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Front Office
The Baywood Hotel
  Elena, Christine and Neli
Introduction
The Baywood Hotel is located in Cape Town and is
situated adjacent to the Victoria & Alfred Waterfront.

Popularity of the Waterfront is the 16 million visitors
to the centre every year.

The High season is from January to February

The Low season is from April to July

The Hotel has 670 rooms and good facilities.
Introduction cont.
Calculate and decide on our rack rates
  1. The methods to determine room rates

  2. Competitive analysis

  3. Room rates sheet for each category



Property management system (PMS) for the front
desk
  1. Critical comparison between 2 leading PMS

  2.Advantages and benefits of the chosen system
Establishing Room Rates

  The front office manager shall assign to each room category
  a rack rate. In accordance, front office employees are
  expected to sell rooms at rack unless a guest qualifies for an
  alternative room rate.

  While pricing rooms, the hotel shall keep in mind that rate
  should be between a minimum:

 Minimum (Hurdle Rate) < Room Rate < Maximum (Rack
Rate)

     Cost Structure < Room Rate < Competition Structure
Pricing Strategies
Cost Approach


Rule-of-Thumb Approach


Hubbart Formula Approach


Market Condition Approach
Cost Approach

This Approach’s starting Point is on finding the Per Room
occupied daily Direct and Indirect Expenses



The biggest drawback of the Cost Approach pricing is that
it does not take into consideration how much Customers
are actually willing to pay for the Hotel Services, and how
other Hotels are actually charging for their Rooms.
Rule-of-Thumb Approach

Room rate shall be $ 1 for each $ 1,000 of construction
and furnishing cost per room.



Fails to take into consideration the inflation term, the
contribution of other facilities and services towards the
hotel’s desired profitability.
Hubbart Formula Approach
This very approach considers operating costs,
desired profits, and expected number of rooms sold.


 Requires accurate forecasting, high cost, and very
time consuming.
Market Condition Approach

Management shall look
at comparable hotels in
the geographical market,
see what they are
charging for the same
product, and “charge
only what the market will
accept”.
Market Condition Approach

Safest way not to price our self out of the
market.
Guarantee an average number of guests.
It does not take into consideration the value of
the property.
There is always subjectivity in coming up with
sets of criteria against which hotel rooms can be
compared and measured for similarity.
Competitors
Cape Royale Luxury Hotel   Hilton Cape Town City
                           Centre
Competitors
Cape Town Hotel     Radisson Blu Hotel
2010 Pricing analysis
           High season
5000
4700
4400
4100
3800
3500
3200
2900
2600
2300
2000




         Radison Blue   Hilton   Taj Cape Town
2010 Pricing analysis
           Low season
4100
3800
3500
3200
2900
2600
2300
2000




        Radison Blue   Hilton   Taj Cape Town
The Baywood Hotel’s High Season
         Rack Rates
          Room Type                 Price

        Standard Room              4000 ZAR

         Standard Suite            4250 ZAR

        Executive Suite            4500 ZAR

         Superior Suite            4850 ZAR

 Table Moutain Presidental Suite   5000 ZAR

   Baywood Presidental Suite       5200 ZAR
External Factors


    No
           Holidays
  school



       Climate
The Baywood Hotel’s Low
     Season Rack Rates
         Room Type                 Price
       Standard Room              3700 ZAR

        Superior Suite            4000 ZAR

        Standard Suite            3950 ZAR

       Executive Suite            4200 ZAR

Table Moutain Presidental Suite   4700 ZAR

  Baywood Presidental Suite       4900 ZAR
Corporate Rate
         Room Type                  Price (10-15%)


       Standard Room              3600     3420 ZAR

        Superior Suite            3870    3676 ZAR

        Standard Suite            3825     3633 ZAR

       Executive Suite            4050     3848 ZAR

Table Moutain Presidental Suite   4500     4275 ZAR

  Baywood Presidental Suite       4680     4445 ZAR
Airline Rates

         Room Type                   Price


       Standard Room                2400 ZAR

        Superior Suite              2910 ZAR

        Standard Suite              2550 ZAR

       Executive Suite              2700 ZAR

Table Moutain Presidental Suite

  Baywood Presidental Suite
Group Rates
         Room Type                 Price


       Standard Room              2800 ZAR

        Superior Suite            3395 ZAR

        Standard Suite            2975 ZAR

       Executive Suite            3150 ZAR

Table Moutain Presidental Suite

  Baywood Presidental Suite
Weekend Rate
         Room Type                 Price


       Standard Room              4600 ZAR

        Superior Suite            5577 ZAR

        Standard Suite            4887 ZAR

       Executive Suite            5175 ZAR

Table Moutain Presidental Suite   5750 ZAR

  Baywood Presidental Suite       5980 ZAR
Wedding package
         Room Type                 Price


       Standard Room              2400 ZAR

        Superior Suite            2910 ZAR

        Standard Suite            2550 ZAR

       Executive Suite            2700 ZAR

Table Moutain Presidental Suite   3000 ZAR

  Baywood Presidental Suite       3120 ZAR
Wedding package
Superior Suite
Breakfast & Dinner included
Spa Centre treatment
10% discount for the Shopping
Cake and Champagne
Price : 7500 ZAR
10 % discount for room service and lunch in
the restaurant
Family package
         Room Type                Price (10%)


       Standard Room              3600 ZAR

        Superior Suite             3870 ZAR

        Standard Suite            3825 ZAR

       Executive Suite            4050 ZAR

Table Moutain Presidental Suite   4500 ZAR

  Baywood Presidental Suite       4680 ZAR
Family package ( 2 days)
Standard Suite
Breakfast & Dinner
Spa centre treatment
10% discount for the Shopping
1 Family Ticket to the cinema
Price : 5600 ZAR
Revenue Policy

Selling the right product to the right
 guest at the right rate at the right
                time.
    If less then-          Discount

       75 %                  10%

       65%                  20%

       50%                  30%
Opera
Scalable to suit the size of the Baywood Hotel

Delivers fast, accurate and online information

Runs on two operating systems: Microsoft Windows & IBM
AIX

Offers the ability to use a single database for information
sharing over multiple applications

Completely downloadable
Advantages
         Opera                          Fidelio

More common                     Integrated, configurable,
                                context sensitive help system
Integrated with other
functionality
                                Function keys with windows
fully configurable to any
specific requirement            User-definable screens and
                                report menus
Complex system which can do
everything in one package       Report generator
complete set of features for
making and updating different   Multiple installation parameter
kinds of customers
                                Unlimited security levels
Extensive set of features for
rate management and revenue
forecasting
Disadvantages
       Opera                     Fidelio

More complicated as        If proper locking is not
there are many different   done, anyone will be
software with different    able to access and even
functions                  make changes to
                           various files

                           During night audit, the
                           terminals are shut down
                           for 2 hours.
Q. & A.
References
Boella M., Goss-Turner St. (2009). Human Resource Management in
the Hospitality Industry. An Introduction Guide. GB, Oxford: Elsevier
Ltd.

Booking.com. (2011). Cape Town hotels. [online] Available from:
http://booking.com [Accessed on November 2 2011].

Cyber Cape Town. 2011. Cape Grace Hotel, Cape Town, V&A
Waterfront, Accommodation South Africa. [online] Available from:
http://CyberCapeTown.com [Accessed on November 2 2011].

Jagels, M. G. (2007). Hospitality Management Accounting. 9th Ed.
Hoboken, New Jersey: John Wiley & Sons, Inc.

Kasavana, M. L. and Brooks, R. M. (2009). Managing Front Office
Operations. 8th Ed. Lansing, Michigan: American Hotel & Lodging
Education Institute.

Opera Property Management System. http://www.micros-
retail.eu/en/sitecore/Content/micros-fidelio/Home/Solutions/Products-
N-Z/OPERA-Property-Management-System.aspx [Accessed on
November 1 2011]
Front office presentation

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Front office presentation

  • 1. Front Office The Baywood Hotel Elena, Christine and Neli
  • 2. Introduction The Baywood Hotel is located in Cape Town and is situated adjacent to the Victoria & Alfred Waterfront. Popularity of the Waterfront is the 16 million visitors to the centre every year. The High season is from January to February The Low season is from April to July The Hotel has 670 rooms and good facilities.
  • 3. Introduction cont. Calculate and decide on our rack rates 1. The methods to determine room rates 2. Competitive analysis 3. Room rates sheet for each category Property management system (PMS) for the front desk 1. Critical comparison between 2 leading PMS 2.Advantages and benefits of the chosen system
  • 4. Establishing Room Rates The front office manager shall assign to each room category a rack rate. In accordance, front office employees are expected to sell rooms at rack unless a guest qualifies for an alternative room rate. While pricing rooms, the hotel shall keep in mind that rate should be between a minimum: Minimum (Hurdle Rate) < Room Rate < Maximum (Rack Rate) Cost Structure < Room Rate < Competition Structure
  • 5. Pricing Strategies Cost Approach Rule-of-Thumb Approach Hubbart Formula Approach Market Condition Approach
  • 6. Cost Approach This Approach’s starting Point is on finding the Per Room occupied daily Direct and Indirect Expenses The biggest drawback of the Cost Approach pricing is that it does not take into consideration how much Customers are actually willing to pay for the Hotel Services, and how other Hotels are actually charging for their Rooms.
  • 7. Rule-of-Thumb Approach Room rate shall be $ 1 for each $ 1,000 of construction and furnishing cost per room. Fails to take into consideration the inflation term, the contribution of other facilities and services towards the hotel’s desired profitability.
  • 8. Hubbart Formula Approach This very approach considers operating costs, desired profits, and expected number of rooms sold. Requires accurate forecasting, high cost, and very time consuming.
  • 9. Market Condition Approach Management shall look at comparable hotels in the geographical market, see what they are charging for the same product, and “charge only what the market will accept”.
  • 10. Market Condition Approach Safest way not to price our self out of the market. Guarantee an average number of guests. It does not take into consideration the value of the property. There is always subjectivity in coming up with sets of criteria against which hotel rooms can be compared and measured for similarity.
  • 11. Competitors Cape Royale Luxury Hotel Hilton Cape Town City Centre
  • 12. Competitors Cape Town Hotel Radisson Blu Hotel
  • 13. 2010 Pricing analysis High season 5000 4700 4400 4100 3800 3500 3200 2900 2600 2300 2000 Radison Blue Hilton Taj Cape Town
  • 14. 2010 Pricing analysis Low season 4100 3800 3500 3200 2900 2600 2300 2000 Radison Blue Hilton Taj Cape Town
  • 15. The Baywood Hotel’s High Season Rack Rates Room Type Price Standard Room 4000 ZAR Standard Suite 4250 ZAR Executive Suite 4500 ZAR Superior Suite 4850 ZAR Table Moutain Presidental Suite 5000 ZAR Baywood Presidental Suite 5200 ZAR
  • 16. External Factors No Holidays school Climate
  • 17. The Baywood Hotel’s Low Season Rack Rates Room Type Price Standard Room 3700 ZAR Superior Suite 4000 ZAR Standard Suite 3950 ZAR Executive Suite 4200 ZAR Table Moutain Presidental Suite 4700 ZAR Baywood Presidental Suite 4900 ZAR
  • 18. Corporate Rate Room Type Price (10-15%) Standard Room 3600 3420 ZAR Superior Suite 3870 3676 ZAR Standard Suite 3825 3633 ZAR Executive Suite 4050 3848 ZAR Table Moutain Presidental Suite 4500 4275 ZAR Baywood Presidental Suite 4680 4445 ZAR
  • 19. Airline Rates Room Type Price Standard Room 2400 ZAR Superior Suite 2910 ZAR Standard Suite 2550 ZAR Executive Suite 2700 ZAR Table Moutain Presidental Suite Baywood Presidental Suite
  • 20. Group Rates Room Type Price Standard Room 2800 ZAR Superior Suite 3395 ZAR Standard Suite 2975 ZAR Executive Suite 3150 ZAR Table Moutain Presidental Suite Baywood Presidental Suite
  • 21. Weekend Rate Room Type Price Standard Room 4600 ZAR Superior Suite 5577 ZAR Standard Suite 4887 ZAR Executive Suite 5175 ZAR Table Moutain Presidental Suite 5750 ZAR Baywood Presidental Suite 5980 ZAR
  • 22. Wedding package Room Type Price Standard Room 2400 ZAR Superior Suite 2910 ZAR Standard Suite 2550 ZAR Executive Suite 2700 ZAR Table Moutain Presidental Suite 3000 ZAR Baywood Presidental Suite 3120 ZAR
  • 23. Wedding package Superior Suite Breakfast & Dinner included Spa Centre treatment 10% discount for the Shopping Cake and Champagne Price : 7500 ZAR 10 % discount for room service and lunch in the restaurant
  • 24. Family package Room Type Price (10%) Standard Room 3600 ZAR Superior Suite 3870 ZAR Standard Suite 3825 ZAR Executive Suite 4050 ZAR Table Moutain Presidental Suite 4500 ZAR Baywood Presidental Suite 4680 ZAR
  • 25. Family package ( 2 days) Standard Suite Breakfast & Dinner Spa centre treatment 10% discount for the Shopping 1 Family Ticket to the cinema Price : 5600 ZAR
  • 26. Revenue Policy Selling the right product to the right guest at the right rate at the right time. If less then- Discount 75 % 10% 65% 20% 50% 30%
  • 27. Opera Scalable to suit the size of the Baywood Hotel Delivers fast, accurate and online information Runs on two operating systems: Microsoft Windows & IBM AIX Offers the ability to use a single database for information sharing over multiple applications Completely downloadable
  • 28. Advantages Opera Fidelio More common Integrated, configurable, context sensitive help system Integrated with other functionality Function keys with windows fully configurable to any specific requirement User-definable screens and report menus Complex system which can do everything in one package Report generator complete set of features for making and updating different Multiple installation parameter kinds of customers Unlimited security levels Extensive set of features for rate management and revenue forecasting
  • 29. Disadvantages Opera Fidelio More complicated as If proper locking is not there are many different done, anyone will be software with different able to access and even functions make changes to various files During night audit, the terminals are shut down for 2 hours.
  • 31. References Boella M., Goss-Turner St. (2009). Human Resource Management in the Hospitality Industry. An Introduction Guide. GB, Oxford: Elsevier Ltd. Booking.com. (2011). Cape Town hotels. [online] Available from: http://booking.com [Accessed on November 2 2011]. Cyber Cape Town. 2011. Cape Grace Hotel, Cape Town, V&A Waterfront, Accommodation South Africa. [online] Available from: http://CyberCapeTown.com [Accessed on November 2 2011]. Jagels, M. G. (2007). Hospitality Management Accounting. 9th Ed. Hoboken, New Jersey: John Wiley & Sons, Inc. Kasavana, M. L. and Brooks, R. M. (2009). Managing Front Office Operations. 8th Ed. Lansing, Michigan: American Hotel & Lodging Education Institute. Opera Property Management System. http://www.micros- retail.eu/en/sitecore/Content/micros-fidelio/Home/Solutions/Products- N-Z/OPERA-Property-Management-System.aspx [Accessed on November 1 2011]