line that flows from service strategy to the customer represents the
communicating process of the strategy to the market-customer has to know
it for a fact.
• Line connecting the customer and the people (internal customer) of the
organization represents crucial point of contact and the continuing
interplay/interaction. This interplay presents greatest opportunity for
gain/loss and for creative effort.
• Line connecting customers to systems that are supposed to deliver the
service. Systems should be designed keeping the customer in mind and
clearly avoid mediocrity and dissatisfaction, (e.g. tables in restaurants
etc.).
Three outer lines of the service triangle highlights interplay between:
1. System and people. Even if people are highly motivated and want to
give excellent service are presented because of nonsensical
administrative structure procedures-illogical task assignments,
regression, work rules or poor physical facilities.
(Front line people are better prepared than their managers to improve
the systems they use every day).
2. Service strategy and systems. Suggests that the deployment of physical
and administrative systems should follow logically from the
definition of service strategy.
3. Line between the service strategy and people. Suggests that the people
who delivers the service must have a clearly defined philosophy
from management with clear definition of focus clarity and priority.
Hospitality: A people business. Successful business equation for hospitality
business is as follows:
Service performer + Imaginative business owner + Focus on quality = Service
Business Excellence
(Hospitality service industry = 20% tangible product + 80% service)
I. Service performer. Should have following qualities and should be able to
strength of people to jobs
(a) Basic/Inherent–Energy, charm, details, orientation and work ethics.
(b) Which can be taught–Problem solving, customer orientation.
Personality consistent with job outlet requirements:
HOTEL SALES
• Adequate level of maturity and self esteem. Notes

• High degree of social skills.
• High level of tolerance for contest.
II. Imaginative business owner.
• Business defined in terms of customer.
• Innovative ways to attract and satisfy customers.
• Enrichment training to people.
III. Focus on quality:
• of people-on-skills-training
• of service to customers
• be empathizing
• be considering customer a family member
• be patient with demanding and difficult customers.
Market Places. Before planning a sales strategy it is always advisable that a
SWOT analysis of the hotel should be done, i.e., a study of the hotels strength
and weakness alongwith opportunities and threats that it may get and face
respectively should be completed. For example, a hotel at the airport has
opportunity to cater to airlines transit passengers, airlines crews, etc. while a
downtown hotel shall attract more of business clientele. Needs and paying
capacity of the customers are identified and the policies and strategies for
example business segment and pricing strategy etc. are formulated. The next
step after having done a SWOT analysis of its own establishment is to focus on
to the individuals/group/organizations, etc. with in the segment for sales and
marketing and these segments become the “Target Market” Competitors in the
same sector must also be taken into consideration and an objective and detailed
analysis of all competing hotels, strengths, weaknesses vis-à-vis your own hotel
should be done, i.e., the SWOT analysis of the competitors should be done and
then a comparative study of strength and weakness of your competitors should
be done. This will give a good idea to the sales team of the market environment
in which they have to operate.
Other agencies involved in sales of room. Besides, the sales and marketing
department and the front office department of the hotel, a whole range of people
and organizations are also involved in the selling of hotel rooms. For example,
agencies and organizations such as travel agents, airlines, tour operators, central
reservation offices, public and private sector companies and embassies etc. are
very important in the procuring room sales for the hotel. Most of these agencies
are selling the hotel without the hotel even soliciting their help. They are

Notes invisible sellers for the hotel. Most of these work on commission basis. It is very
important for the hotel management to maintain good relations with them. Policy
formulation regarding commission, i.e. percentage of commission and the period
of payment, etc. must be decided keeping the volume of business given by
these agencies to the hotel. Hence, sales and pricing policies for these agencies
which are called ‘Sellers’ must be formulated.
Sales executives check list.
1. Plan a programme. It is important that a future plan, which is based on
previous market analysis and product analysis, should be made and the
sales executive sticks to etc. The plan should aim at low spots. There is of
course, no way to estimate the relative value of business booked into
capacity periods against between booked into low spots. The business
booked for rooms when the hotel is not full, is all the net profit, because
otherwise the rooms would have remained unoccupied. The real test is
not to be able to book hotel rooms in season in Delhi but to be able to
book room in off season is the real challenge. Similarly to be able to book
rooms on a hill station, may be for conference or meeting shall be
considered good selling during off season. Suitable plans to achieve such
goals should be made.
2. Keep it going. Sales efforts are always commutative and results in increase
in direct ratio to the pace at which the regularity of selling is maintained.
It should not be treated as hit and miss method where normally it misses.
3. Involve all concerned. Keep everyone in the organization informed of what
exactly the sales endeavors are tell them what propositions are being
offered. Tell them about the advertising schedule. Tell them about the
direct mail programme. Tell them about the package weekend promotion
programme. Always remember selling is not just one man job, it is an
organization effort where every one is involved.
4. Record keeping. To avoid depending on memory, maintain precise but
complete records. This will help you in promoting future business without
proper record, there is no future selling, it is only selling today.
5. Be business like. Learn to say ’No’. For example, to the business, you decide
is not going to be profitable, you should be able to say No. Deliver exactly
what you promise. Keep you promises.
6. Don’t be afraid to sell high. Don’t be afraid to ask for the high price. Forget
all about your minimum rates, except as a last resort.
7. Follow up again and again. Many times the first attempt to obtain business
is not very successful. Don’t get disheartened, try again. If you have a
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valuable piece of business in, keep after it unless you get it. Business may Notes
sometimes appear to come to you easily but actually it never does, you
have to make constant efforts for the same. Very rarely the business will
fall into your lap like a ripe fruit. You will have to make efforts to make
the fruit ripe.
Planning a sales call. Make a specific reason for making a call and deliver
a planned presentation. Don’t just let the prospect think that you are there, just
wasting time. Never bring in an unplanned presentation. This may result in
permanent loss of interest of the prospect in your proposal for the sale of
product/service.
Sales etiquette. When you enter the office of the prospect, the first person
you meet is the receptionist/secretary of the prospect. He/she is the first link
and the way she announces your arrival to her boss makes a lot of difference
on the mood of the boss in which he will meet you. So proper respect must be
given to the secretary. Next when you meet the prospect introduce yourself
clearly and confidently. Get to the point at once after proper salutations etc.
make the prospect feel important by your gestures and words. Eliminate all
unnecessary conversation. Come to the point quickly without beating around
the bush. Keep in stride with the prospect. Listen attentively when your business
is finished, leave without wasting his as well as your time. Make sure your
presentation is very well planned and prepared and your demonstration is
interesting, catchy and effective.
DISCOUNTS AND DISCOUNTS FIXATION POLICY

As per the ‘Reader’s Digest Great Encyclopedia’ dictionary, the word discount
means deduction from nominal value or price of anything for payment before
it is due or for prompt payment. It also means deduction from the amount of
bill of exchange, etc. by one who values for it before it is due. When we talk of
the term discount with relation to sales, this can be called as selling technique,
sphere headed by a sales manager of a hotel. Conference, tour and travel agency
business is chased to increase the occupancy of rooms particularly at low
business times. Discount rates of many types are offered to achieve maximum
occupancy and ultimately maximum possible profit. These days the guests needs
for rooms varies a lot and hence the hotels offers numerous room rates which
match their needs. Also, the rates of the room fluctuate with seasonally factor.
The main aim of variance in the room rate from the rack rate, i.e. the discounting
is to get more business and to make the product as closely as possible to the
needs of the prospective buyer. For example, to attract more business from
companies and corporate office’s the hotel may offer a specific percentage of
discount of on rack rate, while another percentage of discount may be given to

Notes travel agent for providing group business to the hotel. It is entirely on the
discount policy of the hotel as to how many discounted categories of tariff for
different group they form, which mainly depends on the market segmentations.
The front office must be made aware and briefed about various categories of
tariffs to enable them to identify as to who is to be offered what rate when they
come to the hotel. The accommodation manager, room division manager with
sales manager should be taking decision as the rates to be quoted to large groups
or business customers and will be personally involved in formulating the
discounting policy. In smaller hotels where the accommodation manager may
also be the sales manager, will, directly liases with potential new customer,
specially those conference and tour operators who may place large amounts of
business with the hotel, Wherever computer system is used for booking the
rooms, for example in a large hotel then the system should be capable of
handling any of the complex tariffs and discount rates. Discount rates are also
given to airlines for their staff. Basically, the principle of giving discount is
same in all cases-organizations which give the most of business to the hotel are
given discount. Discounts are usually strictly negotiated in advance by the hotel
management (G.M./Manager/Sales Manager/Accommodation manager who
have the basic responsibility of increasing the occupancy) and the front desk
staff should not involve themselves in discounted rates on their own, unless it
has been specifically cleared by their superiors. One of the ways of giving
discount to conference organizers is offering “two-for-one” tariff for conference
delegates. This will encourage them to bring their spouse along with them,
ultimately the hotel is aiming at higher occupancy percentage as well as more
revenue generation from areas such as food and beverage, and other facilities
sale of the hotel. The front office staff as a whole have to be familiar with their
operations and detail so that the customer is not overcharged, underchanged
or embarrassed by errors. Discounted rates are offered to various categories of
guests, in addition to corporate and conference organizers, discounted rates
are also offered to senior citizens and government officials etc. also usually it is
the poor F.I.T. who pays the full rack rate and all other guest get one or the
other types of discounted rate and the hotel rarely gets the optimum revenue.
Discount allocation controlling discount is crucial to producing the highest
yield. For example, in off season when the hotel is not able to book its rooms to
capacity then the hotel may offer the vacant and available rooms at various
discounted rates to various prospective qualifying clients, to attract more
business, and gradually over a period of time, i.e. few years when the hotel
starts getting business even in off season the management may start reducing
the offering of discount and gradually may withdraw it. But hotel has to be
careful that reduction and ultimate withdrawl may not spoil the hotel occupancy

HOTEL SALES
position of “off season” period and management must be sure that the rooms Notes
can be sold at a higher rate without an offsetting loss in occupancy percentage.
But some discounts cannot be withdrawn because they are the part of a contract.
For each discounted room type, reservations are regulated at various
available rates, each set below rack rate. The main idea behind this is that the
sale of room which is a perishable commodity at a low rate is better than no
sale at all. The primary objective of discount allocation is to protect enough
remaining rooms at a higher rate to satisfy the projected demand for room at
that rate, while at the same time filling rooms that would otherwise have
remained unsold. This process is repeated for each rate level from rack rate on
down.
Having established that rate cutting (discount) is very important for
increasing occupancy, the next step is that we must understand what is the
effect of this process on revenue production. Obviously, if we cut the rate the
effect will be, reduced revenue generation, provided we still achieve the same
occupancy percentage as we have been doing before rate cutting. Of course,
rate cutting is done in those situation when the rooms are vacant (off season)
and had there been no rate cutting the revenue generation would have been
zero, but at the same time we should also realize one very important fact that if
we can earn revenue by rate cutting and making sales efforts (of course not
optimum) and increase occupancy percentage then why we can’t make more
vigorous sales efforts to increase sales, i.e. increase more occupancy percentage
and hence achieve more revenue generation for the hotel. In other words, by
our efforts we can generate more revenue by increasing the occupancy
percentage. Let us study them with example, but before this let us understand
some important terms. Suppose the average room tariff of a hotel is Rs 1,000
that means if we are able to sell the room for one night we generate Rs 1,000
Now this figure of Rs 1000 include three factors (a) fixed cost of room + marginal
cost of room + net profit. Now the term fixed cost of room as the name suggests
is fixed while marginal cost means cost on all those items which will be there
only if the room is sold and will not be there if the room is not sold. For example,
the cost incurred on cleaning and guest supplies etc. while the fixed cost example
are rent of building and insurance etc. (the factor of marginal cost is not the
loss if the room is not sold). In the above example, let us presume that the
marginal cost factor is Rs. 100. Now if we substract this marginal cost factor
from the room rate then this figure (amount) which is left is called contribution
margins. Hence, in the above example the contribution margin will be Rs 900
(Rs 100 – Rs 100).
Now that we have understood that selling rooms at reduced rate will
generate less revenue. Further, if we have to keep our revenue generation
Notes constant and at the same time we also agree to cut down the rate then obviously
we will have to increase the occupancy percentage to achieve the same revenue
generation. For example, suppose we have ten rooms and average room rate is
Rs 1,000 and, average occupancy % is 80%, then the revenue generated shall be
80/100 × 10 × 1000 = Rs 8000. Now if we are ready to sell the rooms at 10%
discount (in order to fill up the vacant room) then in order to achieve the same
revenue generation, i.e., Rs 8000 we will have to increase the occupancy %
from 80 to 100 so as to achieve the same revenue generation, i.e., Rs 8,000
(New rate 20% of Rs 1,000 i.e. Rs 800 and occupancy % 100% i.e. all 10 rooms
sold at Rs 800 per room; then the revenue generated is 800 × 10
= Rs 8,000). Hence, from the above discussion we conclude that to maintain
equivalent revenue generation with reduced rate, occupancy percentage has to
be increased. One thing should be noted that the factor of marginal cost has not
been considered in this example, if we consider that factor also then the
calculations shall be as follows.
Rack rate is Rs. 1000 and margin cost is Rs 100 and if we substract this
figure from room rate then we are left out with Rs 900 and hence the revenue
generated shall be 80/100 × 10 × 900 = Rs 7200, now if we have to achieve the
equivalent revenue with a reduced rate of 20%, i.e., Rs. 800 and from this
subtraction the marginal cost we are left with Rs 700 the required occupancy
percentage has to be 103% (20% less from Rs 1000 that is Rs. 800% and from this
subtract the marginal cost of Rs 100 hence we get the figure of Rs. 700 and
hence to achieve 103% occupancy at this rate then the revenue shall be 103% of
10 × 700 i.e., 103/100 × 10 × 700 = Rs 7210).
UPSELLING
The word upselling is basically meant to describe the activity of the front desk
staff is being able to sell a higher priced room to a guest who might have come
with a concept of hiring a comparatively a lower category room. It is also called
as sell high. A good receptionist with the ability of being a good salesman can
persuade a prospective buyer to buy a higher priced room by projecting the
features of the room in such a way that the prospective buyer is allured to buy
the proposed accommodation without raising much queries. This is making
the prospective guest a taller and more profitable (to the hotel) order then he
would if the receptionist would not have been smart enough in projecting an
image of the room. Upselling the customer refers to the situation when we are
selling something more expensive than what he initially planned for, and gives
direct and immediate results, a more satisfied customer, a better and more
profitable sales to the hotel and quite possibly, a better tip to the receptionist.
Upselling is also called suggestive selling. The role of receptionist is very
important. Upselling is an art and skill of good salesmanship. For a walk-in
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guest, the upselling is easy as compared to a guest who has made an advance Notes
booking. In case a guest has made an advance booking the guest has already
decided as to what he wants, that is what type of room and at what rate he
wants and upselling may not be possible in such case, but if the guest is a walk-
in guest then a smart receptionist can definitely, by his sales skill convert an
ordinary sales into a more lucrative business. Some techniques like highlighting
the U.S.P and also like sandwiching the price of the higher room between two
plus points of room may prove to be quite beneficial. For example, suppose a
walk in guest comes to the counter and asks for a room. Now a smart receptionist
can always say “sir”, I have an inside room on a higher floor, and that shall be
Rs. 5000 per night and also I have a room facing swimming pool on the 3rd
floor and it is only Rs. 6,000 per day. I am sure you would love the view from
its balcony of the higher floored room.” It is very likely that the prospective
guest would go for a higher priced room because it has more benefits. Another
example of upselling is that suppose a guest says, give me a single room, then
the receptionist may be able to sell a higher priced room by saying, “Sir I have
an ordinary room for Rs. 4,000 per day and also I have a room with a view of
sea on 2nd floor for Rs. 5,000 only and room has antique furniture. In this case
the receptionist is very cleverly putting the price factor (which may be
considered as negate) between two positive features (room on 2nd floor facing
sea view and the antique furniture) and is highlighting the features of the room.
Upselling is a sales skill which should be used with great skill and care, because
if the receptionist is not a careful salesman then in his enthusiasm to sell higher
accommodation to a prospective guest he may spoil the sale completely. He
should make efforts to sell high but he should never be aggressive:
The ability of upselling in the receptionist must be encouraged and
developed in those who don’t have it, often in the face of initial reluctance.
Some front office staff (receptionists) are simply shy or hesitant and are
sometimes very inexperienced and may resist upselling, feeling that they will
embarrass themselves and the guest when they are making an offer of higher
priced room; and the prospective guest may ridicule them or snubs them or
insult them. The management should inculcate the art of selling skill by
conducting sales and marketing training programmes for their staff. Such
receptionist will do no more then offering what the guest orders, offering no
advise or suggestions. A passive staff at times may comment. “The guest knows
what he wants and why should we push them into buying something which
we want to sell.” But infact the truth is that the guest does not know what he
wants until someone tells him what is available. The written tariff card does
only a part of job and it is upto the receptionist to explain the features to the
guest and provide him to buy what he wants to sell. Such receptionist should

Notes be trained to ask a “Rate Question” such as “Sir, would you like a room facing
a waterfall” at some point in the transaction.
The management should try to inculcate the art of selling skill in their staff
by conducting sales and marketing training sessions from time to time. Staff
should be encouraged to talk to the customer about the complete range of rooms
that the hotel has to offer. To do this, the receptionist need to know the product
features that he is trying to sell (i.e. the rooms) fully. For this, i.e., for the product
knowledge it is important that the staff involved in selling get the first hand
information and feel of the room. This can be done during off seasons when
the rooms are mostly vacant. The staff may be asked to stay in the room and
experience the positive and negative aspects of the room. This definitely will
help the receptionist in “upselling”. The more product knowledge the staff
selling it shall have, the easier it will be to pass this on to the guest and hence
“upselling”. The receptionist should not only be willing to tell the guest what
not to buy but should also be willing to tell what to buy and the guest who is
encouraged to buy a little more, will leave the hotel with a feeling of abundance
and repleteness as compared to a guest who has ordered too little and who will
only remember a meager and unsatisfying stay. Naturally, the first category of
guest is likely to return back to the hotel.
Upselling also brings in a healthy spirit of competitions amongst the staff
and ultimately this helps in increasing the revenue. The sales record tells that
which receptionist has done a better job. Incentives such as cash, kind, paid
holidays and stay with family etc. can be given to staff who does more upselling.
The process of upselling basically creates a need and want for the new
product or service by highlighting its benefits and the comparison with the
initial product benefit also making him feel that if he did not buy the product
now he is going to loose a great opportunity of his life.
Following example (Step wise) shall explain the process.
Watch. (The receptionist watches). A couple coming to the hotel dressed more
formally than usual.
Listens. (The receptionist listens). It is our wedding anniversary.
Motive. (The receptionist deduces) Pleasure.
Characteristics. Special room, special food, more personalized service, relaxed
atmosphere, soothing music and dancing.
Product offer. (The receptionist offers and is able to sell). A honeymoon suite
at a special discounted rate with complimentary champagne bottle and a platter
of cookies with a deluxe bouquet and dinner in “roof top restaurant”.
Need of this couple. Initial need of the couple was a double room and dinner
in coffee shop.
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Comparison. “Sir a double room is fine but not so exciting so as to make this Notes
special day a memorable day of your life and the food of coffee shop is good
sir, but you miss out romantic atmosphere of our roof top restaurant”, sir.
DOWNSELL
Selling a product or service at a little bit less than the actual price of the product
or service, or for a shorter duration may also benefit financially in the long run.
For example, number of rooms being booked for conference by a conference
organizer.
Down selling may appear to be a process of loosing revenue initially, but
carefully planned a down. Selling programme may prove to be quite good
business for the hotel particularly when dealing with groups such as conference,
meeting and seminar groups, as they will make it a point to patronize the hotel
for their future conferences and conventions also.
SUBSTITUTE SELLING
• Upselling and down selling-both are examples of substitute selling.
• Sell something different to them from what they initially wanted.
• Substitute selling can be done.
• When the product/service the customer asks for, is not available.
• When the product/service the customer is asking for is not, provided
by the establishment.
• In case of substitute selling.
Watch, Listen, Question to find out customers motives and needs and then
if substitute selling is essential then.
Explain. That the product service asked for is not available or not provided.
Select. Alternative product to be offered.
Describe. The product using characteristics and benefits and comparison of
the product.
Reinforce. The customer decision to buy the substitute product (as this customer
may need reassurance)
Point of sale or point of service (POS or PoS) can mean a retail shop, a
checkout counter in a shop, or the location where a transaction occurs. More
specifically, point of sale often refers to the hardware and software used for
checkouts—the equivalent of an electronic cash register. Point of sale systems
are used in restaurants, hotels, stadiums, and casinos, as well as almost any
type of retail establishment.

Notes Point-of-sale Technology

POS systems evolved from the mechanical cash registers of the first half of the
20th century. Examples included the NCR registers, operated by a crank, and
the lever-operated Burroughs registers. These cash registers recorded data on
journal tapes or paper tape and required an extra step to transcribe the
information into the retailer’s accounting system.
Later cash registers moved to operation by electricity, such as the NCR
Class 5 cash register. The first computer-based systems were introduced in 1973,
such as the IBM 3653 Store System and the NCR 2150. Other computer-based
manufacturers were Regitel, TRW, and Datachecker. 1973 also brought about
the introduction of the UPC/EAN barcode readers for POS systems. In 1986,
the IBM 4683 introduced PC-based POS systems.
During the late 1980s and 90s, manufacturers developed stand-alone credit
card devices to easily and securely add credit card processing to POS systems.
Some popular models include the VeriFone Tranz 330, Hypercom T7 Plus, and
Lipman Nurit 2085. These relatively simple devices have evolved to handle
multiple applications (credit card processing, gift card activation, age
verification, employee time tracking) on one device. Some wireless POS systems
for restaurants not only allow for mobile payment processing, they also allow
servers to process the entire food order right at tableside.
Most retail POS systems do much more than just “point of sale” tasks. Even
for smaller tier 4 & 5 retailers, many POS systems can include fully integrated
accounting, inventory management, open to buy forecasting, customer relation
management (CRM), service management, rental, and payroll modules. Due
to this wide range of functionality, vendors sometimes refer to POS solutions
as retail management software or business management software.
Early POS Software

The early electronic cash registers (ECR) were programmed in proprietary
software and were very limited in function and communications capability. In
August of 1973, IBM announced the IBM 3650 and 3660 Store Systems that
were, in essence, a mainframe computer packaged as a store controller that
could control 128 IBM 3653/3663 Point of Sale Registers. This system was the
first commercial use of client-server technology, peer to peer communications,
Local Area Network (LAN) simultaneous backup, and remote initialization.
By mid-1974, it was installed in Pathmark Stores in New Jersey and Dillards
Department Stores.
Programmability allowed retailers to be more creative. In 1979 Gene
Mosher’s Old Canal Cafe in Syracuse, New York was using POS software written
by Mosher that ran on an Apple II to take customer orders at the restaurant’s
HOTEL SALES
front entrance and print complete preparation details in the restaurant’s kitchen. Notes
In that novel context, customers would often proceed to their tables to find
their food waiting for them already. This software included real time labor and
food cost reports.
Today, most major retailers use POS software or systems.
Time-based pricing refers to a type offer or contract by a provider of a
service or supplier of a commodity, in which the price depends on the time
when the service is provided or the commodity is delivered. The rational
background of time-based pricing is expected or observed change of the supply
and demand balance during time. Time-based pricing includes fixed time-of
use rates for electricity and public transport, dynamic pricing reflecting current
supply-demand situation or differentiated offers for delivery of a commodity
depending on the date of delivery (futures contract). Most often time-based
pricing refers to a specific practice of a supplier.
Time-based pricing is the standard method of pricing in the tourist industry.
Higher prices are charged during the peak season, or during special-event
periods. In the off-season, hotels may charge only the operating costs of the
establishment, whereas investments and any profit are gained during the high
season. (This is the basic principle of the long run marginal cost (LRMC) pricing,
see also Long run). Time based pricing is occasionally used by transportation
service providers, whereby higher prices are charged during rush-hours, or,
alternatively, some type of reduced-rate tickets are invalid at that time.
Time-based pricing of services such as provision of electric power includes,
but is not limited to:
• Time-of-use pricing (TOU pricing), whereby electricity prices are set for
a specific time period on an advance or forward basis, typically not
changing more often than twice a year. Prices paid for energy consumed
during these periods are preestablished and known to consumers in
advance, allowing them to vary their usage in response to such prices
and manage their energy costs by shifting usage to a lower cost period or
reducing their consumption overall;
• Critical peak pricing whereby time-of-use prices are in effect except for
certain peak days, when prices may reflect the costs of generating and/or
purchasing electricity at the wholesale level.
• Real-time pricing (also: dynamic pricing) whereby electricity prices may
change as often as hourly (exceptionally more often). Price signal is
provided to the user on an advanced or forward basis, reflecting the
utility’s cost of generating and/or purchasing electricity at the wholesale
level; and
Notes • Peak load reduction credits for consumers with large loads who enter
into pre-established peak load reduction agreements that reduce a utility’s
planned capacity obligations.
Time-based pricing is recommendable for utilities both in regulated or
market based environment. The use of time-based pricing is limited in case of
low difference between peak- and off-peak demand, unavailability of adequate
time-of-use metering. Also, customer response to time-based pricing should
be considered (see: Demand response).
A regulated utility will develop a time-based pricing schedule on analysis of
its cost on a long-run basis, including both operation and investment costs. A
utility operating in a market environment, where electricity (or other service) is
auctioned on a competitive market, time-based pricing will reflect the price
variations on the market. Such variations include both regular oscillations due
to the demand pattern of users, supply issues (such as availability of intermittent
natural resources: water flow, wind), and occasional exceptional price peaks.
Price peaks reflect strained conditions on the market and convey possible
lack of investment.
Why do retail stores need dynamic pricing? With respect to the key
objectives of growth and profit for any retail entity, dynamic pricing should
significantly improve sales margins and increase sales by enabling the vendor
to price variably and hence suitably and to control its product range based on
profit margins. The retail stores will be able to compete more effectively with
rivals in the form of mixed multiples, mail order and on-line retailers, who are
often able to undercut but who do not generally have the same understanding
of the retail market. In particular dynamic pricing is recognised as encouraging
impulse buys, cross-selling of products and repeat sales.
How will dynamic pricing address the key stakeholder issues? Key
concern for a consumer would be the availability of desired products ‘at the
right place, at the right time and for the right price’. The new information flows
established to implement dynamic pricing should allow retail stores to update
consumers as to the current and future availability and price of products.
Suppliers demand responsiveness, volume sales, and the availability of demand
and forecasts. Dynamic pricing will improve responsiveness by prioritising
the sale of new products while ensuring that pricing decisions enhance its ability
to sell more products. Finally, the new information flows can be shared with
suppliers and distributors.
What will the introduction of dynamic pricing involve? The key steps are
the effective integration, analysis and understanding of EPOS, customer,
competitor and supplier data to monitor existing and future product range.

HOTEL SALES
Where lies the congruence with retail policies? Dynamic pricing relies on Notes
target retail objectives (i) enhanced customer relationships; (ii) supplier
relationship management; and (iii) inventory management.
What are the key risks involved? The processes required to implement
dynamic pricing build on existing processes and on the processes required for
the recommendations needed to reform the key company objectives listed above.
Critically, dynamic pricing requires minimal ongoing external input.
Benefits of dynamic pricing. This strategy helps retail outlets to increase
repeat purchases as well as enhance the ability to cross-sell products, depending
on the volumes data received from EPOS, dwindling value of products held
back at the warehouse or in the backroom of the outlet could be a measure of
the effectiveness of this benefit.
Brand awareness could be increased which would be measured by number
of product recalls and returns compared to the estimate of expected repeat
purchases for competitors.
Another benefit of dynamic pricing could be increasing the margin of sales,
thus maximising profits which could be a measure of the total percentage of
sales to the 25% margin from EPOS data. This also reduces the risk of obsolete
inventory, by measuring improvement in sales against products already ordered
but not purchased due to them going out of vogue.
Typically, the responsibility of this implementation would lie with the
marketing or the merchandising departments, i.e. if responsibility for brand
awareness lies with the marketing department then the responsibility for
margins and sales would lie with the merchandising department to ensure tacit
co-ordination between the two.
Dynamic pricing could also help increase the volume of repeat customers
indicating strengthening and retaining of existing customers leading to reduced
churn rate. This could be further fostered by use of loyalty card schemes under
the supervision of the marketing department. Ordering inventory restricted to
requirement saves holding additional and perhaps outdated stocks which
results in reduced inventory levels. This effect could be measured by the
declining value of products held in the warehouses.
Sales of discounted products taken from EPOS could be a measurement of
the effect of higher discounts and increased promotions and marketing
campaigns, under the direction of the marketing department, as a causal effect
of dynamic pricing.
Process & Implementation

Dynamic pricing is facilitated through pricing range over the product lines by
pricing and demand forecasts based on past trends identified from the data
Notes available. Weekly meetings to sign off new product ranges and change in prices
while time reviewing existing products for promotion (for obsolescence).
EPOS needs to be integrated with electronic pricing in stores by installing
electronic price displays on shelves and setting up interactive store links. This
could help in monitoring and displaying direct co-related sales value and price
variation responses with the suppliers through vendor managed inventory.
Monthly evaluation and comparison of competitor prices and self-analysis
based on activity based costing (from supplier to sale) will be required for which
EPOS serves as the source for collating information on demand while activity
based costing serves as basis of prices. Business growth can be propagated by
analysis of profitability and statistics of existing stores to identify trends, for
which a formal business case may need to be prepared, needing the involvement
of regional managers to assess demand.
Dynamic pricing could involve significant business redesign depending
on the present infrastructure and the ability to deliver desired data. In order to
record and monitor customer data, key activities such as loyalty card schemes,
updating of EPOS to record sales and staff training for recording sales would
required to be initiated. EPOS needs to be updated to record and monitor by
product range as well as by stores which would facilitate price and product
changes in response to changes in demand as well as developing future decision
making process.
In bench marking of competitor pricing and product range, key activities
would involve setting up of an integrated data base at head office recording
weekly price and product data fluctuations of competitors. New methodologies
will be required to analyse total costs per product and its contribution to bottom
line in proposing a full costing method for product lines.
Dynamic pricing could also help increase the volume of repeat customers
indicating strengthening and retaining of existing customers leading to reduced
churn rate. This could be further fostered by use of loyalty card schemes under
the supervision of the marketing department. Ordering inventory restricted to
requirement saves holding additional and perhaps outdated stocks which
results in reduced inventory levels. This effect could be measured by the
declining value of products held in the warehouses.
Sales of discounted products taken from EPOS could be a measurement of
the effect of higher discounts and increased promotions and marketing
campaigns, under the direction of the marketing department, as a causal effect
of dynamic pricing.
Negative customer impact of dynamic pricing. Customers of Amazon.com
were startled and quite upset when they learned that the online mega-store
HOTEL SALES
was charging different customers varying prices for the same DVD movies. Notes
Amazon, it appears, was engaging in a form of “dynamic pricing” – an
innovative pricing mechanism made possible by recent advances in information
technology. By using the plethora of information gathered from customers –
ranging from where they live to what they buy to how much they have spent
on past purchases – dynamic pricing allows online companies to adjust the
prices of identical goods to correspond to a customer’s willingness to pay. This
resulted in a hoard of negative publicity for Amazon and the company had to
take some drastic measures including heavy discounts to stem the tide of
complaints.
[April 2007 update on dynamic pricing] Ideas, a provider of hospitality revenue
optimisation solutions, and SynXis, a Sabre Holdings company, have announced
the completion and joint certification of integration between SynXis’ RedX
Distribution Management System and the IDeaS V5i revenue optimisation
solution.
Tom Murray, Vice President of Technology for Synxis, said, “The ideas V51
ASP solution is a perfect fit for REDX. It supports our goal of enabling our
customers to choose the best-of-breed vendors and seamlessly integrating the
functionality with ours. Dynamic pricing is a powerful tool and we are thrilled
to be able to offer it to our customers with this interface.”
DIRECT SALES WITH WHOM HOTEL DEALS

A travel agency is a business that sells travel related products and services,
particularly package tours, to end-user customers on behalf of third party travel
suppliers, such as airlines, hotels, tour companies, and cruise lines. In addition
to dealing with ordinary tourists, most travel agents have a special department
devoted to travel arrangements for business travelers, while some agencies
specialize in commercial and business travelers. Some agencies also serve as
general service agents for foreign travel companies in different countries.
Origins
The British company, Cox & Kings is sometimes said to be the oldest travel
agent in the world, but this rests upon services that the original bank (established
in 1758) supplied to its wealthy clients. However, the modern travel agent first
appeared in the second half of the nineteenth century. Thomas Cook, in addition
to developing the package tour, established a chain of agencies in the last quarter
of the nineteenth century, in association with the Midland Railway. These not
only sold their own tours to the public, but represented other tour companies.
Other British pioneer agencies were Dean and Dawson, the Polytechnic Touring
Association, and the Co-operative Wholesale Society.

Notes Travel agencies became more commonplace with the development of

commercial aviation starting in the 1920s. Originally, the agencies largely catered
to middle-class customers, but the post-war boom in mass-market package
holidays resulted in travel agencies on the main streets of most British towns,
catering to a working class clientele looking for a cheap overseas beach holiday.
Operations
As the name implies, their main function is to act as an agent, that is to say
selling travel products and services on behalf of a supplier. Consequently, unlike
other retail businesses, they do not keep a stock in hand. A package holiday or
a ticket is not purchased from a supplier unless a customer requests that
purchase. The holiday or ticket is supplied to them at a discount. The profit is
therefore the difference between the advertised price which the customer pays
and the discounted price at which it is supplied to the agent. This is known as
the commission. A British travel agent would consider a 10-12% commission
as a good arrangement.
Since September 11, 2001 airlines have stopped giving commission to travel
agencies in order to make up for growing cost in security. Therefore, travel
agencies are now forced to charge a standard flat fee, per sale. However,
companies still give them a set percentage for selling their product. Major tour
companies can afford to do this because if they were to sell a thousand trips at
a cheaper rate they still come out better than if they sell a hundred trips at a
higher rate. This process benefits everyone.
Other commercial operations are undertaken, especially by the larger chains.
These can include the sale of in-house insurance, travel guides and timetables,
car rental, and the services of an on-site bureau de change dealing in the most
popular holiday currencies.
The majority of travel agents have felt the need to protect themselves and
their clients against the possibilities of commercial failure, either their own or a
supplier. They will advertise the fact that they are bonded (posting a financial
bond with an organisation). In the case of a failure, the customers are guaranteed
either an equivalent holiday to that which they have lost, or (if they prefer) a
refund. Many British agencies (and tour companies too) are bonded with IATA
for those who issue their own tickets, ATOL for those who order tickets in, or
ABTA for those who sell package holidays on behalf of a tour company.
Of course, a travel agent is supposed to offer impartial travel advice to the
customer. This function almost disappeared with the mass-market package
holiday, and some agency chains seemed to develop a ‘holiday supermarket’
concept, in which customers chose their holiday from brochures on racks and
then booked it from a counter. However, a variety of social and economic
HOTEL SALES
changes have now contrived to bring this aspect to the fore once more, Notes
particularly the advent of multiple no-frills airlines.
Types of Agency
There are three different types of agencies: these are Multiples, Miniples and
Independent Agencies. The former comprise a number of national chains, often
owned by international conglomerates (Thomson Holidays is now a subsidiary
of TUI, the German multinational). It is now quite common for the large mass-
market tour companies to purchase a controlling interest in a chain of travel
agencies, in order to control the distribution of their product. (This is an example
of vertical integration.)
The smaller chains are often based in particular regions or districts.
Independent Agencies usually cater for a special or niche market. Some
cater to the needs of residents in an upmarket commuter town or suburb, or
concentrate upon a particular area or group (catering to the travel needs of
Polish expatriates, perhaps), or an activity such as sports (servicing the needs
of football supporters).
There are two approaches of travel agents. One is the traditional multi-
destination travel agent based in the originating location of the traveller and
the other is the destination focussed travel agent that is based in the destination
and delivers an expertise on that location. At present, the former is usually a
larger operator like Thomas Cook while the latter is a smaller, often independent,
operator like my guide Travel.
Consolidators
Travel consolidators or wholesalers are high volume sales companies that are
sometimes specialized in a niche. They may or may not offer various types of
services at one single point of access. These can be for example hotel reservations,
flights, or car-rental. Sometimes, the services are combined into vacation
packages that include transfer to the location and lodging. These companies do
not usually sell directly to the public but act as fulfillment for retail companies.
As the travel industry has changed we see more and more consolidators selling
directly to the public. The sole purpose of wholesalers is to sell ethnic niches in
the travel industry. There is no consolidator that offers everything. All travel
companies can sell you whatever you may be looking for but they only have
contracted rates to specific destinations. Today, there are no domestic
consolidators with some exceptions for business class contracts.
Criticisms
Travel agencies have been accused of employing a number of restrictive
practices, the chief of which is known as ’racking’. This is the practice of only
Notes displaying the brochures of those travel companies whose holidays they wish
to sell, the ones that pay them the most commission. Of course, the average
customer tends to think that these are the only holidays on offer, and are
unaware of possible alternatives.
Generally speaking, small or specialist tour companies do not sell their
product through travel agents, since they could not afford to pay the rates of
commission that would be demanded. There are a few exceptions to this rule.
Independent agents might sell or take bookings for local tour companies (such
as coach companies) or tour companies offering specialist holidays that fit into
their target market.
Consequently, even before the advent of the internet, small niche tour
companies ignored travel agents and sold direct to their customers.
The Internet Threat

With the advent of general public access to the internet, many airlines and
other travel companies began to sell directly to passengers. As a consequence,
airlines no longer needed to pay the commissions to travel agents on each ticket
sold. Since 1997, travel agencies gradually became victims of disintermediation,
the reduction in costs caused by removing layers from the package holiday
distribution network.
Many travel agencies have developed an internet presence by posting a
website, with detailed travel information. Full travel booking sites are often
complex, and require the assistance of outside travel technology solutions
providers such as Travelocity, Patheo and Open Fares. These companies use
travel service distribution companies who operate Global Distribution Systems
(GDS), such as Sabre Holdings, Amadeus, Abaccus, Galileo and Worldspan, to
provide up to the minute, detailed data on tens of thousands of flight, hotel,
and car rental vacancies.
Some online travel sites allow visitors to compare hotel and flight rates
with multiple companies for free. They often allow visitors to sort the travel
packages by amenities, price, and or proximity to a city or landmark.
Travel agents have applied dynamic packaging tools to provide fully bonded
(full financial protection) travel at prices equal to or lower than a member of
the public can book online. As such, the agencies’ financial assets are protected
in addition to professional travel agency advice.
All travel sites that sell hotels online work together with numerous outside
travel agents. Once the travel site sells a hotel, one of the supplying travel agents
is contacted and will try to get a confirmation for this hotel. Once confirmed or
not, the customer is contacted with the result. This means, that booking a hotel

HOTEL SALES
on a travel website will not get you an instant answer. Only some of the hotels Notes
on a travel website can be confirmed instantly (which is normally marked as
such on each site). As different travel websites work with different suppliers
together, each site has different hotels that it can confirm instantly. Some
examples of such online travel websites that sell hotel rooms are Expedia,
Travelocity and Tripadvisor.
A tour operator typically combines components to create a holiday. The
most common example of a tour operator’s product would be a flight on a
charter airline plus a transfer from the airport to a hotel and the services of a
local representative, all for one price. Niche tour operators may specialise in
destinations e.g. Italy, activities e.g. skiing, or a combination. The original raison
d’etre of tour operating was the difficulty of making arrangements in far-flung
places, with problems of language, currency and communication. The advent
of the internet has led to a rapid increase in self-packaging of holidays. However,
tour operators still have their competence in arranging tours for those who do
not have time to do DIY holidays, and specialize in large group events and
meetings such as conferences or seminars.
The two major tour operator associations in the US are the National Tour
Association (NTA) and the United States Tour Operator’s Association (USTOA),
in Europe it is the European Tour Operators Association (ETOA) and in the UK
it is AITO .
A Tourist Information centre or visitor information centre may be:
• A visitor centre at a specific attraction or place of interest, such as a
landmark, national park, national forests, or state park, providing
information (such as trail maps, and about camp sites, staff contact,
restrooms, etc.) and in-depth educational exhibits and artifact displays
(for example, about natural or cultural history). Often a film or other media
display is used. If the site has permit requirements or guided tours, the
visitor centre is often the place where these are coordinated.
• A tourist information centre, centre, providing visitors to a location with
information on the area’s attractions, lodgings, maps, and other items
relevant to tourism. Often, these centres are operated at the airport or
other port of entry, by the local government or chamber of commerce.
Often a visitor centre is called simply an information centre. In the U.S.,
a welcome centre is a rest area with a visitor centre, located after the
entrance from one state to another state, usually along an interstate
highway.

Notes
THE ROLE OF GOVERNMENT

6 AGENCIES
FEDERATION OF HOTEL & RESTAURANT ASSOCIATION OF INDIA

(MEMBER OF INTERNATIONAL HOTEL & RESTAURANT
ASSOCIATION)
B-82, 8th Floor, Himalaya House, 23 Kasturba Gandhi Marg, New Delhi-110001
Phones : (011) 23318781, 23318782, 23322647, 23323770. Fax: (011) 23322645
E-Mail : fhrai@vsnl.com Website : www.fhrai.com
APPLICATION FORM
Please make 3 copies, Forward 2 signed copies with a covering letter on your letter-
head, along with D.D. of the requisite amount, through the Regional Association.
One copy may be retained by you for your record.
FHRAI MEMBERSHIP ELIGIBILITY CRITERIA

1. Must be a member of one of our Regional Association. It is preferable if
this application comes through your Regional Association who will
certify their membership.
2. Must be a functioning establishment in operation.
3. Must have minimum 10 rooms or the qualifying criterion of the Regional
Association.
4. If the hotel is under construction, only associate membership can be
approved. This can be converted to hotel membership once it starts
operations.
5. Must have a restaurant in the hotel.
6. Must have all the relevant Municipal/Police or any other required
licenses with current validity.
7. Please note that a restaurant in a hotel can also become a separate
restaurant member (upto 1 for hotel with 25-100 rooms & upto 2 for
above 100 rooms).
8. Please send the listing proforma with the application, for publication in
Hotel & Restaurant Guide India.

THE ROLE OF GOVERNMENT AGENCIES
1. We wish to enrol our Hotel ________________________________________ Notes

(give name of the hotel not name of the company)
which is at (give full address) _____________________________________

City _______________ Pin Code __________ State: ____________________
Telephone : (STD Code _________)________________Fax: _____________
E-mail : _____________________ Website ___________________________
as Individual Member of the Federation of Hotel & Restaurant
Association of India.
2. Name & Designation of the Chief Executive/Owner__________________
3. Name of Incharge (give designation)/General Manager_______________
4. We are a member of or applying for membership of (name the Regional

Association) _____________________________________________________
5. We are (Please ) 5 Star Deluxe 5 Star 4 Star Heritage 3 Star
2 Star 1 Star
Govt. Approved unclassified Unapproved
6. Does your hotel have a Restaurant Yes No
7. If yes Number of seats in the largest Restaurant (if more than one
restaurant)______________________________________________________
8. Is the hotel classified by Dept. of Tourism, Govt. of India. If yes, validity

of approval from___________ to__________________(Please enclose the
classification certificate issued by Deptt. Of Tourism, Govt of India)
9. We have__________________total number of rooms (____________ Single,

_______________ Double, _______________ Suites)
10. Please place our application before the Executive Committee of the Fed-
eration for approval and after membership of our Hotel has been approved,
issue Membership cards to our following nominees. Two stamp size (31
mm x28 m photograph of each nominee are enclosed for this purpose (pl.
write name of the person on the back of the photograph)
1. Name_______________________ Designation_________________________
2. Name______________________ Designation_________________________
Notes (Note: If the hotel takes restaurant membership for one or two of its restaurant,
2 cards will be issued for such a member also).
11. Year in which opened ______________________________________________
12. Mention names & addresses, phone/fax nos. of your State/City/Hotel/
Restaurant Associations of which you are a member. State Association
________________________________________________________________
Telephone ______________ Fax ___________ E-mail ____________________
City Association __________________________________________
Telephone ______________ Fax __________ E-mail ____________________
13. We agree to abide by the rules and regulations of the Federation.
14. We are enclosing a D.D. for Rs. __________ in favour of “FHRAI” payable
at New Delhi. D. D. No. ___________ dated _________ Bank name & Branch
______________ This amount being the Entrance Fee of Rs. _____________
Annual Membership Fee of Rs. ________________________ Legal Fund
Fee of Rs. ________________ Listing Fee Rs. _________________________
Certified that the above information is true and correct to the best of my knowledge.
To be filled by Regional Association

Certified that the above applicant is a member Signature _________________
of this Association Designation _______________
Signature ____________________________
Designation __________________________
Official seal of
Seal of Regional Association
the establishment
HOTEL MEMBERSHIP FEE STRUCTURE FOR THE YEAR 2005-2006

Star Category Entrance Annual Membership Fee
Fee (in Rupees)
(in Rupees) upto 50 51 to 100 101 to 150 151 to 200 More than 200
rooms rooms rooms rooms rooms Legal
Fund @
5 Star Delux 12,100 4,600 5,320 7,990 9,320 13,310
10% of
5 Star 9,080 3,990 4,660 6,660 7,990 9,990 Annual
4 Star Heritage 6,050 2,930 3,990 5,320 6,660 7,990 Mem-
& 3 Star bership
Fee
2 Star, 1 Star, 4,840 2,660 3,470 4,930 6,000 7,330
Approved
unclassified &
Unapproved

Annual Listing Fee upto 50 51 to 100 101 to 150 151 to 200 201 to 400 More than 400 Notes
(in Rupees) rooms rooms rooms rooms rooms rooms
For All categories 2,130 3,060 3,060 3,060 4,260 5,320
Entrance fee is payable only once at the time of enrolment. Membership dues
(revised if any are to be paid every year which are valid from April to March).
All Discount Cards are issued from July to June of next year.
Star Category Total Annual Membership Dues including Entrance
Fee (in Rupees)
up to 50 51 to 100 101 to 150 151 to 200 200 to 400 more than
rooms rooms rooms rooms rooms 400 rooms
5 Star 15,600 17,270 19,470 20,930 24,330 25,390

4 Star Heritage 11,400 13,500 14,970 16,440 19,100 20,160
& 3 Star
2 Star, 1 Star, 9,900 11,720 13,320 14,500 17,160 18,220
Approved &
Unapproved
HOTEL & RESTAURANT ASSOCIATION OF NORTHERN INDIA

406/75-76, Manisha Building, Nehru Place, New Delhi-110019
Phone : 26468103 Telefax : 26236201 E-mail hrani@ndf.vsnl.net.in
APPLICATION FORM (Hotel Membership)
We desire to be elected as a member of the Hotel & Restaurant Association of

Northern India as Hotel Member.
If elected we agree to abide by the Memorandum & Articles of Association, to

pay the subscription rate for the time being in force and to implement, as for as
practicable, the policy of the Association.
Name of the Establishment (Block Letters) _______________________________
Postal Address _______________________________________________________
Phone ________________Fax __________________ E-mail: _________________
Name of Proprietor(s)/Director(s) ______________________________________
Name of General Manager/Manager-in-charge ____________________________
Name of the authorised representative who will exercise rights of Member-

ship, e.g. attend the Annual General Meeting etc.

Notes Mr./Mrs. Designation
Authorised Signatory Designation
(M.D., Director or Proprietor)
Proposed by (Name in Capital) Designation
Establishment Signature with Official Seal
Seconded by Designation
(Name in Capital)
Establishment Signature with Official Seal
(Application should be Proposed and Seconded only by an existing member affixing
their Rubber Stamp and Signatures)
RATE OF SUBSCRIPTION (PERIOD APRIL TO MARCH)

Classification Entrance Fee Annual Legal Fund Total
Subscription
Approved/Unapproved 3500 1500 500 5500
/1 Star/ 2 Star 4000 2000 500 6500
3 Star- Upto 100 rooms 4500 3000 500 8000
Above 100 rooms 4500 4000 500 9000
4 Star- Upto 100 rooms 5000 4500 500 10000
Above 100 rooms 5000 5500 500 11000
Heritage 5500 5500 500 11000
5 Star- Upto 200 rooms 6500 6500 500 13500
Above 200 rooms 6500 7500 500 14500
5 Star (D) - Upto 200 rooms 8000 8500 500 17000
Above 200 rooms 8000 9500 500 18000

RS. : Please make the Subscription payments by Bank Draft only.

PARTICULARS OF THE ESTABLISHMENT Notes

1. Year of Establishment ____________________________________________
2. Percentage of Foreign Tourists catered ______________________________
3. Is there a provision for liquor Bar ____________________________________
4. Strength of Staff _________________________________________________
5. Please attach the following:
1. Competent Authority to grant license for Hotel Business approval
like MCD/Nagar palika etc.
2. Health Certificate
3. Police/District magistrate
4. Govt. Approval
5. Establishment Profile with brochure
6. Any other
6. We are 5 Star Delux 5 Star 4 Star 3 Star
2 Star 1 Star Heritage
Government Approved Unclassified Unapproved
7. For Hotels Number of Rooms Hotel Room Rate
(i) Number of Rooms
(a) Single (Airconditioned) ___________ ___________
(b) Single (Non AC) ___________ ___________
(c) Double (Airconditioned) ___________ ___________
(d) Double (Non AC) ___________ ___________
(ii) Number of Suites
(a) Single (Airconditioned) ___________ ___________
(b) Single (Non AC) ___________ ___________
(c) Double (Airconditioned) ___________ ___________
(d) Double (Non AC) ___________ ___________
Total of (a) to (d) ________ Total number of beds ________
(iii) Other Facilities Offered
1. 2.
3. 4.
DETAILS OF THE RESTAURANTS
1 Name Seating capacity Cuisines AC (/×)
1.
2.
3.
4.

Notes HOTEL AND RESTAURANT ASSOCIATION OF EASTERN INDIA

18A/1, Everest House, 46C Chowringhee Road, Kolkata 700 071
Phones: (033) 22881742 / 43 Telefax: 22881743 E-mail: hraei@vsnl. net
ORGANISATION MEMBER OF THE FEDERATION OF HOTEL &

RESTAURANT ASSOCIATIONS OF INDIA
APPLICATION FOR HOTEL MEMBERSHIP

(To be filled in duplicate)
We wish to enroll our establishment as Individual Member of the Hotel & Res-
taurant Association of Eastern India. We agree to abide by the rules and regula-
tions of the Association. The application has been proposed and seconded by
Hotel/Restaurant Members of the Association. We are enclosing herewith our
Cheque/Demand Draft drawn in favour of Hotel & Restaurant Association of
Eastern India covering the applicable charges.
We shall be thankful if you will kindly place our application before the
Executive Committee of the Association for approval.
Name of the Hotel
Full Address
Pin Code State
STD Code Telephone
Fax E-mail
Chief Executive/Owner
Incharge/General Manager
Certified that the information given by us in the application form is true and
correct to the best of my knowledge.
Signature _________________________ Designation _______________________
PROPOSED BY
NAME OF HOTEL/RESTAURANT
ADDRESS
SIGNATURE WITH SEAL
DESIGNATION
SECONDED BY
PARTICULARS OF THE HOTEL
YEAR IN WHICH ESTABLISHED
ROOMS SINGLE DOUBLE SUITE
AIRCONDITIONED
TARIFF IN RUPEES Notes

TOTAL INVESTMENT IN THE ESTABLISHMENT IN RUPEES
DO FACILITIES EXIST FOR HOLDING CONFERENCES / SEMINARS ETC.?
IF SO, PLEASE INDICATE THE MAXIMUM NUMBER OF DELEGATES THAT
CAN BE ACCOMMODATED.
HALL - I HALL - II HALL - III
NUMBER OF DELEGATES
IS THERE A PROVISION FOR LIQUOR BAR ? YES / NO
TOTAL STAFF STRENGTH
TYPE OF CUISINE SERVED IN THE HOTEL
OCCUPANCY (PERCENTAGE FOR THE PREVIOUS YEAR)
PERCENTAGE OF FOREIGN TOURISTS FOR THE PREVIOUS YEAR
FOREIGN EXCHANGE EARNED DURING THE PREVIOUS YEAR
DOES THE HOTEL HAVE MONEY CHANGERS LICENCE? YES / NO
DURATION OF HIGH/LOW SEASON LOW SEASON HIGH SEASON
(In case of establishments in hill stations, etc.)
IS THE HOTEL APPROVED BY THE DEPARTMENT OF TOURISM, GOV-
ERNMENT OF INDIA YES/NO
HAS YOUR HOTEL BEEN CLASSIFIED BY THE
DEPARTMENT OF TOURISM
GOVERNMENT OF INDIA? YES/NO
IF YES STAR CATEGORY
PLEASE ATTACH THE FOLLOWING ITEMS ALONG WITH THE
APPLICATION FORM
A) PHOTOCOPIES OF TRADE LICENCE, POLICE LICENCE, EXCISE
LICENCE OR ANY OTHER LICENCE APPLICABLE IN YOUR AREA
B) PHOTOGRAPHS OF FRONT FACADE, RECEPTION, SINGLE ROOM,
DOUBLE ROOM, SUITE, KITCHEN, BATH-ROOM
C) ANNUAL REPORT WITH BALANCE SHEET AND PROFIT & LOSS
ACCOUNT
D) CHEQUE/DEMAND DRAFT TO BE DRAWN IN FAVOUR OF “HOTEL
& RESTAURANT ASSOCIATION OF EASTERN INDIA"
SUBSCRIPTION RATES

Notes HOTEL MEMBERSHIP

ANNUAL SUBSCRIPTION (Rs.) 5-STAR 4-STAR 3-STAR 2-STAR 1-STAR
PER SINGLE ROOM 32 26 20 17 11
PER DOUBLE ROOM 37 31 22 20 17
PER SUITE 39 35 26 24 21
MINIMUM ANNUAL SUBSCRIPTION: Rs 2000
ENTRANCE FEE: Rs 5000 BUILDING FUND: Rs 2000
LEGAL FUND: 25% of annual subscription
RESTAURANT MEMBERSHIP
ANNUAL SUBSCRIPTION (Rs.) Without Bar & With Bar With Bar &
Entertainment
Seating Capacity upto 75 1200 1250 1450
Seating Capacity 76 to 150 1450 1500 1650
Seating Capacity 151 & above 1750 1850 1950
ENTRANCE FEE: Rs 3500 BUILDING FUND: Rs 1000
ASSOCIATE MEMBERSHIP
MINIMUM ANNUAL SUBSCRIPTION: Rs 1000
ENTRANCE FEE: Rs 2500
For all assistance please contact:
Acting Executive Director
or Accounts Assistant
HOTEL AND RESTAURANT ASSOCIATION OF EASTERN INDIA,
18A/1, Everest House, 46C Chowringhee Road, Kolkata 700 071
Phones : (033) 22881742 / 43 Telefax: 22881743.
E-mail: hraei@vsnl. net

FORM-C Notes
(See Rules 4 & 5)
DELHI SHOPS & ESTABLISHMENTS ACT, 1954
REGISTRATION CERTIFICATE OF THE ESTABLISHMENT
Name of the establishment, if any ............................................................................
Name of the occupier/employer................................................................................
Postal Address of the establishment .........................................................................
Registration No .............................................................................................................
It is certified that the establishment” herein ...............................................................
has been registered under the Delhi Shops & Establishments Act, 1954
on.....................................................................................................................................
Here insert category of the Establishment. Chief Inspector,

Shops & Establishments, Delhi
Dated 3rd August, 1998, Government of India, Ministry of Finance

Department of Revenue
Text of Notification No. 60/98 Customs
GSR 470 (E)
In excercise of the powers conferred by sub-section (1) of section 25 of the
Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it
is necessary in the public interest so to do, hereby makes the following further
amendments in the notification of the Government

Notes MUNICIPAL CORPORATION OF DELHI

LICENCE
Issued u/s 417 M.C. Act.
Book No.................. Dated...................
No. ...........................
The premises situated in ....................................................... and described in the
Municipal House Tax Register as ......................................................... are hereby
licensed as an Eating Houses/ Restaurants/ Tea Shops/ Coffee Houses / Re-
freshment Rooms ......................................................... This Licence is granted to
Sh ...........................................................................................................................................
.......................................................................................... the Landlord / Tenant of
the said premises, subject to conditions laid down in the bye-laws printed on
reverse.
The Licence will remain inforce until .............................. unless suspended or
revoked prior to that date.
Licence fee received Rs. ............................................................
Vide R. No. ............................................................ Dated..............................
Licensing Officer
Z.H.O. .................................. Zone

MUNICIPAL CORPORATION OF DELHI Notes

(Health Department)
LICENCE
Issued u/s 421 D.M.C.Act. (Not Transferable)

Book No. .............................. Licence No. ............................
This Licence is granted in Pursuant to the provisions of section 421 of the
Delhi Municipal Corporation Act, 1957 as amended upto-date and is valid only
for the person and particulars specified herein subject to conditions stated
overleaf.
Name of the Licensee Shri ...........................................................................................
S/o, W/o, Shri ..............................................................................................................
Premises Licenced ........................................................................................................
Trade ................................................................................................................................
Duration of Licence : For Period ending .....................................................................
unless or revoked earlier.
Licence fee Rs. ( ) paid vide Receipt No.
dated ..................................................
Licensing Officer
Zonal Health Officer Zone
The Licence is hereby renewed :
Fee received
vide R.No. Date Rs. Licence valid upto L.O.’s Sign.

Notes PREVENTION OF FOOD ADULTERATION ACT 1954

The following extracts from the Prevention of Food Adulteration Act, 1954 may
be of interest to hotels, restaurants and allied catering units -
12-B. Form of nomination of Director or Manager and his consent under
section 17
(1) A company may inform the Local Health Authority of the concerned
local area, by notice in duplicate in form VIII containing the name and address
of the Director or Manager, who has been nominated by it under sub-section
(2) of Section 17 of the Act to be in charge of, and responsible to, the company
for the conduct of the business of the company or any establishment, branch or
unit thereof:
Provided that no such nomination shall be valid unless the Director or Man-
ager who has been so nominated, gives his consent in writing and has affixed
his signature, in Form VIII in duplicate in token of such consent.
(2) The Local (Health) Authority shall sign and return one copy of the no-
tice in Form VIII to the company to signify the receipt of the nomination and
retain the second copy in his office for records.
Form VIII
(See Rule 12-B)
Nomination of Persons by a Company
Name................................................................................................................................
of the company) has been nominated by the company by a Resolution passed
at their meeting held on .......................................................(Day/Date).
Conduct of the business of the said company or establishment/branch/
unit thereof and authorised to exercise all such powers and take all such steps
as may be necessary or expedient to prevent the commission by the said com-
pany of any offence under the Prevention of Food Adulteration Act, 1954.
A certified copy of the said resolution is enclosed.
Place ............................... Managing Director/Secretary of
(Name of the company)
Date ...............................
Note- Score out the portion which is not applicable
I accept the above nomination in pursuance of sub-section (2) of Section 17 of
the Prevention of Food Adulteration Act, 1954 and Rule 12-B of the rules made
thereunder.
Place ............................... Managing Director/Secretary
Date ...............................
I hereby acknowledge receipt of the above nomination.
Place ............................... Signature of the Local (Health)
Date ............................... Authority
LIST OF L-4 DOCUMENTS ATTACHED WITH APPLICATION Notes
1. Documentary Proof regarding legal status of the Restaurant i.e. whether

a company, partnership firm, etc.
2. Whether the premises of Restaurant in legal possession of the applicant

i.e. Owned / Leased/Rented.
3. Trade Licence from the local authority i.e. MCD/NDMC as the case may
be.
4. Certificate of Registration of Eating House Licence issued by the DCP

(Licensing).
5. Documentary Proof regarding applicant being an Income tax Assessee/

PAN No.
6. Lay out Plan of the proposed Restaurant.
7. Certificate of Registration from Sales Tax Deptt.
8. NOC from Fire Services/Affidavit regarding Fire Safety measures.
9. Approval from DOT Deptt., Govt. of Delhi.
10. The restaurant should not be within a distance of 75 meters from any
school/college/teaching institution and religious place.
11. Affidavit regarding Punjab Excise Act, 1914.
12. Affidavit regarding Seating capacity of the restaurant.
13. Affidavit regarding correctness of information.
14. List of staff strength.

Notes FORM OF APPLICATION FOR GRANT OF LICENCE IN FORM L-4

UNDER DELHI LIQUOR LICENCE RULES 1976 AMENDED FROM TIME
TO TIME FOR THE SERVICES OF IMFL AND BEER IN AN INDEPEN-
DENT RESTAURANT.
1. Name & Address of Applicant/Restaurant.
2. Constitution (Whether proprietorship/partnership of society of Pvt.Ltd.
or partnership deed of memorandum of articles of association in support
of the constitution, wherever is relevant.
3. Letter No. & Date of approval of Deptt. of Tourism of the capital Govt., if
applicable.
4. Whether the premises are owned or leased or rented by the applicant.
Note : Please attach attested photocopy of the proof in support thereof.
5. Whether adequate space has been set out for Storage/Bar area with the
restaurant.
Note : Please enclose a site and layout plan of the restaurant clearly
demarcating the store room, bar area (if any) and service area.
6. Whether the area where the Restaurant is situated is an approved
commercial area by the MCD (please answer Yes/No).
7. Whether the applicant holds an Excise Licence in any form for any other
premises (if so, details thereof).
8. Sales Tax Registration Certificate No. & Date.
Note : Please enclose an attested copy of the Sales Tax Registration
Certificate.
9. Copy of Certificate for Registration under Shops & Establishment Act.
10. If assessed under the Income Tax indicate the Permanent Account No./R.
No.
11. Have you registered an Eating House with DCP (Licensing). If yes, please
attach photocopy of the Certificate duly renewed.
12. Please attach a copy of the site plan & outline, Map of the Restt. indicating
sitting area segment wise bathroom/toilet facilities separately for Gents
& Ladies, Kitchen area etc.
13. Does the Restaurant has parking space of its own. How many vehicles
can be parked outside restaurant. Please indicate number of (a) cars & (b)
scooters.
14. What is the staff strength of the Restt. Please indicate the number of
Manager, Stewards, Kitchen Staff, Utility employees etc.
15. Whether the Restaurant is centrally air-conditioned or provided with
A.C.’s number of air-conditioners provided.
16. Whether the Restaurant is properly furnished and decorated. Give details
of type of furniture, furnishing, carpets etc. lighting arrangement.
17. Whether the premises have provision for store and service counter for Notes
liquor, indicate area provided for the same in sq. ft.
18. Whether the Pentry area is equipped with suitable gadgets and is hygienic.
19. Details of fire-fighting equipments installed in the Restaurant with dates/
inspection by Fire Deptt. and MCD about adequately of anti fire
arrangement.
20. Whether separate sitting arrangements have been provided for guests with
families.
21. Whether separate area has been ear-marked for the smokers. Those who
do not smoke or drink Alcoholic Beverages.
22. To what category of Restaurant you would grade?
23. Please indicate the distance from the premises of the Restaurant to the
nearest:
(i) Industrial estate or other major construction site
(ii) Religious places
(iii) Major educational institutions
(iv) Colonies of labourers & Harijans &
(v) Hospitals
We have gone through the Punjab Excise Act, 1914, as extended to the
Union Territory of Delhi. Delhi Liquor Licence Rules, 1976 as amended
from time to time, Delhi intoxicants (Sales & Licence) rules; 1976 and other
relevant, excise rules and understood the same.
We have also understood that the application for the grant of L-4 Licence
shall be considered by the competent authority under the Delhi Liquor
Licence Rules, 1976 as amended from time to time and the Delhi
Intoxicants. (Sale & Licence) rules, 1976 and the other relevant Excise Rules
for the grant of L-4 licence.
Note:
We further clearly understand, the application/licence is liable to be
rejected/cancelled for furnishing incomplete/incorrect particulars and for
any reasons whatsoever by the appropriate/competent authority. We
understand that no compensation whatsoever on this account or on any
other account shall be payable by the Delhi Administration in the event
of non-grant/cancellation of L-4 licence by the appropriate Competent
Authority.
(Signature of the Applicant)
24. Certified that the information given above is true and correct on the basis
of the facts on record and to the best of my knowledge and belief.
(Signature of the Applicant)

Notes STAR CLASSIFICATION
REVISED GUIDELINES FOR APPROVAL OF HOTELS AT THE

PROJECT/IMPLEMENTATION STAGE AND FOR CLASSIFICATION/RE-
CLASSIFICATION OF FUNCTIONING HOTELS UNDER - ONE TO FIVE
STAR DELUXE AND HERITAGE CATEGORIES HOTELS
(COPY)
Government of India, Department of Tourism (H & R Division)
Hotels are an integral part of a tourists visit to a place and the services offered
by them can make or mar a visit completely. With the aim of providing
standardised, world class services to the tourists, the Government of India,
Department of Tourism has a scheme for classification of fully operational hotels
in the following categories :-
(A) Star Hotels:- 5 Star’Deluxe, 5 Star, 4 Star, 3 Star, 2 Star & 1 Star
(B) Heritage Hotels :-Heritage Grand, Heritage Classic & Heritage
The Hotel & Restaurant Approval & Classification Committee (HRACC)
inspects and assesses the hotels based on facilities and services offered. Project
approvals are also given in all the above mentioned categories at the project
implementation stage. Classified hotels/approved projects are eligible for
various concessions and facilities that are announced by the Government from
time to time besides getting worldwide publicity through the India Tourism
Offices located in India and abroad. Details of the criteria set and the documents
required are given in this document. For classification and project approvals in
the 5 star deluxe, 5 star, 4 star and all the three heritage categories the applications
along with the requisite fees may be sent to :- .
Member Secretary (HRACC) Hotel and Restaurants Division, Department
of Tourism, Government of India, C–I Hutments, Dalhousie Road, New Delhi-
110011.
For classifications and project approvals in the 3 star, 2 star and 1 star
categories, the applications along with the requisite fees may be sent to the
Regional Director, Indiatourism Office in whose region the hotel/project is
located:
1. Regional Director, Indiatourism, West & Central Region, 121, M Karve
Road, Mumbai-400020.
2. Regional Director, Indiatourism Northern Region, 88, Janpath, New Delhi-
110001.
3. Regional Director, Indiatourism, Southern Region, 154, Anna Salai,
Chennai-600002.
4. Regional Director, Indiatourism, Eastern Region, Embassy, 4, Shakespeare
Sarani, Kolkata-700007.
5. Regional Director, Indiatourism, North Eastern Region, G. L. Publication
Complex, G. S. Road, Guwahati-781007.
GENERAL TERMS, CONDITIONS & APPLICATION Notes

FORMAT FOR PROJECT APPROVAL AT PROJECT
LEVEL & CLASSIFICATION OF HOTELS
........................Approval at Project Level..........................
1. The Department of Tourism approves hotels at project stage based on
documentation, which enables the hotels to get certain benefits from the
Government as announced from time to time. To documents required for
project approvals are listed below.
2. Project approvals are valid for 5 years. Project approvals of the Government
of India, Department of Tourism cease 3 months from the date that the
hotel becomes operational even if all its rooms are not ready. The hotel
must apply for classification within these 3 months.
3. The Government of India, Department of Tourism reserves the right to
modify the guidelines/terms and conditions from time to time.
4. Application form. This covers
(i) Proposed name of the hotel,
(ii) Name of the promoters with a note on their business antecedents
(iii) Complete postal address of the promoters/tel/fax/email
(iv) Status of the owners/promoters
1. If public/private limited company with copies Memorandum and
Articles of Association
2. If partnership, a copy of partnership deed and certificate of
registration
3. If proprietary concern, name and address of proprietor/certificate
of registration
(v) Location of hotel site with postal address
(vi) Details of the site
1. Area (in sq. metres)
2. Title-owned/leased with copies of sale/lease deed
3. Copy of land use permit from local authorities
4. Distances from railway station, airport, main shopping centres
(in kms)
(vii) Details of the project
1. Copy of feasibility report
2. Star category planned
3. Number of rooms and area for each type of room (in sq. ft.)
4. Number of attached baths and areas (in sq. ft.)
Notes 5. Details of public areas - lobby/lounge, restaurants, bars, shopping,

banquet/conference halls, health club, swimming pool, parking
facilities.
6. Facilities for the physically challenged persons.
7. Eco-friendly practices and any other additional facilities (please
indicate area in sq. ft for each facility mentioned above at 5, 6 & 7)
8. Date by which project is expected to be completed and operational
(viii) Blue prints/sketch plans signed by owners and architect showing
1. Site plan
2. Front and side elevations
3. Floor plans for all floors
4. Detail of guestrooms and bath rooms with dimensions in sq.ft.
5. Details of fire fighting measures/hydrants etc.
6. Details of measures for energy conservation and water harvesting.
(ix) Airconditioning details for guest rooms, public areas.
(x) Local approvals by
1. Municipal authorities
2. Concerned Police Authorities
3. Any other local authority as may be required.
4. Approval /NOC from Airport Authority of India for projects
located near airports.
The above mentioned approvals/NOCs are the responsibility of the
promoters/concerned company as the case may be. The Department’s approval
is no substitute for any statutory approval and the approval given is liable to be
withdrawn in case of any violations without notice.
(xi) Proposed capital structure
Total project cost
(a) Equity component with details of paid up capital
(b) Debt-with current and proposed sources of funding
(xii) Letter of acceptance of regulatory conditions.
(xiii) Please indicate whether the promoter intends to give a few rooms or
all rooms on a time-share basis.
(xiv) Application Fee
5. ln the event of any changes in the project plans, the approval must be
sought afresh.
6. Authorised officers of the Department of Tourism should be allowed free Notes

access to inspect the premises from time to time without prior notice.
7. The hotel must immediately inform the Department of the date from which
the hotel becomes operational and apply for classification within 3 months
of this date.
8. The fees payable for the project approval and subsequent extension, if
required are:
Star Category Amount is Rs.
5 Star 15,000
4 Star 12,000
3 Star 8,000
2 Star 6,000
1 Star 5,000
Heritage Category 12,000
9. The promoters must forward regular progress reports for each quarter
failing which the project approval would be considered withdrawn.
10. All documents must be valid at the time of application and a Gazetted
officer or Notary must duly certify copies furnished to the Department.
Documents in local languages should be accompanied by a translation in
English/official language and be duly certified.
11. Projects, where it is proposed to let out part or whole of the hotel on time
share basis will not be eligible for approval.
12. For any change in the category, the promoters must apply afresh with a
fresh application form and requisite fees for the category applied for.
13. Any changes in the project plans or management should be informed to
‘the Regional Directors Office (for 3, 2 & 1 star, categories) and to the
Department of Tourism (for 5-D, 5, 4 star and Heritage categories) within
30 days otherwise the approval will stand withdrawn/terminated.
14. Incomplete applications will not be accepted.

Notes HOTEL CLASSIFICATION

1. Classification for newly operational hotels must be sought within 3 months
of completion of approved hotel projects. Operating hotels may opt for
classification at any stage. However, hotels seeking re-classification should
apply for reclas sification one year prior to the expiry of the current period
of classification.
2. If the hotel fails to reapply 1 year before the expiry of the classification
order, the application will be treated as a fresh classification case.
3. Once a hotel applies for classification/re-classification, it should be ready
at all times for inspection by the HRACC. No. requests for deferment of
inspection will be entertained.
4. Classification will be valid for 5 (Five) years from the date of issue of
orders or in case of reclassification from the date of expiry of the last
classification provided that the application has been received within the
stipulated time mentioned above, along with all valid documents.
Incomplete applications will not be accepted.
5. Hotels which propose to let-out part of or all its rooms on time share basis
are not eligible to be classified.
6. Hotels applying for classification must provide the following
documentation.
APPLICATION FORM DETAILING

(i) Name of the hotel
(ii) Name and address of the promoters/owners with a note on their business
antecedents
(iii) Complete postal address of the hotel with telephone no./fax/email
(iv) Status of the owners/promoters
1. If public/private limited company with copies of Memorandum and
Articles of Association
2. If partnership, a copy of partnership deed and certificate of
registration
3. If proprietory concern, name and address of proprietor/certificate
of registration.
(v) Date on which the hotel became operational.
(vi) Details of hotel site with postal address and distance from Airport/Railway
Station/City Centre/Downtown shopping area (in kms)

(vii) Details of the hotel Notes

1. Area (in sq. metres) with title-owned/leased with copies of sale/
lease deed
2. Copy of land use permit from local authorities
3. Star category being applied for
4. Number of rooms and area for each type of room in sq. ft. (single/
double/suites)
5. Number of attached baths
6. Details of public areas-lobby/lounge, restaurants, bars, shopping
area, banquet/conference halls, health club, swimming pool, parking
facilities, facilities for the physically challenged persons, eco-friendly
practices and any other additional facilities. The area for each facility
should be indicated in sq. ft.
7. Details of guestrooms and bathrooms with dimensions in sq. ft.
8. Details of fire fighting measures/hydrants etc.
9. Details of measures for energy conservation and water harvesting
and other eco-friendly measures and initiatives.
10. Airconditioning details for guestrooms, public areas
(viii) Certificates/No objection certificates (attested copies)
(a) Certificate/licence from Municipality/Corporation to show that
your establishment is registered as a hotel
(b) Certificate/licence from concerned Police Department authorizing
the running of a hotel
(c) Clearance certificate from Municipal Health Officer/Sanitary
Inspector giving clearance to your establishment from sanitary/
hygienic point of view
(d) No Objection Certificate with respect to fire fighting arrangements
from the Fire Service Department (Local Fire Brigade Authorities)
(e) Public liability insurance
(f) Bar Licence (necessary for 4 star, 5 star, 5 star deluxe only)
(g) Money Changers Licence (necessary for 4 star, 5 star, 5 star deluxe
only)
(h) Sanctioned building plans/occupancy certificate
(i) If classified earlier, a copy of the earlier “Certificate of
Classification"issued by Department of Tourism

Notes (j) For Heritage property, certificate from the local authority stating
age of the property and showing new and old built up areas
separately.
(k) Any other local authority as may be required.
(l) Approval/NOC from AAI for projects located near airports
(m) Please indicate whether a few rooms or all rooms are to be let out on
a time-share basis.
(n) Application fees.
The above-mentioned approvals/No objection certificates are the
responsibility of the Owners/promoters/concerned company as the
case may be. The Department’s approval is no substitute for any
statutory approval and the approval given is liable to be withdrawn
without notice in case of any violations or misrepresentation of facts.
7. All applications for classification or re-classification must be complete in
all respects - application form, application fee, prescribed clearances,
NOCs, certificates etc. - incomplete application is liable to be rejected.
8. Hotels will qualify for. classification as Heritage hotels provided a
minimum 50% of the floor area was built before 1935 and no substantial
change has been made in the facade. Hotels, which have been classified/
re-classified under heritage categories prior to issue of these Guidelines
will continue under Heritage categories even if they were built between
1935 – 1950.
9. The application fees payable are as follows:
Star Category Classification/
Reclassification fees in Rs.
1 Star 6,000
2 Star 8,000
3 Star 10,000
4 Star 15,000
5 Star 20,000
5 Star Deluxe 25,000
Heritage (Grand, Classic & 15,000
Heritage categories
10. The classification committee will consist as follows:
(a) For 4 Star, 5 Star and 5 Star Deluxe and Heritage category - Chaired
by Chairman (HRACC) or his representative. Representatives from
FHRAI/HAI/IATO/TAAI/IHM/local Indiatourism office/ Notes

Member Secretary will constitute the other members of the
Committee. In case of Heritage category, a representative of IHHA
will be a member of the committee.
(b) For 1 Star, 2 Star and 3 Star, the committee will be Chaired by
Secretary (T) of the concerned State Government or his nominee who
should not be below the rank of a Deputy Secretary to the
Government of India. In his absence the Regional Director,
Indiatourism who is also a Member Secretary, Regional HRACC will
chair the committee. The recommendations will be sent to HRACC
Division (Department of Tourism, Government of India) within 3
weeks. Other members will be representatives from FHRAI/IATO/
TAAI/IHM.
(c) The Chairman and any 3 members will constitute a quorum
(d) The minutes will be approved by the Chairman (HRACC).
(e) In case of any dissatisfaction with the decision of HRACC the hotels
may appeal to Secretary (T), Government of India for review and
reconsideration within 30 days of receiving the communication
regarding classification/reclassification. No requests will be
entertained beyond this period.
11. Hotels will be classified following a two stage procedure
(a) The presence of facilities and services will be evaluated against the
enclosed checklist.
(i) New projects will be required to adopt environment friendly
practices and facilities for physically challenged persons.
(ii) Existing hotels being classified will need to conform to a phased
plan for adding Eco-friendly practices and facilities for physically
challenged persons, which should be completed by 31st
December, 2003.
(b) The quality of facilities and services will be evaluated against the
mark sheet.
12. The hotel is expected to maintain required standards at all times. The
Classification Committee may inspect a hotel at any time without previous
notice. The Committee may request that its members be accommodated
overnight to inspect the level of services.
13. Any deficiencies/rectification pointed out by the HRACC must be
complied with within the stipulated time, which has been allotted in
consultation with the hotel representatives during inspection. Failure to
do so will result in rejection of the application.

Notes 14. The committee may assign a star category lower but not higher than that
applied for.
15. The hotel must be able to convince the committee that they are taking
sufficient steps to conserve energy and harvest water, garbage segregation,
and disposal/recycling as per Pollution Control Board (PCB) norms and
following other Eco-friendly measures.
16. For any change in the star category /heritage category, the promoters
must apply afresh with a fresh application form and requisite fees for the
category applied for.
17. Any changes in the plans or management of the hotel should be informed
to the HRACC, Government of India, Department of Tourism within 30
days otherwise the classification will stand withdrawn/terminated.
18. Applicants are requested to go through the checklist of facilities and
services contained in this document before applying.
19. Incomplete applications will not be considered. All cases of classification
would be finalised within three months of the application being made.
20. The Government of India, Department of tourism reserves the right to
modify the guidelines/terms and conditions from time to time.

FORMAT FOR UNDERTAKING Notes

To
The Secretary (T )
Government of India,
Department of Tourism,
New Delhi
UNDERTAKING
I have read and understood all the terms and conditions mentioned above with respect
to project approval/classification/re-classification in 1/2/3/4/5/5-deluxe/heritage
category and hereby agree to abide by them. The information and documents provided
are correct and authentic to the best of my knowledge.
Signature and name in block letters

Place: Seal of the applicant
Date:
CHECKLIST FOR FACILITIES 1Star 2Star 3Star 4Star 5/5Star D Comments
& SERVICES
GENERAL
Primarily transient, full time operations, N N N N N Max 10% of rooms for
7 days week in season commercial use in hotel block
or as per local law. At least one
room equipped for the
physically challenged
Establishment to have all necessary N N N N N These documents are licences
trading licences already detailed in General
Terms and Conditions
Establishment to have public liability N N N N N Public liability insurance be
insurance specified at a minimum of Rs.
5.0 crores.
24 hours lifts for buildings higher than N N N N N Mandatory for new hotels.
ground plus two floors Local laws may require a
relaxation of this condition.
Easy access for physically
challenged persons.
Bedrooms, Bathrooms, Public areas and N N N N N
kitchens fully serviced daily
All floor surfaces clean and in good repair N N N N N Floors may be of any type
GUESTROOMS
Minimum l0lettable rooms. All rooms N N N N N
with outside window/ventilation
Minimum size of guestroom excluding 120 120 140 140 200 Single occupancy rooms may
bathroom in sq. ft. be 20 sq. ft. less ‘
Airconditioning 25% 25% 50% 100% 100% A ir c o n d i t i o n i n g / h e a t in g
depends on climatic conditions
& architecture. Room temp
should be between 20 & 28
Degrees C. For 4*, 5* & 5*
Deluxe. (the % is of the total no.
of rooms )

Notes A clean change of bed and bath linen daily N

& between check-in’s
N N N N Hotels may have a guest
triggered system.
For 1* & 2* on alternate days.
Definitely required between
each check- in.
Minimum bed width for single (90cm)and D N N N N
double beds (135 cm)
Mattress Minimum 10cm thick D D N N N Coir, foam or spring. Foam
covered if cotton.
Minimum bedding 2sheets, pillow & case, N N N N N Blankets available in
blanket, mattress protector/bed cover airconditioned rooms & as per
seasonal requirement in non
a/c rooms.
Sufficient lighting 1 per bed N N N N N
A 5 amp earthed power socket N N N N N
A bedside table and drawer N N N N N 1 per two twins and two for a
double bed
TV-cable if available N N N 3*4*5* and 5* deluxe must have
remotes
A writing surface with sufficient lighting N N N

Chairs N N N N N Preferable one per bedding
Wardrobe with minimum 4 clothes N N N N N In 1* & 2* these may be without
hangers per bedding doors
Shelves or drawer space N N N N N
A waste paper basket N N N N N
Opaque curtains or screening at all N N N N N
windows
Drinking water +1 glass tumbler per guest N N N N N Water treated with
UV+filteration is necessary
A mirror, at least half length (3’) N N N N N

A stationary folder containing stationery D D N N N
envelopes
A do not disturb notice N N N
Night spread/bed cover with nightly N N N
turndown service
In room safe N
Minibar/Fridge N Contents must conform to local
laws
Iron and ironing board on request N N

SUITES N N 2% of room block with a
BATHROOMS minimum of 1
Percentage of rooms with dedicated 25% 75% All All All Dedicated bathrooms need not
(private) bathrooms with room be “attached” but must have
private access
Minimum size of bathroom in square feet 30 30 36 36 45 25% of bathroom in 1* & 2* to
be western style WC
Communal bathrooms on same floor as N N NA NA NA All bathrooms, shower stalls
rooms for 1 star & 2 star. Access not lockable. Toilet area to have
through public areas, kitchen etc. sanitary bin with lid
1 bath towel and 1 hand towel to be N N N N N If no attached/dedicated bath,
provided per guest to provide in room
One W. C. brush per toilet seat N N
Guest toiletries to be provided. N N N N N Where bathroom is not
Minimum 1 new soap/guest attached, toiletries provided in
room
A clothes-hook in each bath/shower room N
A sanitary bin N
N
N
N
N
N
N
N
N In communal bathrooms, these
Notes
must have a cover
Each Western WC toilet to have a seat and N N N N N
lid, toilet paper
Floors and walls to have non-porous N N N N N
surfaces
Hot and Cold running water available D D N N N
24 hours bath tubs/shower closet Bath tubs don’t waste water. In
4* plus hotels, some rooms
should offer this option to the
guest
Water saving taps/shower N

Energy saving lighting N N N N N
Bottled toiletry products D D D N N
Hairdryers N N Where not provided in bathroom
must be available on request.
PUBLIC AREAS
A lounge or seating in the lobby area N N N N N Size would depend on check in
pattern. There should be at least
one telephone no higher than 24”
from floor level in 5/5D*
Reception facility or means to call N N N N N Manned minimum 16 hours a
attention day.
Call service 24 hours
Accommodation, F & B and other tariffs N N N N N To be displayed in room.
available
Heating is cooling to be provided in N N Temperature to be between
20-28°C
enclosed public room
Public restrooms for ladies and gents with N N N N N To be displayed in room.
soap and clean towels, a wash basin with above should have . facility for
running hot and cold water, a mirror, a physically challenged persons)
sanitary bin with lid in unisex & ladies
toilet
Public rest rooms to have low height N N N N N
urinal (24"max)
Ramps with anti-slip floors and handrails D D D N N Fire and emergency alarms
at the entrance. Minimum door width should have visual & audible
should be 32” to allow wheel chair access signals. Wheelchair access with
and other facilities for the physically suitable table in atleast one
challenged restaurant.
Facilities for aurally/visually handicapped D D D D D
FOOD & BEVERAGE
Early morning beverage service N N N N N This may be room service or a
self-making facility
Dining room serving breakfast & dinner N N N N N Meal times to be displayed.
Service to start by 7 am & finish
no earlier than 10 pm. Minimum
one hour per meal service.
Breakfast may be Continental.
1* hotel without dining room
must offer service in rooms
Multi cuisine restaurant on premises D D N N N
Speciality restaurant D N N
24 hours coffee shop D N N
Full service of all 3 meals in dining room N N N

Notes A cooked breakfast be available

Room service of full meals
N N N
N
N
N In 1* & 2* this is necessary if no
Dining room. 3 * must offer light
(pre-plated) meals
Room service of alcoholic beverages N N If permitted by local law
Crockery & Glassware unchipped N N N N N Plasticware accepted in pool
area
Cutlery to be at least stainless steel N N N N N Plasticware accepted in pool.

Silverware N
Bar N N If permitted by local laws
KITCHEN
Refrigerator with deep freeze N N N N N Capacity based on size of F & B
service
Segregated storage of meat, fish N N N N N Meats & fish in freezers.

& vegetables Vegetables must be separate
Tiled walls, non-slip floors N N N N N

Head covering for production staff N N N N N
Daily germicidal cleaning of floors N N N N N
Clean utensils N N N N N
Six monthly medical checks for N N N N N
production staff
All food grade equipment, containers N N N N N
Ventilation system N N N N N
First-aid training for all kitchen staff N N N N N
Drinking water N N N N N Water treated with
UV+filtration is acceptable
Garbage to be segregated-wet dry N N N N N To encourage recycling wet

garbage area to be
airconditioned for 3 - 5D
Receiving and stores to be clean and N N N N N

distant from garbage area
STAFF QUALITY
Staff uniforms for front of the house N N N N N Uniforms to be clean and in
good repair.
Front office staff English speaking N N N May be relaxed outside the 8

metros/submetros
Percentage of staff with minimum one 10% 15% 20% 25% 30% This may be relaxed for hotels
year certificate course from,Government course from Government in
recognised catering/hotel institutes rural, pilgrimage and hill areas
STAFF WELFARE/FACILITIES
Staff rest rooms D D N N N
Staff locker rooms D D N N N
Toilet facilities N N N N N
Dining area D D D N N
GUEST SERVICES
Valet (Pressing) services to be available N N
Service can be next day. In resort
Laundry and dry-cleaning service to D N N
destinations, hill, rural &
be provided
pilgrimage areas drycleaning
services may be relaxed
Paid transportation on call N N N Guest should be able to travel

from hotel.

Shoe cleaning service N N N May be charged. Shoe cleaning
machines are acceptable in Notes
corridors for 4*, 5* & 5 *D
Ice-for drinking water-on demand N N N Ice machines accessible to
guests are acceptable. May be
placed in corridors for 4, 5 and
5 star deluxe
Acceptance of common credit cards N N N

Assistance with luggage on request N N N N N
A public telephone on premises. N N N
Unit charges made known
Wake-up call service on request N N N N N
Messages for guests to be recorded N N N N N A prominently displayed
and delivered message board will suffice for
1* & 2*
Name, address and telephone number of N N N N N Doctors on call in 3,4,5,5*
doctors with front desk deluxe
Stamp and mailing facilities N N N
Newspapers available N N N N N This may be in the lounge for
1*,2* & 3* hotels
Access to travel desk facilities N N N N N This need not be on premise for
1 to 3* hotels
Left luggage facilities N N N This must be in a lockable
room/24 hour staffed area
Provision for emergency supplies- N N N This may be a chargeable item
toiletries/first aid kit
Health/fitness facilities N Indian system of treatments to
be offered
Beauty saloon and barbers shop D N

Florist D D
Shop/kiosk N N N
Money changing facilities N N Newstand, toiletries, novelties,
games in resorts
Bookshop D N N
SAFETY & SECURITY
Staff trained in fire fighting drill N N N N N Quarterly drill or as per law
Security arrangements for all hotel entrances N N N N N
Each bedroom door fitted with lock & key, N N N N N A safety chain/wishbone latch
viewport/peephole & internal security is acceptable in place of view
port/peephole
device
Safekeeping facilities available N N N N N
Smoke detectors N N N N N These can be battery operated
Fire and emergency procedure notices N N N N N
Displayed in rooms behind door
Fire exit signs on guest floors with N N N N N
emergency power
Staff trained in first aid D D N N N CPR/choking, regular first-aid
First aid kit with over the counter N N N N N
medicines with front desk
COMMUNICATION FACILITIES
A telephone for incoming & outgoing N N N N 4* plus should have direct dial
calls in the room and STD/ISD facilities. 1*, 2*
and 3* may go through
exchange
Notes PC available for guest use with

internet access
N N N This can be a paid service. Upto
3*, PC can be in executive
offices. Internet subject to local
access being available
E-Mail service N N N
Fax and photocopy service N N N
In room internet connection/dataport N Subject to local internet access
being available
Business centre N N This should be a dedicated area.
In hill, beach destinations and
pilgrimage centres this may be
relaxed
Swimming pool N This can be relaxed for hill
destinations.
Parking facilities D D N N N Should be adequate in relation
to the no. of rooms and hall
capacities. Exclusively
earmarked accessible parking,
nearest to the entrance for
physically challenged persons.
Conference facilities D D D
Note: D = Desirable, N = Necessary. There is no relaxation in the necessary criteria except, as specified in the
comment column.
Government of India, Department of Tourism (H &-R Cell) Hotel

Classification
MARK SHEET FOR QUALITY
Criteria Max Marks Score Comments
Exterior & Grounds 8 Exteriors, Approach 2/
landscaping 2/exterior lighting
2/parking 2
Guest Rooms 10 Furniture 2/Furnishings 2/ decor
2/room facilities & Amenities 2/
linen2
Bathrooms 8 Facilities 2/fittings 2/linen 2/
toiletries 2
Public Areas 8 Furniture 2/furnishings 2/decor
2/restrooms 2
Food & Beverage 8 Choice of cuisine, menu 3/
decor2/food quality 3
Kitchens 8 Equipment 3/state of repair 2/
food storage 3
Cleanliness 8 Overall impression
Hygiene 8 Pot & dish washing 2/drinking
water 2/staff facilities 1/pest
control 2/garbage disposal 1
Safety & Security 8 Fire fighting equipment 2/ Notes

signage 2/awareness of
procedures 2/public area and
room security 2
Communications 6 Phone service 2/e-mail access 2/
internet access 1/PC and other
equipment 1
Guest Service 5 Overall impression
Eco-friendly practices 5 Waste management, recycling, no
plastic 1/water conservation,
challenged persons harvesting 1/pollution control-
air, water, sound, light 2/
alternative energy usage 1
Facilities for physically 5 At least a room for physically
challenged persons 1/public
toilet in lobby 1/telephone in
public places 1/ramps etc 1/
facilities for aurally or visually
handicapped 1
Staff quality 5 Overall impression
Total 100
Comments..........................................HRACC Members 1. 2. 3.
4. 5. 6.
QUALIFYING SCORE
5*D 90% 5* 80%
4* 75% 3* 65%
2* 55% 1* 50%

Notes PUBLIC LIABILITY INSURANCE FOR HOTELS

Text of letter. No. 5-HRACC (1)/2006
Date: 3rd December, 2006
From Ministry of Tourism & Culture
Government of India
Department of Tourism, C -I Hutments, Dalhousie Road
New Delhi
Sub: Revised guidelines with respect to classification of hotels and approval
of hotel projects.
Please refer to this Department letter of even number dated 24.3.2006 on the
above subject. The Department of Tourism, Government of India has been
receiving representations from time to time stating that it is difficult for all
categories of hotels to comply with the requirement of having a Public Liability
Insurance of Rs. 5 crore. It has now been decided to amend the requirement of
Public Liability Insurance coverage for different categories of hotels as contained
in the said guidelines as follows:
Star Category Amount of public liability Insurance
1-star Rs. One crore
2-star Rs. One crore
3-star Rs. Three crores
4-star Rs. Four crores
5-star Rs.Five crores
5-star deluxe Rs. Five crores
The above provisions will come into immediate effect.

(Copy) Notes
Government of India
Ministry of Tourism & Culture
Department of Tourism
C-1, Hutments, Dalhousie Road
New Delhi
Tel. No. 23792504
Fax No. 23011518
23rd February, 2006
No. 5-HRACC(1)/2006
To
1. The Secretary (Tourism), All State Govts./UT’s
2. The India Tourism Officers in India
3. The Secretary General, FHRAI, New Delhi
4. The President, HAI, New Delhi
5. The President, IHHA, New Delhi
Sub.: Revised guidelines with respect to classification of hotels and
approval of hotel projects—requirements of Public Liability Insurance
Coverage
Sir/Madam,
In continuation of this Department letter of even dated 03.12.2006 on the
above subject, it has been decided to place ‘requirement of Public Liability
Insurance Coverage’ for the hotels from ‘necessary column’ to ‘desirable
column’. The check list for facilities and services appended to the Guidelines is
accordingly amended.
The above provision will come into immediate effect. You are requested to
inform all concerned.
Yours faithfully
(XYZ)
Deputy Director General (Hotels)

Notes TAXES APPLICABLE IN THE HOSPITALITY INDUSTRY
1. On Purchase of Property : STAMP DUTY or The VALUE of Prop-

erty as per state Act based on Stamp
Duty Act to be paid at time of Regis-
tration of Property.
2. Annual Lease : In case of lease hold property to be paid
annually.
3. Sales Tax/VAT
– Local : As applicable in the state.
– Central : 10% or 4% against C-Form.
To be paid monthly or quarterly as per
the schedule prescribed at the time of
sales tax registration.
4. Income Tax : As per Business Constitution. As per
slab and rate announced at the time of
annual budget. To be paid annually or
as advance tax (twice) as per category
of tax payee.
5. T.D.S. : Tax deducted at source by the Em-
ployee/Owner.
6. Entertainment Tax : To be paid before organising any event
of major nature like New Years Eve
etc.
7. Expenditure Tax : To be paid as per schedule.
8. Luxury Tax : 10% to be levied at the time of final bill-
ing on check-out.
9. Service Charge : 10% to be retained by the management
and appropriated between mgt. & em-
ployees welfare schemes.
10. Employment Benefits - : These are deducted at the prescribe
Statutory or mandatory percentage from the Employee’s salary
and Employer’s Contribution made as
per prescribed percentage and depos-
ited accordingly as per given time
schedules with respective authorities.
(a) E.P.F./C.P.F. Contribution (b) E.S.I. Contribution
(c) Bonus Provision (d) Leave Encashment

The above are governed as per their respective Act and Rates prescribed therein. Notes
11. Excise under Liquor Laws : (a) License fees on initial application fee
Bar License
(b) Monthly Excise as per Literage of Li-
quor (B.W.S.) consumed/sold.
(c) Corkage in case of guests, bring their
own B.W.S.
12. Professional Tax : Paid by Professionals as per prescribed
Rate to be deducted at source every month.
13. Education cess : To be paid by the consumer as per pre-
scribed rate.
14. Property/House Tax : To be paid annually as per the rateable value
fixed by MCD.

Notes
7 MANAGING HUMAN RESOURCES
INTRODUCTION
Today’s front office managers face much greater challenges than managers of a
generation ago. Labor management has always been a significant issue, but the
recent past shows that the future promises to put even more emphasis on this
area. Front office managers must be skilled at handling a diverse work force
that blends people of varying ages, ethnic backgrounds, cultures, and values.
Just as the nature of the work force will change, so will the techniques and
incentives that govern its management. This chapter focuses on some of the
basic concepts that front office managers need to know to effectively manage
and develop competent staff.
Recruiting
Employee recruitment is the process by which qualified applicants are sought
and screened to fill open positions. The process involves announcing or
advertising job vacancies through proper sources, and interviewing and
evaluating applicants to determine the best person for the job.
The human resources division often assists the front office manager in
finding and hiring qualified individuals. Not all hotels, however, have a human
resources division. When they don’t, the front office manager may have to seek
out qualified recruitment sources, place the advertisements, and post the job
openings internally, conduct the initial interviews, contact applicants’ references,
and perform other related tasks. Even when the hotel has a human resources
division, it is the front office manager’s responsibility to identify the skills and
qualities needed in the front office job positions and to communicate this
information to the human resources division to ensure that it qualifies candidates
properly. This generally is done with a job description that identifies the skills,
personal qualities, and responsibilities of the position. Regardless of how
prospects are identified, the front office manager should personally interview
top candidates for front office positions.

MANAGING HUMAN RESOURCES
Internal Recruiting Notes

Internal recruiting involves the transfer or promotion of current employees.
Through this form of recruiting, managers have access to applicants who are
familiar with the hotel and possibly the front office and who have proven skills.
Internal recruiting may also boost employee morale and productivity.
Employees tend to show loyalty to hotels that provide opportunities to increase
their skills, knowledge, status, and income. Many industry leaders, including
company presidents, vice presidents, and general managers, have risen through
the ranks as a result of internal recruiting. Exhibit 1 summarizes the advantages
and disadvantages of internal recruiting.
Exhibit 1: Advantages and Disadvantages of Internal Recruiting

Advantages
• Improves the morale of the promoted employee,
• Improves the morale of other employees who see future opportunities
for themselves.
• Managers can better assess the abilities of internal recruits; since their
performances have been observed over time.
• Internal recruiting for supervisory and management positions results
in a succession of promotions (one to fill each vacated job), which
reinforces the “internal career ladder.”
• The cost of internal-recruitment is lower than the cost of external
recruitment.
Disadvantages
• Internal recruiting promotes “inbreeding.”
• Internal recruiting can cause morale problems among those
employees who were skipped over for promotion.
• Internal recruiting can have political overtones; some employees
attribute internal promotions to friendships with managers and
supervisors.
• Filling a gap in one department through internal recruiting may create
an even more critical gap in another department.
Internal recruiting includes cross-training, succession planning, posting job

openings, paying for performance, and maintaining a call-back list.
Cross-Training. Whenever possible, employees should be trained to perform
the duties of more than one job. Cross-training makes it easier for the front
office manager to develop comprehensive employee schedules that include
planned employee vacations and absences. Employees find cross-training
beneficial since it diversifies their skills, gives their jobs variety, and makes
them more valuable to the hotel. Cross-training may also lead to a wider range
of promotion opportunities. Registration, cashiering, and reservations
Notes employees were cross-trained when front office systems were introduced many
years ago. In smaller properties, reservations, front desk, and telephone duties
are often combined into one job. One recent innovation developed by a major
hotel company is to cross-train front desk agents and bell attendants. In this
case, the person who checks the guest in is also the person who carries the
guest’s bags and escorts the guest to the room. There may be some disadvantages
to cross-training, but the overall effects have been very positive.
Succession Planning. In succession planning, the front office manager
identifies a key position and targets a particular employee to eventually fill
that position. Front office management identifies the employee’s training needs
and ensures that those needs are met. The manager creates a staffing plan that
identifies training dates and times, the trainer or trainers, and the date the
employee will be qualified to assume the job.
Posting Job Openings. When the front office posts job openings internally,
it gets a known applicant pool. Employees from other departments may want
to transfer to the front office or current front office employees may want to
advance within their own department. Whatever the case, front office
management must make sure that the employee has the skills for the promotion,
as well as a good work record.
The front office manager should post each available position as soon as it is
officially open. The openings can also be discussed at departmental rneetings.
Some hotel companies open each position to people on staff before it is
announced to outside applicants. Job postings are placed in a prominent location
in the employee lounge or work area. Some hotel properties also find it useful
to post entry-level positions. When employees know about these positions, they
often encourage qualified friends or acquaintances to apply.
Postings should be comprehensive; they should describe jobs fully and
specify minimum qualifications and required skills. The posting should tell
applicants whether the job is for a day, night, or weekend shift. Some properties
also post the exact wage or salary. In some hotels, employees cannot apply for
openings until they have held their current positions for a certain period. When
this is the case, the requirement should be clearly stated on the job posting.
Paying for Performance. Employees are more likely to be motivated to excel
when they know the hotel has a wage program that rewards hard work and
productivity. As employees gain more experience and proficiency, they should
be paid accordingly. Giving all employees an identical wage increase, regardless
of performance, may be discouraging to those employees who are exceeding
expectations.
Maintaining a Call-Back List. While recruiting appears to be an infrequent
event, in reality it is ongoing. To assist future staffing efforts, front office
management can develop and maintain a call-back list of employees and
previous applicants with special skills and interests. Some hotels also maintain
a back-up list, or waiting list of former employees who completed their
employment in good standing The front office may hire such individuals as
supplemental labor during a peak business period or employee shortage.
External Recruiting Notes

Front office managers may also recruit individuals from outside the hotel to fill
open positions. New employees can contribute innovative ideas, unique
perspectives, and creative ways of doing things. External recruiting includes
networking, temporary employment agencies, and employee referral programs.
Federal, state, and local government tax credit programs may also provide
incentives for management to recruit individuals from designated groups. There
are also several programs to encourage the hiring of workers with disabilities.
Exhibit 2 summarizes the advantages and disadvantages of external recruiting.
Exhibit 2: Advantages and Disadvantages of External Recruiting
Advantages
• External recruiting brings new blood and new ideas into the company.
• Recruits from the outside can often provide not only new ideas, but
news about how and what competitors are doing.
• External recruits can provide a fresh look at your company, which
sometimes reinforces the reasons current employees work for you.
Consider, for example, the’ value of an external recruit saying such
things as “You keep your kitchen, much cleaner than they do at XYZ
company where I used to work” or “The helpful attitude of employees
here certainly makes this a more pleasant place to work than my old
job.”
• External recruiting sometimes avoids many of the political problems
associated, with internal recruiting.
• External recruiting serves as a form of advertising for the company
(newspaper ads, posters, bulletin board notices, and so on remind
the public of your products and services).
Disadvantages
• It is more difficult to find a good fit with the company’s culture and
management philosophy when recruiting externally.
• Internal morale problems can develop if current employees feel,
that they have no opportunity to move up in the organization.
• It takes longer to orient external recruits than it does internal recruits.
• External recruiting can lower productivity over the short run because
external recruits usually cannot produce as quickly or effectively
as internal recruits.
• When employees believe that they could have done the job as well
as the external recruit who was hired, political problems and
personality conflicts can result.

Notes Networking. Networking involves developing personal contacts with

friends, acquaintances, colleagues, business associates, educators, and school
counselors. These personal contacts can often lead to employment referrals.
Companies that provide services or supplies to the hotel may also share leads
on possible jobs or job candidates. Other network sources may include members
of trade or community associations. If a hotel is part of a chain, the front office
manager can network with managers of other properties in the area. By working
together, they make career advancement better for all employees and make
employment with the chain more desirable.
Temporary Employment Agencies. Temporary employment agencies can
provide staff to fill a wide range of positions. These agencies often train a pool
of employees in specific employment areas. Temporary employment agencies
operate for profit and therefore charge a higher hourly rate for temporary
employees than the rate generally paid to permanent hourly employees. These
higher costs are usually offset in other ways. For example, temporary
employment agencies may:
• Reduce overtime, recruitment, and hiring expenses
• Provide screened and trained qualified employees
• Create employee commitment by providing full-time positions and
benefits
• Be able to supply complete work crews
On the downside, temporary employees may lack specific training in
appropriate procedures. In addition, they will need time to become acquainted
with the hotel layout, amenities, facilities, and departmental hours of operation.
As a result, temporary workers may be less productive than the front office’s
own staff, and may require more supervision. Temporary workers are generally
considered short-term additions to the permanent work force.
Employee Referral Programs. Some front offices adopt employee referral
programs that encourage employees to recommend friends and acquaintances
for open positions. An employee referral program usually rewards current
employees who refer qualified staff members to the company. The program
works best when front office management establishes the size of the referring
employee’s reward at the outset. The program must also specify which criteria
will be applied and how referrals will be credited to the proper source. Usually,
the referred employee must work for a specified trial period before the employee
who made the referral can claim the reward. This period often ranges from 90
days to 180 days.
Tax Credits. Some government programs, such as the federal Targeted jobs Notes
Tax Credits Program, provide tax incentives to private employers who hire
individuals from specified human resource categories. Any front office employee
hired under a tax credit program must be certified as a member of a targeted
category by a local office of the state employment commission before being hired.
To claim the targeted job tax credit, the hotel must certify that the new employee
is not a relative or dependent of the property’s owner, and that he or she has
not worked for the hotel before.
Workers with Disabilities. Some positions in the front office are well-suited
to employees with physical handicaps or disabilities. For example, a wheelchair
user may be qualified to work as a telephone operator or reservations agent,
since such jobs usually do not require standing or a great deal of moving within
a work area. Workers with disabilities are usually highly motivated and may
perceive their work as important evidence of their ability, skill, and
independence.
In general, employees with disabilities can be recruited through local
government job training agencies or with schools that provide training for people
with disabilities. Some communities may also offer tax incentives to companies
that employ persons with disabilities. Before hiring such individuals, the front
office manager must ensure that work areas are compatible with the employees’
needs. A major focus of the Americans with Disabilities Act of 1990 is to make
it easier for people with physical and mental disabilities to find jobs and to
advance within their careers. Hotels must take appropriate steps to comply
with this legislation, particularly in terms of barrier-free design and employment
practices. Since the traditional labor market is shrinking, people with disabilities
are becoming an important and growing source of new employees. In addition,
job descriptions and specifications must clearly identify any restrictions or
requirements that may exclude an employee covered by the ADA. For example,
an employee in a wheel-chair would not qualify as bell attendant because of
the mobility and heavy lifting requirements of the position.
Selecting
Selecting the right person for a front office position should always involve the
front office manager. Depending on the policy of the hotel, the front office
manager may directly hire an applicant or may be limited to forwarding a hiring
recommendation to top management.
Applicants with practical skills, knowledge, and aptitude are likely to
become valuable front office employees. Three specific skills frequently required
Notes in front office work are good language, mathematical, and keyboard (typing)
skills. An employee’s language skills are necessary to communicate with guests
and other employees; mathematical ability will help him or her understand
front office accounting and transaction processing; keyboard skills are especially
useful for recordkeeping and using a computer.
Since front office work involves a high degree of guest contact, managers
usually seek certain personality traits in applicants. These traits include
congeniality, flexibility, professional attitude, self-motivation; and a well-
groomed appearance. Evaluating applicants in terms of personal qualities is
highly subjective. An effective front office selection process usually focuses on
a set of skills, attitude, and personal qualities. In addition, since the front office
staff members have so much contact with guests, they should reflect the quality
of the hotel during that contact. It does not matter whether the contact is by
telephone, by letter, or face to face. Guests will create an image of the hotel
through employee contact. One hotel company interviews prospective
reservations agents by asking a few questions over the telephone. This allows
the interviewer to hear the candidate’s voice and how the candidate presents
himself or herself over the phone. Proper selection of employees will help ensure
that the hotel’s image and values are upheld in all guest contacts.
Selection Tools
Job descriptions and job specifications are important selection tools. A job
description lists all the tasks and related information that make up a work
position. A job description may also outline reporting relationships,
responsibilities, working conditions, equipment and material to be used, and
other information specific to the position. Job descriptions are especially helpful
in recruiting and selecting employees since they clearly state the duties required
to perform a particular job. Job descriptions may also explain how a work
position relates to other work positions in the department.
Although each job is unique, some general statements can be made about
work requirements in the front office. A job specification usually lists and
describes the personal qualities, skills, traits, educational background; and
experience a person needs to successfully perform the tasks outlined by a job
description. To develop job specifications, managers may draw on the
knowledge of other front office staff and any written material related to the job.
For example, managers might describe an employee as demonstrating a
professional attitude by reporting to work on time. A professional attitude might
further be marked by sensitivity to guests, a sense of humor, congeniality, and

good listening habits. A flexible employee might be defined as a team player Notes
who is willing to work different positions or shifts as necessary. Job specifications
may include terminology that relates to the specific needs of the front office.
For example, appropriate dress in a resort might mean casual dress, while in a
commercial hotel, it is likely to mean business attire. Descriptions of personal
qualities must be relevant to the needs of each individual property.
Evaluating Applicants
Generally, front office managers evaluate job applicants by reviewing completed
job application forms, checking applicant references, and interviewing selected
applicants. A hotel with a human resources division may screen applicants on
the basis of front office job descriptions and job specifications. In hotels without
a human resources division, the front office manager may be responsible for all
aspects of screening and evaluating applicants. A job application form should
be easy to complete and should require applicants to provide information that
helps determine suitability for the job. Exhibit 3 presents a sample job application
form.
Managers should check references to verify an applicant’s identity and
claims about previous work experiences and skills. Managers should be aware
that past employers are often reluctant to provide any information other than
the applicant’s past job title, dates of employment, and salary. Former employers
rarely reveal whether they would rehire the person. Past employer comments,
especially if negative, increase the former employer’s potential liability for
charges of libel, slander, or defamation of character by the former employee.
Front office managers must be familiar with their own property’s policy on
handling calls regarding the work record of current or past employees.
Familiarity with such policy positions will allow managers to better understand
the comments of job candidates’ previous employers. It may also be hotel policy
to have a police record check on all job applicants. This may be especially
essential for certain positions, such as cashier or hotel van driver. A police check
may help uncover an unsafe driving record, a drug record, or a dismissal from
another job due to cash handling problems.
Questions contained on a job application form must be carefully structured
since federal, state, and local laws prohibit discriminatory hiring practices.
Exhibit 4 lists employment questions that may be considered discriminatory
and suggests ways to avoid discrimination. Managers may also find this guide
helpful when developing interview questions. Since laws, and their
interpretation, vary from state to state, a qualified attorney should review job
application forms, related personnel forms, and interview procedures to ensure
that their contents do not violate anti-discrimination laws.
Notes Exhibit 3: Sample Job Application Form
APPLICATION FOR EMPLOYMENT

GENERAL DATA AND AVAILABILITY
Name ___________________________ Social Security # _______/_____/________

Last First Middle Initial
Address _____________________________________________ Phone __________
Street City State Zip
If you are applying for a position which requires you drive, do you have a current
Driver’s License? Yes No . If you answered yes, please provide:
License Number ___________________ Class _________________
CITIZENSHIP: If you are not a citizen of the United States of America, do you
have a permanent resident visa card, I-94 Form or letter from the immigration
Service indicating that you are legally permitted to work in this country?
Yes No If hired, are you able to show proof of status? Yes No
If you are under 21 years of age: List Age ___________ Date of Birth __________
For employment verification, have you used any other name on a previous job?
Yes No
List name ________________________________________________________
Positions Desired: 1st Choice_________________ 2nd Choice_________________
Wage of Salary Desired: ______ per______ Date available to start work________
For what job status are you applying? Full Time Part Time ___________
hours per week. Summer School Term Other Explain:_____________
The following conditions may be required at some time in a job assignment. If
required would you be willing to work:
A. Shift work? Yes No B. Rotational work schedule? Yes No
C. Work schedule other than Monday through Friday? Yes No
D. Overtime work? Yes No
List any scheduling problems or limitations_______________________________
Is your transportation reliable to meet any work schedule requirement any day
of the week? Yes No
Have you ever been employed at this hotel before? Yes No When_______
Reason for leaving________________ Name of Supervisor________________
How did you happen to apply?
Referred by______________ Ad per paper_____________
Which paper
Agency_________________ Sign Passing by
Friend/Current Employee________________________________
Name
Do you have any relatives working here? ___________________________________________________
Names
Police Conviction Repord: Have you ever been convicted of a felony? Yes No . If yes, please
briefly describe the circumstances of your conviction, indicating the nature and place of the offense
and the disposition of the case. A felony conviction does not necessarily bar you from employment
since this will be looked upon as only one of the factors considered in the employment decision.
Page 1

Exhibit 3 (continued)
Notes
MILITARY EXPERIENCE
Have you ever served in the United States Armed Forces? Yes No If so,
describe any special training or skills acquired during your service which may
be helpful on the job?___________________________________________________
_________________________________________________________________________
EDUCATIONAL BACKGROUND
Type of Name & Address Years Completed Graduated Major Field
School of School of Study
High School 9, 10, 11, 12 Yes No
College 1, 2, 3, 4 Yes No
Other 1, 2, 3, 4 Yes No
EMPLOYMENT HISTORY
List the most recent employer first, then follow with the next most recent. We
will check all references.
Name and address Dates Worked Position Supervisor Hours Rate of
of Previous From To Worked Pay
Employer Mo Yr Mo Yr Per Week
Company
Address If currently employed, may we contact
this employer for a reference? Yes No
City State Why did you leave or are interested in leaving this employer?
____________________________________________________
Phone
Name and address Dates Worked Position Supervisor Hours Rate of
of Next Employer From To Worked Pay
Mo Yr Mo Yr Per Week
Company
Address
City State Why did you leave this employer? _____________________

Phone
Include any additional employment history on another sheet of paper.
SPECIAL SKILLS
Typing/Word Processing______Dictation/Shorthand _____ Telephone ________
Computers________Foreign Languages_________Mechanical________________
List List
PERSONAL REFERENCE
The following person knows me and would be able to give a personal reference:
Name Address City State Zip Telephone

APPLICANT PLEASE READ AND SIGN
I certify that the information contained in this application is correct to the best of my knowledge and
understand that falsification of this information is ground for refusal to hire or, if hired, dismissal. I
authorize any of the persons or organizations referenced in this application to give you any and all
information concerning my previous employment, education, or any other information they might
have, personal or otherwise, with regard to any of the subjects covered by this application and
release all such parties from all liability for damage that may result from furnishing such information
to you. I authorize you to request and receive such information. I understand this hotel does not
discriminate in hiring or employment on the basis of race, color, religious creed, national origin, sex,
age, handicap or veteran status.
Signed:__________________ Date:_________________

Notes Exhibit 4: Pre-Employment Inquiry Guide
Subject Lawful Pre-Employment Unlawful pre-Employment

Inquires Inquiries
Name: Applicant’s full name. Original name of an applicant
Have you ever worked for this whose name has been changed by
company under a different court order or otherwise.
name? Applicant’s maiden name.
Is any additional information
relative to a different name
necessary to check work
record? If yes, explain.
Address or How long a resident of this

Duration of state or city?
Residence:
Birthplace: Birthplace of applicant.
Birthplace of applicant’s parents,
spouse or other close relatives.
Requirement that applicant
submit birth certificate,
naturalization or baptismal
record.
Age: ‘Are you 18 years old or older? How old are you? What is your
date of birth?
Religion or Inquiry into an applicant’s
Creed: religious denomination, religious
affiliations, church, parish, pastor,
or religious holidays observed.
An applicant may not be told.
“This is a Catholic (Protestant or
Jewish) organization.”
Race or Complexion or color of skin.
Colour:
Photograph: Requirement that an applicant for
employment affix a photograph to
an employment application form.
Request an applicant, at his or her
option, to submit a photograph.
Requirement for photograph after
interview but before hiring.
Height: Inquiry regarding applicant’s
height.
Weight: Inquiry regarding applicant’s
weight.
Marital Requirement that an applicant
Status: provide any information
regarding marital status or
children. Are you single or
married? Do you have any
children? Is your spouse

Notes
employed? What is your spouse’s
name?
Sex: Mr., Miss, Mrs., or an inquiry
regarding sex. Inquiry as to the
ability to reproduce of advocacy of
any form of birth control.
Citizenship: Are you a citizen of the United Of what country are you a citizen?
States? Whether an applicant is
If not a citizen of the United naturalized or a native-born
States, does applicant intend citizen; the date when the
to become a citizen of the applicant acquired citizenship.
United States? Requirement that an applicant
If you are not a United States produce naturalization papers or
citizen, have you the legal first papers.
right to remain permanently Whether applicant’s parents or
in the United States? Do you spouse are naturalized or native
intend to remain permanently born citizens of the United States;
in the United States? the date when such parent or
spouse acquired citizenship.
National Inquiry into languages Inquiry into applicant’s (a)
Origin: applicant speaks and writes lineage; (b) ancestry; (c) national
fluently. origin; (d) descent; (e) parentage,
or nationality.
Nationality of applicant’s parents
or spouse.
What is your mother tongue?
Inquiry into how applicant
acquired ability to read, write, or
speak a foreign language.
Education: Inquiry into the academic
vocational or professional
education of an applicant and
the public and private schools
attended.
Experience: Inquiry into work experience.
Inquiry into countries
applicant has visited.
Arrests: Have you ever been convicted Inquiry regarding arrests.
of a crime? If so, when, where,
and nature of offense?
Are there any felony charges
pending against you?
Relatives: Name of applicant’s relatives, Address of any relative of
other than a spouse, already applicant, other than address
employed by this company. (within the United States) of
applicant’s father and mother,
husband or wife and minor
dependent children.
Notice in Name and address of person Name and address of nearest
Case of to be notified in case of relative to be notified in case of
Emergency: accident or emergency. accident or emergency.
Notes
Military Inquiry into an applicant’s Inquiry into an applicant’s general
experience: military experience in the military experience.
Armed Forces of the United
States or in a State Militia.
Inquiry into applicant’s service
in particular branch of United
States Army, Navy, etc.
Organizations: Inquiry into the organizations List all clubs, societies, and lodges
of which an applicant is a to which you belong.
member—excluding organiza-
tions, the name or character of
which indicates the race, color,
religion, national origin or an-
cestry of its members.
References: Who suggested that you apply
for a position here?
*This question may be asked only for the purpose of determining
whether applicants are of legal age for employment.
Interviewing
First impressions do matter. Applicants form impressions of the interviewer,
the hotel, the front office, and what it would be like to work there, just as the
interviewer forms impressions of how suitable the applicant would be for the
job. Often, eventual job satisfaction and productivity is the result of the
expectations formed during an interview.
In large properties, the human resources division usually handles recruiting
(including advertising) and initial screening of all job candidates. After that,
the head of each department conducts the main, in-depth interview and decides
whom to hire. The front office manager may delegate interviewing and hiring
responsibilities to an assistant. Regardless of who does the actual hiring, the
front office manager is ultimately responsible for hiring and maintaining a
qualified front office staff.
Whoever the interviewer is, he or she should be thoroughly familiar with
the job and its duties, benefits, wage scale, and other important factors. The
interviewer should be an objective judge of people and their qualifications, a
positive role model, and a skillful communicator. Exhibit 5 summarizes common
problems associated with interviewing. When managers are aware of factors
that can distort an interview, they can better prevent them and increase the
probability of a successful interview.

The interview should be held in a comfortable, private setting that allows Notes
few, if any, interruptions. Focusing on the applicant shows a sincere interest.
Applicants tend to be intimidated by business settings in which they sit in front
of a desk and the interviewer sits on the other side of the desk. Interviewers
often find, it workable and more pleasant for the applicant to hold the interview
in or near the actual work area. If the work site is too distracting for a sit-down
interview, another location should be chosen. Unless there is an emergency, no
telephone calls or other interruptions should be allowed during the interview.
Conducting an Interview. The interview process has at least five objectives:
Exhibit 5: Common Problems Associated with Interviewing

Similarity Error
Many interviewers are predisposed to react positively to candidates who are similar
to themselves (in outside interests, personal background, and even appearance) and
react negatively to candidates very different from themselves.
Contrast Error
Candidates should be compared to the standards that the club has established for
the position, not to each other, Comparing candidates to one another, whether
consciously or subconsciously, is particularly troublesome when two poor candidates
are followed by a merely average candidate. Because of the contrast between
candidates, the average candidate, may be viewed as excellent, resulting in a contrast
error.
Overweighting Negative Information
It is human nature to notice negative information more than positive information.
When we examine a resume or an application, we tend to look for the negative, not
the positive. This also happens in interviews.
First-Impression Error
Many interviewers tend to form a strong first impression of a candidate that they
maintain throughout the interview.
Halo Effect
Sometimes, an interviewer’s favorable impression of a single dimension about a
candidate—appearance, background, and so on-can substantially color his or her
overall impression. The halo effect occurs when an interviewer views everything
that a candidate says or does in this favorable light.
Devil’s Horns
The opposite of the halo effect. This phenomenon can often cause interviewers to
see everything a candidate says or does in an unfavorable light.
Faulty Listening and Memory
Interviewers do not always hear what is said in the way it was intended, nor do
they, remember everything that was said.
Recency Errors
An interviewer is likely to remember a candidate’s most recent behaviors or
responses, rather than behaviors or responses that occurred earlier in the interview.
Nonverbal Factors
Nonverbal factors such as clothing, smiles, speech patterns, and eye contact
substantially influence an interviewer’s impression of candidates. Some interviewers
make up their minds about whom to hire based almost solely on the candidate’s
attire and demeanor.

Notes l. To establish a basis for a working relationship.

2. To collect enough accurate information to make an informed hiring
decision
3. To provide enough information to help the applicant make a decision
4. To promote the company and the work position to the preferred applicant.
5. To create goodwill between the hotel and the applicant.
Front office managers should speak in a conversational tone while
conducting an interview. Care must be taken so that the applicant doesn’t
perceive the manager as patronizing or condescending. Essentially, managers
should treat applicants with the same courtesy and respect they would extend
to guests.
Interviewers should allow applicants to set the pace of the interview and
should be patient with people who are nervous or shy. Applicants should not
be told exactly what the manager is looking for, since some applicants might
modify their responses to meet those expectations. Managers should also note
the applicant’s physical appearance. Since many applicants will be groomed
according to their highest personal standard.
A well-prepared interviewer has a list of questions already developed before
the start of the interview. Interviewers may not ask all the questions and some
questions will evoke answers that lead to additional questions that may not be
on the list. Questions should allow applicants to fully express themselves
without feeling that they are being interrogated. The use of closed-ended
questions requiring “Yes” and “No” answers should be limited to verifying
information provided on the completed application form or to obtaining
additional facts. Asking closed-ended questions such as, “Did you enjoy your
previous job?” Often do not provoke detailed responses. Also, these types of
questions may lead job applicants to respond with answers they feel the
interviewer wants to hear. To provoke fuller responses to issues, managers
should ask open-ended questions such as. “What did you like most about your
previous job?” or “What did you like least about your previous job.”
Generally, an interviewer starts the interview with a period of small talk
and perhaps humor to put the applicant at ease. Then, he or she moves into the
body of the interview by asking the applicant about job expectations—basically,
the kind of work and working conditions the applicant is looking for.
Interviewers should then focus on one principal area at a time. For example,
the interviewer could thoroughly examine the applicant’s work experience
before talking about education or other areas.
Good interviewers encourage responses by using appropriate gestures and
comments. They also listen carefully, noting the applicant’s body language.
Sudden changes in position or tone of voice, eye movement, facial expressions,
and nervous mannerisms may indicate that the applicant feels uneasy with the

discussion. When applicants hesitate before answering a question, managers Notes

should follow up with related questions to probe for further information.
Moreover, when an applicant responds vaguely or changes the subject, it may
mean that he or she wants to avoid the topic. Similarly, interviewers can arouse
an applicant’s suspicions if they try to conceal or avoid topics. When an applicant
asks about the work position or aspects of front office operations, the interviewer
should respond as directly and honestly as possible.
Providing the applicant a copy of the job description as part of the interview
may be a good idea. It will clearly identify what the manager is looking for and
the requirements of the job. The front office manager can review the job
description with the applicant, identifying the important duties and
responsibilities. This enables applicants to form a clearer picture of the job and
an informed opinion as to whether they will like the job. If the interview is
going well, there may even be a brief discussion about the actual training the
candidate will receive if hired.
In hotels without a human resources division, the interviewer should
determine early in the interview whether the applicant meets the position’s
basic requirements. This is also the time to mention other hiring prerequisites,
such as the federal government’s requirement that employees prove their legal
right to work in the United States (note, however, that an applicant should not
actually be required to provide such proof until after a hiring offer has been
made). The person conducting the interview should also determine whether
the applicant’s personal job requirements may be met with respect to working
conditions, scheduled hours, pay rate, type of work, and employment benefits.
If it appears as though the job will not be satisfactory or workable for either
side, the interview should end. Job offers made or accepted under less-than-
ideal conditions are likely to lead to higher rates of employee dissatisfaction
and turnover.
Interview Questions. A two-step questioning process is the most common
technique used in interviewing. First, the interviewer asks for specific
information such as who, what, when, or where. The second, or follow-up,
question seeks a more in-depth response—one that will tell the interviewer
why or how. For instance, the first question might be, “What did you like most
about working at your last hotel?” After the applicant answers, the interviewer
might ask, “Why was that your favorite?” Other questioning techniques
interviewers can use include:
• Asking the applicant for a list rather than a single response, which allows
for more spontaneity. Follow-up questions can be asked that narrow the
field.
• Using direct questions to verify facts and cover a lot of information quickly.
A direct question is sometimes called a closed question and usually
requires a simple answer, such as yes or no.

Notes • Asking indirect or open-ended questions, or asking the applicant to make

comparisons. This technique is useful when the interviewer is seeking
more than standard responses. An open-ended question is one that the
applicant must elaborate on, such as “What were your favorite subjects in
school?”
• Pursuing a specific subject in depth when a response seems unreasonable
or unrealistic.
• Probing for additional information when the applicant gives a partial
response. This is usually done by restating the reply as a question, such
as, “So you felt that department was just too big, didn’t you?”
• Using short affirmative responses to encourage the applicant to continue
talking, such as, “I see,” or “Please go on.” Sometimes, it may also be
helpful to nod your head in agreement.
• Using silence to indicate that the applicant should continue speaking.
• Suggesting sample answers when the applicant does not understand the
question.
• Varying applicant responses by making comments rather than always
asking questions.
What to ask. All questions must be based on sound business reasoning
Questions asked during an interview should be relevant to the open position.
For example, the front office manager is not likely to ask an applicant for a
position as a front desk agent the same questions that he or she would ask a
person applying for a job as a front office supervisor. Applicants may be asked
about their ability to perform specific job functions. Exhibit 6 presents a collection
of sample questions that managers may use to develop interviews.
What not to ask. Managers must be careful when phrasing interview questions
and when deciding what questions to ask. Generally, managers should avoid
asking for information that cannot be legally used in a hiring decision.
Discussions should not focus on birthplace, national origin, citizenship, age,
sex, lifestyle, race, height and weight, marital status, religion or creed, arrest
records, disabilities, and membership in clubs or religious or ethnic
organizations. Managers may not ask job applicants about the existence, nature,
or severity of a disability.
It is also illegal to ask questions of one sex and not the other. For example,
interviewers should not ask only female applicants whether they have children
or what plans they may have for child care. If such questions are employment-
related and if the front office manager can prove they are, they must be asked
of both male and female applicants.
Certain types of information must be obtained after an applicant is hired,
such as proof of age and proof of the legal right to work in the United States. An
appropriate time to obtain such information is while a recruit is completing
employment papers. Also, a job offer may be conditioned on the results of a Notes
medical examination, drug test, or inquiry, but only if the examination or inquiry
is required for all entering employees in the job. Medical examinations or
inquiries of employees must be job-related and consistent with the employer’s
business needs.
Interview Evaluation. The sample interview evaluation form presented in
Exhibit 7 lists some key traits for front office staff. Portions of this form should
be structured according to front office job specifications. The front office manager
can use such a form to evaluate an applicant’s strengths and weaknesses. After
interviewing an applicant, the front office manager may use the form to compile
a score based on the following criteria:
• Applicants score zero if they meet an acceptable level of skill in a given
area, or if the skill is not directly job-related.
• Applicants score plus one or plus three according to the degree they
surpass the acceptable level of skill in a job-related area.
• Applicants score minus one Or minus three according to the degree they
fail to meet the acceptable level of skill in a job-related area.
Exhibit 6: Sample Interview Questions

Relevant to Job Background
• Did you regularly work 40 hours a week? How much overtime did you work?
• What were your gross and take-home wages?
• What benefits did you receive? How much did you pay for them?
• What salary/wage do you desire? What is the lowest amount you are likely to
accept?
• Which days of the week are best for working?
• Have you ever worked weekends before? Where? How often?
• Which shift do you enjoy working the most? Which shift can’t you work? Why?
• How many hours a week would you like to work?
• How will you get to work?
• Is your means of transportation reliable for the shifts you may be working?
• When you started your last job, what position did you hold? What position do
you hold now or did you hold when you left?
• What was the starting salary of your present job or the last job you held?
• How often did you get pay increases on your present job or the last job you
held?
• What three things do you want to avoid on your next job?
• What qualities do you expect in a supervisor?
• Why did you choose this line of work?
• Why are you interested in working at this hotel?
• Which work experience most influenced your career decisions?
Education and Intelligence
• When you were in school, what subjects did you like the most? Why?

Notes Exhibit 6. (Continued)

• When you were in school, what subjects did you like the least? Why?
• Do you think your grades are a good indicator of your overall abilities?
• If you had to make the same educational, decisions over again, would you make
the same choices? Why or why not?
• What is the most important thing you have learned in the past six months?
• What good qualities did you find in your best teachers? Can these apply to
work as well?
Personal Traits
Some of the following may be more suitable for people without much work
background:
• What do you like to do in your spare time?
• How many times were you absent or late for your present or last job? Is that
normal? What were the reasons?
• What does your family think of your working at this hotel?
• On your last job, were the policies concerning being late or absent without cause
clearly explained to you? Were these policies fair?
• What was your first supervisor like?
• How did you get your first job? Your most recent job?
For the following questions about personal traits, job titles may be changed to
meet the needs of the interview:
• Who has greater responsibilities—a front desk agent or a reservation sales agent?
Why?
• Have you ever had to deal with an angry guest who complains about everything?
If so, how did you work with the guest to resolve the issues?
• What do you consider the main reason people in the position you are applying
for leave their jobs? What would you do to change this?
• What do you consider the most important responsibilities of a good front desk
agent?
• Suppose your supervisor insisted you to learn a task in a certain way, when
you know there is a better way. What would you do?
• Have you ever had a supervisor show favoritism to certain employees? How
did you feel about this?
• Of all your job experiences, what did you like the most? Why?
• Of all your job experiences, what did you like the least? Why?
• When you go to a store to purchase something, what qualities do you look for
in the sales person?
• What was your biggest accomplishment on your last job?
• What would you have changed about your last job if you had the opportunity?
• If the opportunity was offered to you, would you return to your last employer?
Why or why not?
• How much notice did you give your last employer when you decided to leave
(or plan to give your current employer)?
• How would your former supervisor and fellow employees describe you?
• What strengths and weaknesses do you bring to this new position?
• What frustrates you on the job? How do you handle this frustration?

Exhibit 6. (Continued) Notes

• On your last performance review, what areas did your former supervisor mention
need to be improved? Why do you think the comment was made?
• What three areas would you most like to improve about yourself?
• What one thing have you done of which you are the proudest? Why?
• What is the funniest thing that has ever happened to you?
• What is important to you about the job you are applying for? Why?
Questions for Managerial Candidates
• What type of training program did you have for your employees? Who set it up
and who implemented it?
• What have you done on your last job to improve the performance of the
department you supervised? How was this measured?
• What are the most important attributes of a manager?
• What hotels were your biggest competitors? What were their strengths and
weaknesses?
• How would your employees describe you as a supervisor?
• How many people did you have to discipline on your last job? Describe the
circumstances. How do you feel about terminating employees?
• What did you do to motivate your employees?
Exhibit 7: Sample Interview Evaluation Form

Applicant Position
Name ___________________ Evaluated ___________________ Date ___________
Poor Match Acceptable Strong Match
RELEVANT JOB BACKGROUND –3 –1 0 +1 +3
General background
Work experience
Similar companies
Interest in job
Salary requirements
Attendance
Leadership experience
Education/Intelligence
Formal schooling
Intellectual ability
Additional training
Social skills
Verbal and listening skills
Writing skills
PHYSICAL FACTORS
General health
Physical ability
Cleanliness, dress, and posture
Energy level

Exhibit 7: (Continued)
Notes
PERSONAL TRAITS
First impression
Interpersonal skills
Personality
Teamwork
Motivation
Outlook, humor, and optimism
Values
Creativity
Stress tolerance
Performing skills
Service attitude
Independence
Planning and organizing
Problem solving
Maturity
Decisiveness
Self-knowledge
Flexibility
Work standards
Subtotals
Total Points _________________
Every applicant possesses strengths and weaknesses. An interview

evaluation form ensures that shortcomings in one area do not diminish an
applicant’s chances for further consideration. After evaluating all applicants,
the manager should select and hire the best applicant for the position. Generally,
the applicant who scores the highest on the interview evaluation form will
probably make the best employee. Once an applicant is selected, the manager
should inform other applicants who were interviewed that the position has
been filled. Sometimes, an unsuccessful applicant for one position may be
qualified for an alternative open position. If so, the manager should encourage
the applicant to apply or can take the time to notify another department manager
of a qualified applicant.
Managers should document all employment interviews, especially
interviews for applicants who were not hired. These records should contain
only job-related information. The interviewer’s personal notes should not
become part of a candidate’s date’s job application file. `
Hiring
The hiring period begins when an employer extends an offer to a prospective
employee. Hiring involves making all the necessary arrangements to prepare
the recruit and current employees for a successful working relationship,
including processing personnel records. The hiring period lasts through the

recruit’s initial on-the-job adjustments. In some cases, job applicants may Notes
interview with several managers including shift supervisors, rooms division
managers, and even the general manager before being hired. Applicants should
be told of this process as part of the initial interview process, so that they will
understand that more than one visit to the property may be required.
Job Offers
Since hiring requires a degree of skill and knowledge of complex labor laws,
most front office managers rely on the human resources division or someone
specifically designated by top management. When only one or two people are
authorized to make employment offers, the hotel has greater control over how
the job is represented and what pre-employment promises are made. The three
steps of making and closing employment offers are extending, negotiating, and
concluding.
Extending the Offer. A carefully worded offer can represent the beginning
of a potential employee’s commitment to the employer. To be sure the terms of
the offer are clear and there is no misunderstanding, many hotels require written
job offers. Successful employment offers depend on timing. The longer a front
office manager waits to extend an offer, the less likely a candidate is to accept.
In the interim, the applicant may lose enthusiasm or interest; or may have
accepted a job somewhere else. Whenever possible, job offers should be extended
in writing. Doing so can eliminate misunderstandings about the job title, job
requirements, starting pay, or working schedule. A well-written job offer
includes a signature line for the applicant to accept the offer. This signature
line provides an acknowledgement by the applicant that he or she has read and
understands the contents of the offer.
Negotiating the Offer. During the interview process, the front office
manager should become familiar with an applicant’s background and
expectations. Many of the areas that sometimes become obstacles to job offers
(such as pay, starting dates, and employment benefits) should be discussed.
Management should negotiate a job offer only when it is reasonably certain the
offer will be accepted.
Establishing a reasonable starting date informs recruits that the front office
expects its employees to give proper notice before leaving a job. Hotels cannot
expect employees to give proper notice when they do not allow potential recruits
sufficient time to give proper notice to their current employer.
Completing an Offer. Once an applicant accepts a job offer, the front office
manager should assure the applicant that he or she has made the right decision.
Recruits should be told that they are not expected to know everything about a
job at the outset, but that management believes in their ability to handle the job
successfully. Supervisors should immediately begin preparations for the
recruit’s arrival, including informing other front office staff about the new
employee. Current employees should be told the new recruit’s name, previous
job experience, and starting date. The front office manager should meet with
workshift leaders and encourage them to assist with the recruit’s training and
work relationships.
Notes Processing Personnel Records

Processing new employees’ personnel records before they start work helps
prepare them for their new positions. Uniforms should be fitted and name tags
ordered since these items are needed for the employee’s first work day. If the
employee needs the hotel to issue a cashier bank or other supplies, this should
be arranged prior to the first day of work, if possible.
The tone of the processing period should be warm, caring, and professional.
If it’s too light, casual, or hectic, new employees may conclude that the hotel or
front office is lax in its policies and procedures. Employees should learn what
management expects in the way of service, as well as the goals of the front
office and the hotel. Management will find the processing period an excellent
time to discuss goals and expectations with new employees.
At this time, the front office manager or human resources division employee
should also discuss time cards, pay procedures, house rules, reporting
instructions, and uniforms. A checklist can ensure that all important points
are covered. Many of these points will be reinforced during employee
orientation.
Orienting
New employees should be given an orientation when they arrive for their first
day of work. A well-planned and organized orientation helps new employees
get off to a good start. Usually, the new employee’s first days on a job are filled
with anxiety. The front office manager should take full responsibility for
orienting new front office employees.
Managers should plan to make the employee’s transition into the new job
as smooth as possible. Successful orientation programs often include a written
agenda that the new employee can use as a reference. The agenda should tell
the employee who he or she will meet, where to meet, the time to meet, and
what will be discussed. At the least, the orientation should include information
about:
• The hotel—its history, reputation for service, names of key management
personnel, plans for growth, company policies, and chain information.
• The benefits—wages, insurance coverage, employee discounts, vacations,
and paid holidays.
• The working conditions—applicable training schedules, work schedules,
breaks, meal periods;, overtime, safety, security, employee bulletin boards
and log books, and social activities.
• The job—the tasks the job entails, how the job fits within the front office,
how the front office fits within the hotel, and what performance standards
are expected.

• The front office team—introductions to fellow employees, overview of the Notes

key responsibilities of each employee, and explanation of reporting
structures.
• The rules and regulations—regarding, for example, smoking, entry and exit,
disciplinary action, and parking privileges.
• The building—the layout of the building, the location of the employee
entrance, locker room, employee dining room, uniform room, front desk,
and other important departments. In addition, front desk, reservations,
and bell staff should be shown guestrooms, dining rooms, recreation areas,
and meeting rooms to begin to understand the layout of guest areas.
Much of this information should appear in the employee manual or hand-
book. Time should be set aside during an employee’s first day of work to
complete all proof of citizenship or work permit, tax withholding, insurance,
and similar work-related forms. Uniforms and lockers should be provided if
they are part of the job. New employees should also be given a tour of the
entire facility, especially the different types of guestrooms and meeting rooms.
The tour should include the work area, time clocks, and locations of posted
work schedules, supply areas, first aid kits, restrooms, and break areas. A tour
of related departments will help reinforce an explanation of the workflow and
need for teamwork. During the tour, the front office manager should introduce
as many fellow staff members as possible.
Management should ensure that all revenue centres are shown to the recruit.
The tour should also point out the locations of housekeeping, laundry,
maintenance, accounting, and other important hotel departments. Among the
most important features of a tour, however, is the tirne taken to introduce the
new employee to key managers, especially the general manager and the rooms
division manager, if they were not part of the interview process. Such
introductions can help make the recruit feel part of the team immediately. It
also establishes recognition between management and staff.
Skills Training
Ensuring that employees receive proper training is one of the front office
manager’s major responsibilities. This does not mean that the manager must
necessarily be the trainer. The actual training functions maybe delegated to
trainers, to department supervisors, or even to talented line employees.
However, the front office manager is responsible for ongoing training programs
in the department.
Most managers and trainers understand that the goal of training is to help
staff members develop skills to do their jobs well. Many managers and trainers,
Notes however, are not sure of the best way to train. Often, they need a framework for
training. The four-step training method provides that framework. The four steps
in the method are:
• Prepare to train.
• Present the training.
• Practice skills.
• Follow up.
Prepare to Train
Preparation is essential for successful training. Without adequate preparation,
the training will lack a logical sequence and key details of the job may be omitted.
Before training begins, the front office manager must analyze the job and assess
the training needs of the staff.
Analyze Jobs. The foundation for training and for preventing performance
problems is job analysis. Job analysis is determining what knowledge staff
members must have, what tasks they need to perform, and the standards at
which they must perform them. Without a complete knowledge of what each
staff member is expected to do, you can’t train properly. Job analysis involves
three steps: identifying job knowledge, creating a task list, and developing a
job breakdown for each task performed by front office positions. The knowledge,
lists, and breakdowns also form an efficient system for evaluating performance.
Job knowledge identifies what a staff member needs to know to perform
his or her job. Job knowledge can be divided into three categories: knowledge
for all hotel employees, knowledge for front office employees, and knowledge
specific to a position like a front desk agent. Exhibit 8 lists topics that might be
covered with all hotel employees, topics relevant for all front office employees,
and knowledge requirements for front desk agents.
A task list should reflect the total job responsibility of a position. Exhibit 9
presents a sample task list for a front desk agent. Note that each line on the
sample task list begins with a verb. This format stresses action and clearly
indicates to a staff member what he or she will be responsible for doing.
Wherever possible, tasks should be listed in an order that reflects the logical
sequence of daily responsibilities.
A job breakdown includes a list of needed equipment and supplies, steps,
how-to’s, and tips explaining how to complete a single task. The job breakdown
format can vary to suit the needs and requirements of individual operations.
Exhibit 10 presents a sample job breakdown for Task #16, Use Effective Sales
Techniques, listed in Exhibit 9.
Exhibit 8: Job Knowledge for Front Office Employees Notes

Knowledge for All Employees Knowledge for Front Desk
Employees
• Quality guest service • What is a front desk employee?
• Bloodborne pathogens • Working as a team with co-workers
• Personal appearance and other departments
• Emergency situations • Target markets
• Lost and found • Using guestroom equipment and
• Recycling procedures amenities
• Safe work habits • The telephone system
• Manager on duty identification • Point-of-sale equipment
• Property fact sheet • The front desk computer system
• Employee policies • Front desk printers
• The Americans with Disabilities • Room racks
Act • Types of reservations
Knowledge for All Front • Room inventory and occupancy
Office Employees terms
• Telephone courtesy • Room rate terms
• Security • Room status terms
• Guestroom types • Frequent flyer program
• Maintenance needs • Check-in and check-out guidelines
• Property policies • Room forecasts
• Community information • Credit card approval procedures
• Giving directions • Check approval procedures
• Airport shuttle services • Credit check report
• Elevator courtesy • Currency exchange
• Restaurant menus • Par stock system
• OSHA regulations • VIPs
Each member of the front office staff should know the standards that
will be used to measure his or her job performance. Therefore, it is important
to break down job tasks and document the standards. In order to serve as
a performance standard, each task must be observable and measurable.
Exhibit 11 shows a sample Training Needs Evaluation for Current Employees
form that can be used as a performance evaluation. The front office
manager (or the supervising manager) conducting a performance
evaluation should be able to simply check the box matching the staff member’s
performance. Performance evaluations should be held frequently for new
employees. These evaluations should be reinforcing sessions, focusing on areas
of success as well as areas of required improvement. As employees become
more familiar with their jobs, the evaluations can be held less frequently until
they are fully trained.

Notes Exhibit 9: Sample Task List—Front Desk Agent
FRONT DESK AGENT TASK LIST

1. Use the front desk computer system.
2. Use the front desk printers.
3. Use the front desk telephone system.
4. Use the facsimile machine.
5. Use the photocopy machine.
6. Organize the front desk and prepare for check-ins.
7. Use the front office log book.
8. Prepare and use an arrivals list.
9. Block and unblock rooms.
10. Set up preregistrations.
11. Begin guest check-in.
12. Establish the payment method during check-in.
13. Secure authorization for credit cards.
14. Issue and control guestroom keys/key cards.
15. Finish guest check-in.
16. Use effective sales techniques.
17. Preregister and check in group arrivals.
18. Show rooms to potential guests.
19. Use a waiting list when rooms are not ready for check-in.
20. Relocate guests in sold-out situations.
21. Use a manual room rack system.
22. Process room changes.
23. Process safe deposit box transactions for guests.
24. Prepare a cash-only report for outlets.
25. Run and follow up on credit check reports.
26. Process guest mail, packages, telegrams, and faxes.
27. Maintain a guest information directory.
28. Prepare maps and provide directions.
29. Help guests with special requests.
30. Respond to questions about services and events
31. Handle guest service problems.
32. Cash checks for guests.
33. Pick up, use, and turn in cash bank.
34. Post guest charges and payments.
35. Follow guest privacy and security measures.
36. Process wake-up call requests.
37. Operate the pay movie system.
38. Process guaranteed no-shows.
39. Update room status.
40. Help guests make future reservations.
41. Process guest check-outs.
42. Adjust disputed guest charges.

Exhibit 9 (Continued) Notes

43. Transfer allowable guest charges.
44. Process automatic check-outs.
45. Handle late guest check-outs.
46. Process late charges.
47. Keep the front desk clean and orderly.
48. Reconcile room status with the p.m. housekeeping report.
49. Prepare a current status report.
50. Perform bucket or tub checks.
51. Inventory and requisition front desk supplies.
52. Complete and turn in the shift checklist.
53. Respond to situations requiring first aid.
54. Respond to emergency alarms.
Develop Job Breakdowns. If one person in the front office is assigned the
responsibility of writing every job breakdown, the job may never get done,
unless the operation is very small with a limited number of tasks. Some of the
best job break-downs are written by those who actually perform the tasks. In
properties with large staffs, standards groups can be formed to handle the
writing tasks. Group members should include department supervisors and
several experienced employees. In smaller properties, experienced staff
members might be assigned to write the job breakdowns alone.
Most hotels have a policy and procedures manual. Although this manual
rarely contains the detail necessary to set up effective training and evaluation
programs, portions of it may be helpful to members of a standards group as
they write job breakdowns for each department position. For example, if the
procedure sections of the manual include job descriptions and job specifications,
they may help a standards group in writing job lists and performance standards.
The policy sections may be helpful sources of additional information that can
be included in the job breakdowns.
The job breakdowns for tasks that involve the use of equipment may already
be written in the operating manuals supplied by vendors. Standards groups
should not have to write performance standards for operating the front desk
computer system. Instead, the standards group may simply refer to (or even
attach) appropriate pages from the operating manual supplied by the vendor
for in-house training.
Developing job breakdowns involves breaking down each task on each front
office job list by writing the performance standards that state the specific
observable and measurable steps a staff member must take to accomplish the
task. The front office manager should assist the standards group in writing
performance standards for at least two or three positions. While assisting the

Notes Exhibit 10: Sample Job Breakdown
Use Effective Sales Techniques

Materials needed: Promotional programs catalog, promotional materials, brochures,
guestroom diagrams, and restaurant and room service menus.
Steps How-To’s Tips
1. Upsell guestrooms  Suggest higher-rate Upselling is a way of selling a
guestrooms when guests more expensive guestroom
check in. than the one a guest orginally
 Describe features and requested.
benefits of the more It never hurts to offer a guest a
expensive rooms. better room. You’re showing
 Show guests room that you want the guest to have
diagrams to help explain a pleasant stay.
features.
 If guests have children,
suggest a larger room to
give them extra space.
 Suggest a room with
extra amenities to
business travelers, or a
larger room so they can
hold meetings.
 If a couple is vacationing,
suggest a room with
features that will give
them a more memorable
experience.
 Be sure to always Don’t wait for guests to tell you
directly ask guests if they to book a certain room type.
would like to check into Anticipate what they want and
a room you describe. ask if you can book that room
type of them.
2. Suggest the food and  Suggest ordering from Guests usually welcome a
beverage outlets. room service if guests positive suggestion.
say they don’t have time
to leave their rooms. Tell
guests the hours of
service.
 Use good judgement.
Don’t recommend heavy
dishes on the room
service menu late at
night.
 Recommend the
property’s restaurant if
guests ask for a good
place to eat.


Use Effective Sales Techniques (Continued)
Steps How-To’s Tips
 Show guests the menu to Remember, you’ll be using

help them decide. teamwork when you suggest
 Be abc to tell guests the property’s restaurants.
about reservation and
dress code requirements.
 Listen to guests. If they
specifically ask for a
restaurant outside the
lodging property,
suggest local
establishments.
 Suggest the lounge if
guests are looking for a
place to unwind.
 Stay informed about See “Restaurant Menus” in
changes in menus, Knowledge for All Front Office
hours, and Employees.
entertainment. Guests
expect you to be an
expert about your
property.
3. Suggest property  Ask your supervisor Guests like to feel that they are
promotions. which promotions are
available at your
property.
 Study the features and
benefits of each
promotion.
 Enthusiastically describe
programs that may meet
guests’ needs.
 Give guests any
brochures and other
promotional materials
available.
group, the manager should stress that each performance standard must be
observable and measurable. The value of each performance standard can be
tested by asking whether a supervisor or manager can evaluate a staff member’s
performance by simply checking a “Yes” or “No” in the performance review
column. Sometimes, measurable performance standards include written tests
to verify employees have the required knowledge. These tests should be easy
to administer, using mostly multiple choice, true/false and fill in the blank
type questions.

Notes Exhibit 11: Sample Training Needs Evaluation Form

Training Needs Evaluation for Current Employees
How well are your current employees performing? Use this form to observe and
rate their work
Part 1: Job Knowledge
Well Slightly
Rate the employee’s knowledge Below Below At Above
of each of the following topics: Standard Standard Standard Standard
Knowledge for Employees
Quality Guest Service
Bloodborne Pathogens
Personal Appearance
Emergency Situations
Lost and Found
Recycling Procedures
Safe Work Habits
Manager on Duty
Your Property’s Fact Sheet
Employee Policies
The Americans with Disabilities Act
Knowledge for All Front Office
Employees
Telephone Courtesy
Security
Guestroom Types
Maintenance Needs
Property Polices
Your Community
Giving Directions
Transportation to the Airport
Elevator Courtesy
Restaurant Menus
OSHA Regulations
Knowledge for Front Desk Employees
What Is a Front Desk Employee?
Working as a Team With Co-Workers
and Other Departments
Target Markets


Training Needs Evaluation for Current Employees (continued)
Part 1: Job Knowledge (continued)
Well Slightly
Rate the employee’s knowledge Below Below At Above
of each of the following topics: Standard Standard Standard Standard
Knowledge for Front Desk
Employees (Continued)
Using Guestroom Equipment and
Amenities
The Telephone System
Point-of-Sale Equipment
The Front Desk Computer System
Front Desk Printers
Room Racks
Types of Reservations
Room Inventory and Occupancy
Terms
Room Rate Terms
Room Status Terms
Frequent Flyer Program
Check-In and Check-Out Guidelines
Room Forecasts
Credit Card Approval Procedures
Check Approval Procedures
Credit Check Report
Currency Exchange
Par Stock System
VIPs
After the standards groups has written job breakdowns for two or three
tasks, the writing of job breakdowns for the other tasks should be assigned
to individual members of the group. Within a specified time, they should
submit their work to the front office manager, who then assembles the
breakdowns, has them processed into a single format (perhaps similar to that
shown in Exhibit 10 or in the appendix of this chapter) and provides copies to
all of the group’s members. A final meeting can then be held, with the standards
group carefully analyzing the breakdowns for each position. After the job
breakdowns have been finalized, they should be used immediately to train the
front office staff.
Notes Exhibit 11 (Continued)

Training Needs Evaluation for Current Employees (Continued)
Part 2: Job Skills
Rate the employee’s skills Well Slightly

in performing each of the Below Below At Above
following tasks: Standard Standard Standard Standard
Use the Front Desk Computer System
Use the Front Desk Printers
Use the Front Desk Telephone System
Use the Facsimile machine
Use the Photocopy Machine
Organize the Front Desk and Prepare
for Check-Ins
Use the Front Office Logbook
Prepare and use an Arrivals List
Block and Unblock Rooms
Set up Preregistrations
Begin Guest Check-In
Establish the Payment Method
During Check-In
Secure Authorization for Credit Cards
Issue and Control Guestroom Keys
Finish Guest Check-In
Use Effective Sales Techniques
Preregister and Check In Group Arrivals
Show Rooms to Potential Guests
Use a Waiting List When Rooms Are
Not Ready for Check-In
Relocate Guests in Sold-out Situations
Use a Manual Room Rack System
Process Room Changes
Process Safe-Deposit-Box Transactions
for Guests
Prepare a Cash-Only Report for Outlets
Run and Follow Up on Credit Check
Reports
Process Guest Mail, Packages,
Telegrams, and Faxes
Maintain a Guest Information Directory


Training Needs Evaluation for Current Employees (Continued)
Part 2: Job Skills
Rate the employee’s skills Well Slightly
in performing each of the Below Below At Above
following tasks: Standard Standard Standard Standard
Prepare Maps and Provide Directions
Help Guests With Special Requests
Respond to Questions About Services
and Events
Handle Guest Service Problems
Cash Checks for Guests
Pick Up, Use, and Turn In Your Cash
Bank
Post Guest Changes and Payments
Follow Guest Privacy and Security
Measures
Process Wake-Up Calls
Operate the Pay Movie System
Process Guaranteed No-Shows
Update Room Status
Help Guests Make Reservations
Process Guest Check-Outs at the Desk
Adjust Disputed Guest Charges
Transfer Allowable Guest Charges
Process Automatic Check-Outs
Handle Late Guest Check-Outs
Process Late Charges
Keep the Front Desk Clean and Orderly
Reconcile Room Status With the P.M.
Housekeeping Report
Prepare a Current Status Report
Perform Bucket or Tub Checks
Inventory and Requisition Front Desk
Supplies
Complete and Turn In the Shift
Checklist
Respond to Situations Requiring First
Aid
Respond to Emergency Alarms

Notes Analyze New Employee Training Needs. The task list is an excellent tool
with which to plan employee training. Realistically, new staff members cannot
be expected to learn all of the tasks before the first day on the job. Before you
begin training, study the task list. Then, rate each task according to whether it
should be mastered (1) before working alone on the job; (2) within two weeks
on the job; or (3) within two months on the job.
Select several of the tasks that you rated as “1” and plan to cover those in
the first training session. After the employee understands and can perform these,
teach the remaining tasks in subsequent training sessions until the new staff
member has learned all of the tasks.
Once you’ve decided which tasks you’ll teach in each training session, turn
to the job breakdowns. Think of the job breakdown for each task as a lesson
plan for training or as a learning guide for self-directed study. Because the job
breakdowns list all the steps staff members must perform, they tell exactly what
needs to be done during the training. Job breakdowns can direct the instruction
and make sure that critical points or steps are not overlooked.
Analyze Current Employee Training Needs. Front office managers
sometimes feel that there’s a problem with an employee’s work or with several
employees’ work, but they’re not exactly sure what it is or they feel that
something’s not quite right with the staff, but don’t know where to start making
improvements. A training-needs assessment can help uncover a staff member’s
weaknesses as well as weaknesses of an entire staff. To conduct a needs
assessment of a single employee, observe present performance for two or three
days and record it on a copy of a form similar to the one in Exhibit 11. Areas in
which the employee scores poorly are those you’ll want to target when you
plan refresher training.
Develop Department Training Plan. It’s a good idea to make a training
plan four times a year, every three months or so. And it’s best to complete each
plan one month before the beginning of each quarter. Follow these steps to
prepare for training sessions:
• Carefully review all knowledge sections and job breakdowns that you
will use in training.
• Make a copy of each knowledge section and job breakdown for each
trainee.
• Establish a training schedule. This will depend on whom you are training
and the training method you use. Remember to limit each training session’s
information to what employees can understand and remember.
• Select a training time and location. When possible, conduct training at the
appropriate work stations during slow business hours.
• Notify the employee or employees of the dates and times of the training
sessions.

• Practice your presentation. Notes

• Gather all the necessary supplies for demonstrating tasks.
Present the Training

Well-developed job breakdowns provide all the information you need to conduct
the “present” step of the four-step training method. Use the job breakdowns as
a training guide. Follow the sequence of each step in each job breakdown. For
each step, show and tell staff members what to do, how to do it, and why the
details are important.
Give them a chance to prepare. Let new employees study the task list to get
an overview of all the tasks they will learn to perform. If possible, give the list
to them at least one day before the first training session. At least a day before
each training session, let new and current employees review the job breakdowns
that you plan to cover in that session. Then begin each training session by going
over what they will do. Let them know how long activities will take and when
their breaks will be.
As you explain the steps, demonstrate them. Make sure staff members can
see exactly what you are doing. Encourage them to ask questions whenever
they need more information. Be sure to take enough time when presenting your
training. Go slowly and carefully. Be patient if staff members don’t understand
right away. Go over all the steps at least two times. When you show a step a
second time, ask them questions to see if they understand. Repeat the steps as
many times as necessary. Avoid jargon. Use words that employees who are
new to the hospitality industry or your property can understand. They can pick
up the jargon later.
Practice Skills
When the trainer and trainees agree that they are familiar with the job and able
to complete the steps acceptably, trainees should try to perform the tasks alone.
Immediate practice results in good work habits. Have each trainee demonstrate
each step of the task presented during the training session. This tells you whether
they really do understand. Resist the urge to do the tasks for the employees.
Coaching will help staff members gain the skill and confidence necessary
to perform the job. Compliment employees immediately after correct
performance. Gently correct them when you observe problems. Bad habits
formed at this stage of the training may be very difficult to break later. Be sure
that the trainee understands and can explain not only how to perform each
step, but also the purpose of each step.
Follow Up
There are a number of things you can do to make it easier for your employees
to carry skills over to the workplace after training. Some of these options include:

Notes • Provide opportunities to use and demonstrate new skills during and after
training.
• Have employees discuss the training with their co-workers.
• Provide ongoing, open communication oil progress and concerns.
Continue Coaching on the Job. While training helps employees learn new
knowledge and develop new skills and attitudes, coaching focuses on the actual
on-the-job application of what has been learned in the training sessions. As a
coach, you challenge, encourage, correct, and positively reinforce the knowledge,
skills, and attitudes learned during the training session. On-the-job coaching
tips include:
• Observe employees while they work to ensure that they are performing
tasks correctly and let them know when they do something exceptionally
well.
• Make casual suggestions to correct minor problems.
• Tactfully correct employees when they make major mistakes. Typically,
the best way to do his is in a quiet location, when neither of you is busy.
• If an employee is using an unsafe procedure, correct the problem right
away.
Give Constant Feedback. Feedback is when you tell employees how well
they are performing. Two types of feedback are positive feedback, which
recognizes a job well done, and redirective feedback, which recognizes incorrect
performance and reviews how the employee can improve. Some tips for giving
both types of feed-back include:
• Let employees know what they are doing correctly and incorrectly.
• Tell employees when they perform well after training. This will help them
remember what they learn. It will also encourage them to use those
behaviors and that information on the job.
• If employees are not meeting performance standards, first compliment
them for the tasks they are doing correctly. Then, show them how to correct
their bad habits, and explain why it’s important that they do so.
• Be specific. Describe behavior by stating exactly what the employee said
and did.
• Choose your words carefully; you want to sound helpful, not demanding.
• Don’t say, “You used quality guest service when you asked the guest who
seemed lost if you could help, but you should have known the restaurant’s
hours of operation. Study your copy of the property’s fact sheet.”
• Do say, “You used quality guest service when you asked the guest who
seemed lost if you could help, and you could give even better service by
learning the restaurant’s and other facilities’ hours of operation. Let me
get you another copy of the property’s fact sheet.”
• Make sure you understand what the employee is saying. Say something Notes
such as, “What I’m hearing you say is...”
• Make sure the employee understands your message. Say something such
as, “I’m not sure I explained everything clearly. Let me hear what you
think I said.”
• Always be sincere and tactful with your comments. Employees appreciate
an honest compliment about a specific behavior. And no one likes to be
embarrassed or put down by criticism.
• Tell employees where to find help when you are not available.
Evaluate. Evaluate employees’ progress. Use the task list as a checklist to
confirm that all tasks have been mastered. Provide further training and practice
for tasks that have not been mastered.
Get Employees’ Feedback. Let employees evaluate the training they
received. This can help you improve your training efforts for them and other
employees. Keep training records for each person who receives training. Track
each employee’s training history and keep a copy of a training log in that
employee’s personnel file.
Staff Scheduling
Employee scheduling is one of the most challenging tasks confronting a front
office manager. Scheduling can be extremely complex, especially when front
office staff has been trained to perform only specific tasks. For example, a front
desk agent should not be scheduled as a switchboard operator when he or she
has had no switchboard training.
Employee scheduling affects payroll costs, employee productivity, and
morale. The more cross-training that occurs within the front office, the fewer
staff required to perform front office tasks. Staffing flexibility is the direct result
of proper training in several areas. Cross-gaining provides front office staff
with expanded job knowledge and a broader range of skills. Many more
interesting when they are trained to do several tasks, skills improving and
expanding, they feel more confident; the office is improved employee morale.
Good morale has throughout the entire staff.
Front office managers must be sensitive to the scheduling.
For example, hourly staff may request a varied schedule to avoid working
hours that conflict with school classes. Some front office staff may ask to work
varied shifts to learn the unique challenges posed by each shift. Some front
office managers base employee scheduling on seniority. Others base their
schedules on other criteria and preferences. Both methods are fair, but the front
office manager must be consistent in applying scheduling criteria and attentive
to each staff member’s needs to determine a workable schedule.
Notes While being sensitive to employee needs, the front office manager must
also keep the needs of the front office in mind. Scheduling employees on days
when they are available but not needed can be an unnecessary financial burden
to the hotel.
Front office managers may find the following tips helpful when developing
staffing schedules:
• A schedule should cover a full workweek, typically defined as Sunday
through Saturday. The schedule should be developed using the business
forecast of the hotel. Front desk and uniformed service operations usually
schedule staff based upon the number of check-ins and check-outs
expected each day. The reservations office usually schedules based upon
when reservation traffic is expected. This may take some coordination
with the sales department. For example, the sales department may have
an advertisement in the Sunday travel section of newspapers. Readers
may want to make their reservations immediately, so someone should be
scheduled at the hotel to take calls and inquiries.
• Schedules should be posted at least three days before the beginning of the
next workweek. Some states require schedules be posted five days or more
before the beginning of the next work period. It is also essential that the
front office manager understand laws pertaining to overtime hours and
pay.
• Days off, vacation time, and requested days off should be indicated on
the posted work schedule. Employees should be familiar with the required
lead time to submit a vacation request.
• The work schedule for the current week should be reviewed daily in
relation to anticipated business volume and unanticipated changes in staff
availability. If necessary, changes to the schedule should be made.
• Any scheduling changes should be noted directly on the posted work
schedule.
• A copy of the posted work schedule can be used to monitor the daily
attendance of employees. This copy should be retained as part of the
department’s permanent records.
Alternative Scheduling Techniques

Alternative scheduling involves a staffing schedule that varies from a typical 9
a.m. to 5 p.m. workday. Variations include part-time and flextime hours,
compressed schedules, and job sharing.

Part-Time Scheduling. Part-time staff frequently include students, new or Notes

young parents, retirees, and other individuals who choose not to work full-
time. Employing part-time staff can provide the front office with extra flexibility
in scheduling. It can also help reduce labor costs since expenses attributable to
benefits and over-time usually decrease.
Flextime Scheduling. Flextime planning allows employees to vary the time
they begin and end work shifts. Each shift has certain hours when all scheduled
staff must be present. Staffing needs during the rest of the shift can vary. The
front office manager must ensure that each hour of the day is adequately covered.
Flextime can enhance staff morale, productivity and job satisfaction. Moreover,
front offices with flextime arrangements can sometimes attract a larger number
of high quality employees. Most front office managers use flextime in one form
or another to cover the varying workloads of all shifts. For example, traditional
shifts at the front desk are from 7 a.m. to 3 p.m. and 3 p.m. until 11 p.m. Due to
heavy check-in traffic, however, it may be more beneficial to schedule one or
two employees on a noon to 8 p.m. shift. Airport hotels may have a 6 a.m. to
2 p.m. shift to cover early morning departures.
Compressed Schedules. Compressed schedules offer employees the
opportunity to work the equivalent of a standard work week in fewer than the
usual number of days. One popular arrangement condenses the 40-hour work
week into four 10-hour days. Compressed schedules tend to be somewhat
inflexible. Front office staff members may prefer inflexible hours within a four-
day week to flexible hours within a five-day week. Benefits from the employer’s
point-of-view include enhanced employee morale and reduced absenteeism.
Front office managers should be cautious when considering the adoption of
compressed schedules. In some states, employees qualify for overtime by
working more than eight hours a day, even though their total work week may
not exceed 40 hours.
Job Sharing. In job sharing, the combined efforts of two or more part-time
employees fulfill the duties and responsibilities of one full-time job. Usually,
the staff members who share a job work different hours and often different
shift portions. Some overlap is desired so staff can exchange information, solve
problems, or simply ensure a smooth workflow. Job sharing can lessen
department turnover and absenteeism, as well as increase staff morale. The
front office also benefits since even if one job-sharing partner terminates
employment, the other may be likely to stay and help train a new partner.
It should be noted that all of the scheduling techniques discussed above
must be done with certain restrictions in mind. In hotels, where the hourly staff
Notes is represented by unions, there maybe work scheduling rules that limit the
flexibility of schedules or require overtime pay after eight hours are worked on
any given day.
In other cases, state and federal wage and hour laws may place some
limitations on scheduling. Before a front office manager begins scheduling
employees, he or she should have a thorough knowledge of these union contract
rules and work regulations.
Staff Motivation
Front office managers should strive to create a work environment that fosters
the professional development and growth of the staff. To do so, management
must provide training, guidance, instruction, discipline, evaluation, direction,
and leadership. When the front office lacks these basic elements, staff may
become passive, critical, and indifferent to the hotel’s objectives. Such feelings
may manifest themselves in absenteeism, poor productivity, and high employee
turnover.
With the current changes in the labor market and the high cost of employee
turnover, the front office must seek ways to retain effective staff. One way to
meet this major challenge is to practice strong motivational techniques.
Motivation can mean many different things. For the purpose of this text,
motivation means the art of stimulating a front office staff member’s interest in
a particular job, project, or subject to the extent that he or she is challenged to be
continuously attentive, observant, concerned, and committed. Motivation is
the result of satisfying human needs associated with personal worth, value,
and belonging. In the front office, the outcome of motivation should be that a
staff member’s sense of worth, value, and belonging has improved from taking
part in a particular activity. A front office staff member who receives recognition
for contributions he or she makes to the front office’s success is typically a highly
motivated top performer.
A front office manager can motivate front office staff in a number of ways,
including training, cross-training, recognition, communication, and incentive
programs.
Training
One of the most effective ways to motivate employees is to train them. Training
informs employees that management cares enough to provide the necessary
instruction and direction to ensure their success. Successful training includes
information not only about the job tasks and duties (the “what to do" on a job),
but also about the company culture (the “why tasks are done a certain way" on
the job). The what and why must tie together. If the employee does not know
why a job is done a certain way, he or she will not really understand the job. Notes
This can lead to poor job performance and friction between employees. When
employees understand the culture, they become part of it and support it.
Training significantly reduces the frustration front office staff experience
when they do not know what is expected of them. Effective training educates
staff about performance expectations, required tasks; and equipment The
investment in training pays off because it makes employees more productive
and efficient, as well as easier to manage.
Cross-Training
Cross-training simply means teaching an employee job functions other than
those he or she was hired to perform. Cross-training has many advantages for
both front office management and staff. For the employee, cross-training can
offer an opportunity to acquire additional work skills. For the manager, cross-
training increases flexibility in scheduling. Cross-trained employees are more
valuable since they can perform several job functions. Finally, cross-training
can be a valuable motivational tool that removes many of the obstacles associated
with professional growth and advancement.
Recognition
When guests make positive comments about a front office staff member or select
the hotel for a return stay, it usually reflects guest satisfaction. Front office
management should communicate positive feedback to staff as recognition for
a job well done. Graphs and charts which depict improvements in revenues,
achievements, occupancy, and guest satisfaction can also be effective motivators.
Guest, managerial, and peer recognition are strong staff motivators. Many
hotels solicit guest feedback through comment cards. Comment cards may be
handed out at the front desk or placed in guestrooms, dining rooms, or other
areas. Comment cards frequently ask guests to mention employees who have
provided outstanding service. Completed guest comment cards can be posted
on an employee bulletin board, especially those complimenting individual staff
efforts.
The front office may offer incentives to staff who are favorably recognized
by guests. For example, a front desk agent who is mentioned through guest
comment cards, comments to managers, or letters to the front office may receive
dinner in the hotel dining room or a gift certificate.
Another popular form of recognition is an employee-of-the-month program.
A front office staff member of the month may be selected by front office
management or the front office staff. Usually, an employee qualifies for this
honor by demonstrating extraordinary commitment to the front office, its
standards, and its goals. The front office employee of the month usually receives
a prize certificate or a plaque.

Notes Communication
Keeping employees informed about front office operations helps produce
positive results. Staffs who are informed about upcoming events tend to feel a
greater sense of belonging and value.
A front office newsletter or bulletin can be an excellent way to establish and
maintain formal communications. Articles included in such a newsletter might
be job-related or personal, including such topics as:
• Job opening announcements
• Arriving, or in-house, VIPs and special events in the hotel
• Promotion, transfer, resignation and retirement announcements
• New recruit announcements
• Performance tips
• Special recognition awards
• Birthday, marriage, engagement, and birth announcements
• Upcoming event information
A front office area bulletin board provides an opportunity to post schedules,
memorandums, announcements . VIPs in house or arriving, group functions,
regular training reminders, and other pertinent information. Bulletin boards
are most effective when they are in an area accessible to all front office staff and
when employees regularly review the information. In many hotels, employee
bulletin boards may be the only source of day-to-day information employees
need to do their job properly.
Incentive Programs
Employees deserve special appreciation for the work they perform. An incentive
program is one of the most effective ways to acknowledge staff members who
excel in their work. Incentive programs vary in structure and design and often
are an excellent way to reward exceptional performance. The front office should
develop and establish incentive programs that result in a situation which is
beneficial to guests, the employees, and the front office. An effective incentive
program should challenge the staff and create a spirit of competition.
A well-designed front office incentive program should:
• Recognize and reward exceptional staff performance
• Increase staff productivity
• Demonstrate commitment to guest satisfaction
• Promote staff participation in revenue and service improvement through
suggestions for improvement
Front office managers should consider the following basic guidelines when
developing an incentive program:

• Develop an incentive program that is appropriate and specific to the front Notes
office.
• Outline the specific goals and objectives for the program.
• Define the conditions and requirements which front office staff must meet
to receive recognition and rewards.
• Brainstorm a variety of rewards and obtain the necessary approvals for
any expenditures.
• Determine the date and the time the program will begin. Every staff
member should participate. Front office managers should be sure to design
a program that is fun, realistic, and creative.
Rewards front office managers typically consider are:
• Commendation letters
• Certificates of appreciation
• Public photo display (with the staff member and general manager and/
or front office manager)
• Recognition dinners or events
• Gift certificates
• Complimentary weekend packages
• Special parking privileges
• Recognition plaques
Successful incentive programs also provide staff with feedback about goal
attainment. For example, charts posted on the front office bulletin board that
show individual progress may be very motivational for a reward-oriented
incentive program. Goals should be challenging, but should not be so unrealistic
that they appear unachievable. Unrealistic goals can frustrate employees and
destroy the motivational value of the incentive program.
Front office incentive programs usually center on enhanced occupancy, room
revenue, average rate, and guest satisfaction. Conducting one incentive program
at a time will help staff focus on specific goals. For example, the front office
manager may develop an incentive program directed at increasing the average
daily rate or occupancy. Staff may work toward achieving a specific occupancy
percentage or a specific average daily rate. The incentive should last for a specific
time period. After this time period elapses, the incentive program should end.
During a slow season, for instance, the front office manager may want to
concentrate on building occupancy. During peak periods, the front office
manager may implement an incentive program to maximize the average daily
rate through upselling at the front desk.

Notes Performance Appraisals

Front office staff needs to feel secure with respect to their job performance. The
interaction between front office staff and management can affect an employee’s
self-image and job perception. Like the employee evaluations discussed earlier
in this chapter, a performance appraisal is one of the most effective techniques
a manager can use to enhance motivation and morale.
A performance appraisal:
• Provides each front office staff member with formal written feedback on
his or her job performance.
• Identifies strengths and weaknesses in performance and provides plans
and actions for improvement.
• Gives the manager and each employee the opportunity to develop specific
goals and progress dates.
• Recognizes and rewards outstanding performance through possible
promotions, wage increases, and additional responsibilities.
• Helps identify employee compatibility with a specific work position.
Front office managers will discover there are many methods and techniques
for evaluating staff performance. Although most hotel companies have
performance appraisal programs, each front office manager should tailor an
appraisal program to meet the department’s goals and objectives. Normally,
an effective performance appraisal focuses on an employee’s job performance
and the steps the employee can follow to improve job skills and performance.
Performance appraisals should be fair, objective, informative, and positive.
When the appraisal process is complete, the employee should clearly understand
what he or she is doing well and where he or she needs to improve. Every
employee should receive an appraisal at least once a year.
Many front office managers use written performance appraisal forms and
procedures. Written appraisals can be very supportive and beneficial when
employee counselling or termination are necessary. Written job evaluations that
are acknowledged and signed by the staff member should be placed in the
employee’s-personnel file. The form may also include an area for the employee
to add his or her own comments and, perhaps, identify what other positions he
or she would like to be considered for in the future. A plan of action can then be
developed between the supervisor and employee to prepare for the next position.
Written appraisal forms are also important because they protect employers from
legal action in case an employee feels they have been treated unfairly. There is
much less chance of a legal problem when a hotel can show the history of work
and disciplinary issues with an employee and what the hotel did to try to correct
the situation.

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Punjab Technical University

Dr. R.P. Singh

Dr. R.P. Singh

1. Planning and Front Office Evaluating Operations 1 – 27

UNIT-VI The Role of Government Agencies

UNIT-VII Managing Human Resources

BSCHMCTT-501: FRONT OFFICE MANAGEMENT-I

UNIT-I Planning and Evaluating Front Office Operations

UNIT-III Yield Management

UNIT-IV Reservation Sales Management

PLANNING AND FRONT OFFICE

Initial Pre-operating Operating Appraisal

This chapter focuses on elements of two front office management functions:

• Establishing room rates

• Forecasting room availability

• Budgeting for operations

It concludes by examining various methods by which a front office

ESTABLISHING ROOM RATES

In commercial hotels, each room rate category is assigned a rack (standard

• Corporate or commercial rate. The rate offered to companies that

• Group rate. The rate offered to groups, meetings, and conventions

• Promotional rate. The rate offered to individuals who may belong to

• Incentive rate. The rate offered to guests in affiliated organizations

• Family rate. A rate reserved for families with children.

• Package plan rate. A rate that includes a guestroom in combination

• Complimentary rate. A room rate provided to special guests and/or

Room rates often serve as a market positioning statement since they

The following sections examine three popular approaches to pricing rooms:

Market Condition Approach

• How do our rates compare to those of our competition?

• What is our occupancy percentage? What is the occupancy

• Have any trends emerged during the past six months?

Another, more reliable, way of determining historical market conditions

Exhibit 2: Sample TIMS Report

TIMS Competitive Rate Analysis Report for the

Exhibit 4: Sample STAR Summary Report

Hubbart Formula Approach

Property tax expenses $250,000

Insurance expenses 50,000

Depreciation expenses 300,000

Administrative and general expenses 300,000

Data processing expenses 120,000

Human resources expenses 80,000

Transportation expenses 40,000

Marketing expenses 200,000

Property operation and maintenance expenses 200,000

Energy and related expenses 300,000

The other operated departments’ income (losses) are estimated as follows:

Food and beverage department $150,000

Telephone department (50,000)

Rentals and other departments 100,000

Double Sold Double Occupancy Number of Occupancy

 Doubles Sold ×  Average Daily Number

Notes Exhibit 5: Calculating Average Room Rate: Hubbart Formula

Desired net income Owners’ Investment ROI

$2,500,000 × .15 = $375,000

Pretax income = $625,000

Exhibit 6: Determining Single and Double Room Rates from an Average

where: x = Price of singles

y = Price differential between singles and doubles

Alternatively, the double rate could be set as a percentage of the single

 Doubles Sold ( x) ×  Average Daily Number

The percentage differential is simply the percentage difference of the double