WEEK 5: LECTURE

HOTO7018: Revenue
Management
Dr. Derya Demirdelen Alrawadieh
ddemirdelen-alrawadieh-@brookes.ac.uk
Welcome to
Week 5:
Inventory
 Just a quick recap of
Just a the
quicklast week!
recap of the Just a quick recap of the last week!
last week!
 Available rooms = Number of rooms in the hotel - (stay-overs + incoming reservations)

OOO-OOI rooms!

The simple, unadjusted room count&The adjusted room count

Recap!
 Methods for forecasting room availability
The adjusted room count

The hotel has developed the following

historical statistics:
Cancellation: 3% Of that day’s reservation
No shows: 6%
The hotel has 130 rooms
30 rooms due to check out
Understays: 2% Of stayover rooms 35 rooms are reserved
80 rooms are stayover
Overstays: 4% Of Due to check out rooms
What is the occupancy rate?
OOI-OOO?
 By the end of this session you should be able to understand:

 Inventory management strategies!

 The pros and cons of overbooking as an inventory management strategy!

Week 5: Learning Objectives

 The Marketing Mix
Revisited
• Product: What will be sold?
• Price: What are the financial terms of the sale?
• Place: Where/how will the exchange take place?
• Promotion: Radio, Tv Ads. Social Media Marketing
 Manage Inventory
• HIM is the process ordering, storing and distributing a hotel’s products
• Refers to all resources used daily in a hotel
• Managing the availability of a hotel's products and services
• Primary&Secondary inventory
• Crucial step
• Manuel inventory & Electronic stock control system
• 100-150 rooms!
• Double-King room!
 Think of the Old Bank Hotels in Highstreet. Imagine that
Services vs Products! occupancy this night is 75%. The revenue of the %25 rooms is
lost forever.

You can't stock a hotel room!

They usually offer 20 % discounts!
Idea here is there is a different type of product and how one of the revenue manager managed inventory differently .
 Inventory Management-Rooms Inventory

Achieved better revpar!

In this scenario, four distinct rooms exist! They are:
 Let’s guess!
Close Out!

To remove from sale or to stop selling!

For example: We need to close out kings for August 3rd.

Characterizing rooms
for optimum
inventory
management

•ROOM CODE-Not all rooms are

created equal. Guest will perceive a
higher value based on:

• Location of room
• Room size or type
• Bed configuration
• Package
1. Location

A Hotel's Location, as
well as the way it is
connected with the Mountain hotel
various activities in the
area, is undoubtedly one
of the most important
factors for choosing a
hotel!

Value is changeable! Beach hotel

 2. Room size or type
Most guests perceive larger guest rooms to be of more value than smaller rooms!
Let’s guess-UPGRADE
A hotel room upgrade is a change from a basic or standard room to a room or
suite with better amenities or qualities.

Is there any fee or charge to stay these rooms?

Let’s guess-UPSELL
Upsells are mutually beneficial for hotels and guests; they help hotels
generate more revenue while adding value to the guest experience.
3. Bed configuration
The number and size of beds contained in a
specified hotel guest room.
A hotel room that shares a wall with an adjoining room and is connected by a
private door!
 Let’s guess!
Room Code: A property-specific, shortened description
used to identify a specific room product in a hotel!

DD
NSDD
DND
OCC-O
OOO-OOS/I
COMP
 Let’s guess- COMP
Complimentary room!
A guest room provided to a person at no cost

Does ADR include complimentary rooms? Is there any revenue?

DESIGNATING UNIQUE ROOM
X HOTEL ROOM
CODESCODES
DESIGNATING UNIQUE ROOM CODES
 •The creation of a package is one
of the most common forms of
4. Package product versioning used in the
lodging industry!

weekend package
Let’s guess- Real
Time (inventory
update)
•The term used to identify
rooms inventory availability
that is designed to be updated
in the CRS/PMS immediately
upon the taking or canceling
of a room reservation!
•if you don’t update your
inventory correctly on a third-
party site, you might get more
reservations than you can
accommodate.
https://www.theaccessgroup.com/en-gb/hospitality/software/stock-control/
OVERBOOK •Overbooking is the practice of accepting more reservations than rooms you have available.
•In your PMS, overbookings may appear as “negative” hotel rooms inventory.
ING •If you have three rooms left to sell on a given night, you’ll see 3 rooms left in inventory.
•If you’ve oversold by two rooms, you’ll see -2 rooms in inventory.
 Sometimes, overbooking is very much an intentional decision
made by revenue managers!

If you’ve overbooked by four rooms, then two guests don’t show up and two
guests cancel last-minute, you’ll end up with 100% occupancy.
However, if you’ve overbooked by four rooms, and nobody cancels or no-
shows, then your front desk must relocate, or “walk,” four guests to comparable
hotels.

Overbooking means your hotel will have more reservations than available rooms on a given day!
Let’s guess! / Walk(ed)
To relocate a guest with a confirmed reservation at a hotel to an
alternative property!
The Case for
Overbooking
Is overbooking legal?

•Yes, it's totally legal!

•Airlines are legally obliged to pay you
compensation if they deny you boarding
or bump you from a flight because
they've overbooked it.
A billionaire business •If you lose money for the firm, I will be very
owner Warren understanding. If you lose reputation for the
Buffett’s warning to firm, I will be ruthless.
his own managers
when he said:
As of 2021, the number of people using social media is
over 4.48 billion worldwide!
Choose one of them! And discuss your friend  5 min!

To take overbooking is a good thing for me… Because…

(give 3 reasons!)

To take overbooking is a bad thing for me… Because…

(give 3 reasons!)
Thank you all!

HOTO7018: Revenue
Management
Dr. Derya Demirdelen Alrawadieh

ddemirdelen-alrawadieh-@brookes.ac.uk