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HRTM 136 Rooms Division Management and

Control System

Prepared by: AIREEN Y.


CLORES, INSTRUCTOR

Chapter 3.1
Key Operating
Ratios of Rooms
Division

Forecasting room availability is forecasting


the number of rooms available for sale on any
future date. This type of forecasting helps
manage the reservation process, guides the
front office staff for an effective rooms
management, and can be used as an
occupancy forecast, which is, further, useful
in attempting to schedule the necessary
number of employees for an expected volume
of business.

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I- Forecasting Room
Availability:

Front Office Budgeting


FOM is responsible for:
1. Forecasting Rooms Revenue
Use historical trend data

2. Estimating Expenses
Vary directly with rooms revenue
Payroll, laundry & supplies

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The most important long-term planning function

Forecasting Rooms
Revenue
Rooms
Available

Occupancy
Percentage

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Forecasted Annual Rooms Revenue =


Average
Daily Rate

Rooms Available = Total Rooms X 365 Days

Forecasting Rooms Revenue


Example

75% Occupancy Percentage


.75
$50 Average Daily Rate

36,500 x .75 x $50 = $1,368,750

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100 Room Hotel


100 x 365 days = 36,500 Rooms Available

Room Forecasting
Ten-Day Forecast
House Count

Expected number of guests in the hotel


Divided into group and non-group

Three-Day Forecast

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Done by FOM and Reservations Manager

Updated with current information


Identifies changes in staffing needs
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Forecasting Room
Availability

The most important short-term planning function

Reservation Trends
How far in advance are reservations being made?
Scheduled Events
City-wide conventions; sporting events, etc.

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Hotel Occupancy History


The past few months and last year at this time

Group Profiles
Pickup history
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Forecasting Data
No-shows
Walk-ins

Guests without reservations.

Overstays

Guests who stay beyond their departure date.

Understays

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Expected guests who did not arrive.

Guests who check out before departure date.


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Percentage Of Noshows
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Number of Room No-Shows


Number of Room Reservations

Purpose:
Helps front office managers
decide when (and if) to sell rooms
to walk-in.
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Percentage Of Walkins
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Number of Room Walk-Ins


Total Number of Room Arrivals

Purpose:
Helps front office managers know
how many walk-ins to expect.
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Percentage Of
Overstays

Purpose:

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Number of Overstay Rooms


Number of Expected Check-Outs

Alerts front office managers to


potential problems when rooms have
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been reserved for arriving guests.

Number of Understay Rooms


Number of Expected CheckOuts
Purpose:
Alerts front office manager to
additional room availability.
20% of hotels charge under-stay
guests

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Percentage Of
Understays

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+
+
-

Total number of guestrooms


Out of order rooms
Stayovers
Reservations
Reservations x no-show percentage
Understays
Overstays

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Rooms Availability Formula

Number of Rooms Available for Sale


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150 Guestrooms
- 5 Out of Order
- 45 Stayovers
- 50 Reservations
+ 10% No-show
+ 5 Understays
- 20 Overstays
40 Rooms Available for Sale

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Rooms Availability
Formula Example

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Also called as Daily revenue report or


Managers report
A summary of a hotel activities during 24 hours
Served as a posting reference for various
accounting journals
Including occupancy summary (different room
types, revenue summary (all the outlets),
Rooms revenue analysis (different rate groups),
Group analysis (MICE + Tour), Food & Beverage
analysis, Complimentary rooms, OOO rooms
Distributed to all division heads

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The Daily Operations Report

Occupancy Ratios

Last Periods Ratio


Budgeted or Planned Ratio
Competitors or Industry Average Ratio

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For any ratio to be significant, it should


be compared to a certain benchmark,
which might include:

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Occupancy Percentage

Consider a hotel that sold 75 rooms with a room


inventory of 100 rooms, resulting in 75%
occupancy

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Measure the success of the front office in selling


the hotels primary product (i.e. guestrooms)
Occupancy percentage is computed daily basis by
the Night Auditor base on the method:

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Occupancy Ratios
Multiple Occupancy Percentage = (Number of Rooms Occupied
by More Than One Guest) / (Total Number of Rooms Occupied) *
100
Single Occupancy Percentage = (Number of Single Rooms
Occupied) / (Total Number of Single Rooms Available For Sale) * 100
Double Occupancy Percentage = (Number of Double Rooms
Occupied) / (Total Number of Double Rooms Available for Sale) * 100
Triple Occupancy Percentage = (Number of Triple Rooms
Occupied) / (Total Number of Triple Rooms Available For Sale) * 100

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Occupancy Percentage = (Number of Rooms Occupied) / (Total


Number of Rooms Available For Sale) * 100

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Lets consider the


following problem:
Yasin Hotel has 204 rooms:
45 are triple,
On the night of May 9th, 03 the night
auditor counted 195 rooms occupied, 43
are triple, 58 are double, and the
remaining are single.
Moreover, the housekeeping department
communicated only 4 rooms (all single)
out of order for the night of May 09 th,
2016

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60 are double and the remaining is single.

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Single Occupancy Rate = 94 / (99-4) * 100 =


98.95 %
Double Occupancy Rate = 58 / 60 *100 = 96.67 %
Triple Occupancy Rate = 43 / 45 *100 = 95.56 %

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What is Yasin Hotel's Occupancy Rate for the


night of May 09th, 2016?
Hotels Occupancy Rate = 195 / (204 - 4) *
100 = 97.50 %

What is Yasin Hotel's Single, Double, and


Triple Occupancy rates for the night of May
09th, 2016?

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Other Operational
Statistics:

Average Daily Rate = (Actual Room


Revenue) / (Total Number of Rooms Sold)
Average Rate per Guest = Revenue
Per Available Customer (RevPAC) =
(Actual Room Revenue) / (Number of
Guests)

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Average Guests Per Rooms Sold =


(Total Number of Guests) / (Total Number of
Rooms Sold)

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Other Operational
Statistics:

Average Daily Rate = (Actual Room


Revenue) / (Total Number of Rooms Sold)
Daily room sales of P4,800 with 60 rooms sold, the
ADR is P80, computed as follows:

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Average daily rate is a measure of the hotel staffs


success in selling available room rooms.

P4,800 / 60 = P80
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Other Operational
Statistics:

revenue received for a specific day by the


number of rooms available in the hotel for
that day
Number of Rooms Occupied
Number of Rooms Available
Sold 95 rooms with 5 comps
150 room hotel with 25 out of order
95 + 5 =
150 - 25 =

100
125

=
80%

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Revenue
Per
Available
Room
(RevPAR) determined by dividing room

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Cordoba Hotel has 120 rooms: 53 of them are single


and 67 are double. On the night of 09/12/03,
Cordoba Hotels Night Auditor counted a total of 85
rooms occupied, 42 of which were occupied by more
than one guest. Moreover, on the same night 127
guests were registered. In addition, 2 rooms were on
a complimentary basis. From the Housekeeping
Room Status Report (for the night of 28/11/07),
there were a total of 4 rooms Out of Order, 3 of
which were Single. Lastly, the Actual Room Revenue
for the same night was at the order of $ 6,960.
Calculate the Average Guest Per Room Sold
Calculate the Average Daily Rate
Calculate the Average Rate Per Guest (RevPAC)
Calculate the RevPAR

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Lets consider the


following example:

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Answer:

Average Daily Rate = $ 6,960 / (85-2) = $


83.86
Average Rate Per Guest (RevPAC) = $
6,960 / 127 = $ 54.80 Per Guest

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Average Guest Per Room Sold = 127 / (85


2) = 1.53 Guest Per Room Sold

RevPAR = $ 6,960 / (120 4) = $ 60.00


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1100 RMB.
2 rooms are out of order.
75 rooms were sold at varying rates.
78
rooms
were
occupied
including
3
complimentary rooms.
8 rooms were occupied by 2 guests, therefore, a
total of 86 guests were in occupancy.
66080 RMB in rooms revenue were generated.
81860 RMB in total revenue were generated,
including rooms, food beverage, telephone calls,
meeting room rental, laundry and other.
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Exercise of Occupancy
Ratios
The Hilton Hotel has 100 rooms and a rack rate is

Calculation
Occupancy percentage
Multiple Occupancy Percentage

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Average Guests per Room Sold


Average Daily Rate (ADR)
Revenue per Available Room (RevPAR)
Revenue per Available Customer (RevPAC)
Average Rate per Guest (ARG)
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Occupancy percentage
78/100-2=79.6%
Average Daily Rate (ADR)
66080/75=881.07
Multiple Occupancy Percentage
8/78=10.3%
Average Guests per Room Sold
86/75=1.15
Revenue per Available Room (RevPAR)
66080/98=674.29
Revenue per Available Customer (RevPAC)
81860/86=951.86
Average Rate per Guest (ARG)
66080/86=768.37
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Answers

Yield Statistics is an operational ratio


that needs to be calculated on a daily
basis by the Night Auditor and
communicated to the Rooms Division
Manager to show how successful the
Rooms Division Department is selling its
rooms at a rate very near the rack rate!

Maximize Room Revenue Subject to


Space

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Yield Statistic:

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Yield Statistic:

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Yield statistic = (Actual Room Revenue)


(Potential Room Revenue)

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Lets consider the following


example:

Number of Rooms

Room Type

Room Rate

Rack Rate

54

Single

$ 40

$ 55

40

Single

$ 45

$ 55

19

Double

$ 52

$ 70

39

Double

$ 55

$ 70

14

Triple

$ 60

$ 80

16

Triple

$ 63

$ 80

13

Triple

$ 70

$ 80

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The following data is pertinent to the room price


and room type rack rates of Sinans Hotel for the
Night of December 10th, 03:
Could you calculate Sinan Hotel's Yield Statistic?

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Number of Rooms

Room Type

Room Rate

Rack Rate

54

Single

$40

$55

40

Single

$45

$55

19

Double

$52

$70

39

Double

$55

$70

14

Triple

$60

$80

16

Triple

$63

$80

13

Triple

$70

Actual Room Revenue

Potential Room Revenue

$2,160

$2,970

$1,800

$2,200

$988

$1,330

$2,145

$2,730

$840

$1,120

$1,008

$1,280

$910

$1,040

$80

Total

$9,851

$12,670

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Answer:

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A front office manager has reviewed the daily


report, which reveals that 240 rooms were
sold last night. The hotel has 300 rooms and
a rack rate of $98. Using the following
breakdown of room sales, determine the yield
for last night:
85 rooms at $98
65 rooms at $90
90 rooms at $75

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Exercise quiz: Yield


Management

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Assignment:

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PREPARE CROSSWISE
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1. Determine the yield for a hotel that has 200 rooms available
for sale with a rack rate of $80, all of which are sold at $75.
2. Determine the yield for a hotel that has 275 rooms available
for sale with a rack rate of $60, of which150 are sold at $75.
3. Determine the yield for a hotel that has 1000 rooms
available for sale with a rack rate of $135, of which 850 are
sold at $100.
4. Determine the yield for a hotel that has 100 rooms available
for sale with a rack rate of $95, of which 85 are sold at $75.
5. Determine the yield for a hotel that has 190 rooms available
for sale with a rack rate of $125, of which 100 are sold at
$93.
6. Determine the yield for a hotel that has 525 rooms available
for sale with a rack rate of $140, of which 367 are sold at
$119.

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INSTRUCTOR

Quiz:

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7. The Grand Star hotel has a total of 150 rooms


and 128 of the rooms are sold for the night.
Calculate the Occupancy rate. Please show
computation.
8. The Blue Diamond hotel has 200 rooms
available per night and an average occupancy
rate of 78% for the week and an average daily
rate (ADR) of $109 per night. Calculate the
weekly estimated revenue. Be sure to show your
work.

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Quiz:

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Quiz: Occupancy
Ratios
The Pavilion De Paris Hotel has 200 rooms and the rack
4 rooms were out of order.
180 rooms were sold at varying rates.
182 rooms were occupied including 2 complimentary
rooms.
20 rooms were occupied by 2 guests, therefore, a total of
202 guests were in occupancy.
Php38, 0000 in rooms revenue were generated.
Php460, 000 in total revenue were generated, including
rooms, food and beverage, meeting room rental, laundry
and other.

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rate is Php2, 500.

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9. Occupancy percentage
10.Multiple Occupancy Percentage
11.Average Guests per Room Sold
12.Average Daily Rate (ADR)
13.Revenue per Available Room (Rev PAR)
14.Revenue per Available Customer (Rev
PAC)
15.Average Rate per Guest (ARG)

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Please calculate the following


figures according to the information
provided above:

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