Knowledge Flashcards
Distribution Channel management
Process of delivering a product from the manufacturer to the end customer
Businesses that generate hotel rooms reservations
- Travel agents
- Online travel agent
- Tour Operator
- Hotel Reservation websites
- Travel review sites
- Opaque booking sites
- Airbnb
Travel agents
- receive 10-15% commission
- makes the hotel booking for the guests
- uses GDS
- make money by commission from the hotel
Online travel websites
- website offers packages for holidays
- uses GDS
- large computer website
- eg. booking.com
Tour operator
- group travel programs
- markets directly to consumer
- hotel has a number of rooms which they sell for a lower rate
Hotel reservation website
- focus on selling hotel rooms
- loyalty program
Travel review sites
- platform to share your experience
- gives the options to book trips
Opaque booking sites
- guest bid for a room
- guest only know price,stars, and location
- hotels give up to 30-60% discounts
Airbnb
-low commission for home owners
PMS - property management systems
Controls onsite property’s
- POS( point of sales)
- CRS ( central reservations systems )
- Eg. opera
CRS - central reservations systems
Manage hotels distribution and hotel room booking
Via travel agents
- supply attractive photos and creative site
GDS - Global Distribution systems
A reservation platform to enable reservations 4 major GDP companies: -Sabre -Galileo -amasdeus -worldspan
Travel agents use this to book hotels,airlines etc
WBE - web booking engining
Let’s guests shops for rooms and complete reservations
Channel management systems
Controls the hotels inventory and rates across all distribution channels
Should reduce labour costs and improve efficiency by providing a way to control multiple channels
How does the channel manager work for the hotel?
- deducts rooms sold via one website
- helps you create rate parity
GDS users
- travel agents
- Internet travel sites
- opaque travel sites
Rate parity
The distribution channel of a hotel should reflect the same rates for the same conditions for a particular room type
Regulations for five star hotel
- at least two people in the reception
- Night receptionist
- Three types of shift,Early, late, night
When do we use forecasting
- When you make plans to build or buy a hotel
Investment, return on investment - when you are managing the hotel
Occupancy, and room rates, costs, staffing
Front office records
- confidential information at all times kept within the hotel
- individual guest history profile
Pick up rate
The difference between the number of rooms expected by group booking and the actual number of rooms booked by the group
Hotel pick up record
Booking pace of your hotel
Recorded on every first day of the month the monthly occupancy for every future month
Hotel pricing
-to price and understand how the consumer reacts to the pricing strategy
-marketing decisions need to be taken
-The cost structure:
Fixed costs [high - low]
Variable costs [high - low]
Effects of price on market
- High prices may reduce demand
- May attract high guests and brand your hotel differently
- Price equals creates competition
- Low prices may fail to cover costs
Positioning your price
- Skim
- Match
- Surround
- Undercut
- Penetrate
Skim
- Set your price is higher than the competition does
- So you can skim off the higher paying customer in hope of getting people who are willing to pay a bit more
- attracts luxury and more expensive that majority cannot afford
Match
- Set one right to match the competition and another right slightly higher
- Higher rates for better rooms
Surround
- all for one price that is lower than the competition and one price is higher
- To attract bargain seekers
Undercut
- Offer a price is the same as your competition and lower one as well
- In hope of attracting more customers
Penetrate
- set your rates lower than the competition
- In hope of getting a customers to try your product
Rate fences
Setting special conditions to receive special lower price
Eg. book in advance, pay in advance p,stay more then 3 nights
Costs approaches
Tangible criteria and intangible criteria
Tangible criteria
- type of room
- size of rooms
- location and view
- level of service
Intangible criteria
- season
- weekend or weekday
- Time of arrival
- Inclusive or non-inclusive
- Per person or per room
Establishing room rates
Room rates reflect service expectations to the hotels target market
- Market condition approach
- Rule of thumb approach
- Hubbart formula Ford/ bottoms Up Approach
Market condition approach
- commonsense approach
- often used but has many problems
- Allows the Local market to determine the rate
Rule of thumb approach
- set the minimum average room rates at $1 for each $1000 of construction and furnishing costs per room
- assume 70% of occupancy
- Doesn’t include other hotel services
Hubbart formula/Bottoms up approach
- What is the target rather than actual room prices
- Needs management estimates
Method for bottoms Up approach
– Calculate desired profit
– Calculate pretax profits
– Calculate fixed charges and management fees
– Calculate undistributed operating expenses
-estimate non-room operating department profit/loss
-calculate required rooms division income
– Determine room division income
– Calculate average room rate
Room rate economies
The process by which revenue managers price rooms while considering how consumers may react to the pricing strategy
Benefits of revenue management
- improved forecasting
- Approved seasonal pricing and inventory decisions
- Determine discount activity
Revenue management methods
- Capacity management
- Discount allocation
- Duration control
Capacity management
- Designed to fix capacity of the hotel rooms in the most optimal way
- balances risk of overbooking
Discount allocation
- Offering discounts on hotel rooms
- Restricts time period And product mix available at reduced or discounted rates
Duration control
- Special conditions/restrictions to the duration of the stay
- 1 to 2 days as there’s a big event in the town
- Reaches more occupancy
Rack rates
- The published rates
- maximum property can charge for a room
- Maximum possible price
Elements of revenue management strategies
- group room sales
business rooms - transient rooms sales
Individual booking
Important features of distribution channel management
- be visible
- attractive photos
- languages
- booking module
