Hotelier Indonesia Magazine 30th Edition Edition 30th Finale 2017 | Page 49

What is the expected transient wash for each market segment?
What are the booking windows for transient business? Hotels could use revenue management sys-
tems to analyse booking pace by market segment at various days to arrival.
When is the hotel’s group cut-off and how well are group blocks managed?
Is the hotel consistently managing groups by days-to-arrival and adjusting overbooking accordingly?
Walking a paying guest can be hard
and unpleasant, so why do hotels need
to overbook in the first place?
Consider this all-too-common scena-
rio: A high-profile international trade
fair is occurring in your city and your
hotel has been sold out for more than
two weeks. There’s not a single room
left within a 10-kilometre radius.
Your forecasted revenue numbers for
the week are significantly outperfor-
ming the actual bookings from the
same period the year before. However,
as the morning reports rolled in, your
hotel only finished at 96% occupancy
opening day which led to a revenue
underperformance compared to your
forecast. Rather than trying to figure
out who’s to blame for this situation,
hoteliers should instead see the si-
tuation as an opportunity to enhance
the property’s systems and techno-
logy and rethink their overbooking
strategy.
From a revenue management point
of view, to maximise occupancy and
revenue during peak demand dates,
overbooking can be a necessary evil
driven by several internal and external
factors.
Internal Factors:
No-Show: Paying guests may turn out
as a no-show on the arrival day due to
various reasons, which leads to empty
rooms at a hotel Cancellation/Wash:
Prior to arrival day, hotels typically
have cancellations from transient
bookings or group wash. If hotels are
not able to pick up bookings to com-
pensate cancellations or wash, it will
impact on hotel revenues
Extension/Contraction:
Besides no-shows and cancellations,
revenue managers should track
in-house guests’ extensions, especially
for hotels with a high portion of long-
stay guests.
Although in-house guests’ extensions
are subject to availability, it has to be
taken in consideration when setting
up overbooking scenarios
External factors:
If a hotel has a sister property to relo-
cate their walked guests to based on a
pre-negotiated rate, then they can be
a lot more flexible with their overboo-
king strategy.
However, if a hotel has to relocate
guests to a non-affiliated or competi-
tor hotel, then management has to be
very careful. The overbooking risks in
this situation are compounded when
the market demand is high, such as
during a major event and guest reloca-
tion price, or ‘cost of walk,’ is prohibi-
tively expensive.
The practice of overbooking weaves
art into science to calculate risks
against their rewards, and today’s ad-
vanced revenue management systems
help hoteliers analyse and produce
decisions for a customised overboo-
king strategy.
Below are some considerations and
insights hotel revenue management
systems can provide to maximise stra-
tegic overbooking opportunities:
How is the hotel’s room type overboo-
king strategy established?
Are they deploying room type over-
booking strategies only when they’re
expected to sell out? Deploying room
type overbooking strategies over non-
sold-out periods can be an effective
way to maximise property yield in
both need and busy periods.
Is the hotel’s room type overbooking
strategy static all year long, or is it
deploying different strategies by day-
of-week or season?
Hoteliers need to understand over-
booking is a long-term strategy that
requires constant review. By analysing
overbooking numbers months in
advance, hotels can better compen-
sate for expected group wash with
high-paying transient guests.
Consider a hotel that only overbooks
their base room type all year long.
Assume this hotel has a significant
rainy season and struggles to find bu-
siness to fill their weekends. However,
during this period, they do remain
consistently busy with corporate travel
during the week.
How can they adjust their overboo-
king strategy to accommodate for this
distinct day-of-week need?
Perhaps their base room type is
open for generous overbooking on
the weekends (keeping their hotel as
competitively priced as possible), but
a conservative strategy is employed
during the weekdays to encourage
bookings into upgraded room types.
If the new strategy helps a hotel book
just five upgraded room types every
weekday at a $75 upcharge,
HOTELIER INDONESIA | 30th | Vol 14 | 2017 | www.hotelier-indonesia.com
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