Chapter 4: Reservations

Chapter 4: Reservations
1. Discuss the sales dimension of the reservations process, outline
the different types of reservations, and describe reservation
inquiries and their distribution channels.
2. Describe the process of taking group reservations and discuss
group reservation issues.
3. Identify the tools managers use to track and control reservations
availability, and discuss reservation records.
4. Describe policies and procedures surrounding the confirmation,
modification, and cancellation of different types of reservations.
5. Explain the function of typical reservation reports, and summarize
other reservation considerations.
Managing Front Office Operations PowerPoint
1
Competencies for Reservations

• Prior to front office automation, reservations agents focused on basic
room availability; they could not reserve specific types of rooms
• Automation provides accurate and current room and rate information
• Due to automation, much of the responsibility for room sales,
revenue projections, and profitability analyses has shifted to the
reservations department
• Reservations agents are now salespeople
• Many reservations are now made online; hotels need websites that
are designed to make it easy for guests to make reservations
2
Reservations and Sales

• The sales department is a primary source of group reservations,
typically from corporations and trade associations
• The sales department may also go after the SMERF market,
business traveler market, and travel agent market
• The sales department must familiarize distribution channels with
the hotel’s characteristics and surrounding areas
• Sales managers are often given financial or other incentives to
meet or exceed sales goals
3
Role of the Sales Department in Reservations

• The sales department can book business many months or years in
advance
• The reservations manager should be involved in every decision
affecting the hotel’s occupancy and revenue opportunities
• The mix of group and transient business is carefully planned for
and monitored by hotels
• The sales department is given a specific number of guestrooms it
can sell to groups, called a “group allocation”
• To go over the group allocation, the sales staff needs an approval
from the hotel’s sales director or general manager
• The reservations manager typically evaluates requests to adjust
the group allocation
4
The Reservation Sales Planning Process

Guaranteed Reservations
• Prepayment
• Payment card
• Advance deposit
• Voucher or MCO
• Corporate
Non-Guaranteed Reservations
5
Types of Reservations

• Requires that a payment in full be received prior to the
guest’s day of arrival
• Generally the most desirable form of guaranteed reservation
for the hotel
• Commonly used at resort hotels
6
Guaranteed Reservations—Prepayment

• The most common form of guaranteed reservation
• Unless the payment card guaranteed reservation is properly
canceled before a stated cancellation hour, the hotel charges
the guest’s payment card account for one night’s room rate plus
tax; the card company then bills the cardholder
• Resort hotels may charge for more than one night, since their
typical length of stay is longer and it is more difficult for them to
fill rooms at the last minute
7
Guaranteed Reservations—Payment Card

• Requires that the guest pay the hotel a specified amount of
money prior to arrival (typically enough to cover one night’s
stay plus tax for non-resort hotels, more for resort hotels)
• If a guest fails to register or cancel, the hotel retains the
deposit and cancels the remainder of the reservation
• Most common at destination resorts and convention center
hotels
• Some hotels apply the deposit to the last night of the guest’s
stay; this is intended to ensure collection of room revenue
should the guest depart earlier than scheduled
8
Guaranteed Reservations—Advance Deposit

• With travel agency vouchers and miscellaneous charge orders
(MCOs), the guest prepays the amount of the deposit to a travel
agent
• The travel agent forwards the voucher or MCO to the hotel as
proof of payment and a guarantee that the prepaid amount will
be sent to the hotel when the voucher is returned to the travel
agency for payment
• MCOs are issued by the Airline Reporting Corporation (ARC)
• Many hotels prefer MCOs over travel agency vouchers because
ARC guarantees payment if the travel agency defaults
9
Guaranteed Reservations—Voucher or MCO

• With this type of reservation, a corporation enters into an agreement
with a hotel
• The corporation may sign a contractual agreement stating that it will
pay for any no-show business travelers the corporation sponsors
• Corporate guaranteed reservations are popular in downtown or
business center hotels catering to a large number of business travelers
• The corporation may receive a single comprehensive invoice from the
hotel for several stays, thereby simplifying the billing process
10
Guaranteed Reservations—Corporate

• The hotel agrees to hold a room for the guest until a stated
reservation cancellation hour (usually 4 or 6 p.m.) on the day
of arrival
• Does not guarantee that the hotel will receive payment for
no-shows
• If the guest does not arrive by the cancellation hour, the
hotel can release the guestroom for sale
11
Non-Guaranteed Reservations

• May be handled by a reservations agent or website
• Information collected: guest’s name, address, e-mail address,
and telephone number; company or travel agency name (if
applicable); date of arrival and departure; type and number
of rooms requested; room rate; number of people in party,
method of payment or guarantee; and any special requests
12
Reservation Inquiries

• Property reservations department
• Central reservations systems
• Cluster reservations office
• Global distribution systems
• Intersell agencies
• Internet distribution systems
13
Distribution Channels

• Handles direct requests for rooms, monitors any communication
links with central reservations systems and intersell agencies,
and maintains updated room availability information
• Direct requests can reach the department in several ways:
telephone, mail, property website, property-to-property, faxes,
and text messaging
14
Property Reservations Department

• Greet the caller
• Identify the caller’s needs
• Provide an overview of the hotel’s features and benefits, based
on the caller’s needs
• Propose a room recommendation, and adjust it according to the
caller’s response
• Close the sale
• Gather the reservation information
• Thank the caller
15
Reservations Agent Sales Process

• Responsible for maintaining a room availability inventory for
each property in the system
• Two basic types: affiliate networks and non-affiliate networks
16a
Central Reservations Systems
Continued

Central Reservations Systems Continued from previous slide…
Affiliate Networks
• A hotel chain reservation system
• Typically, all participating hotels are contractually related
• Some affiliate networks allow non-chain properties in the network as
“overflow facilities”
• Overflow facilities pay a commission for these referrals
Non-Affiliate Networks
• Connect independent (non-chain) properties
• Examples: The Leading Hotels of the World, Preferred Hotels &
Resorts Worldwide, and Distinguished Hotels
16b

• Serves several hotels in a geographic area
• Operates similarly to a hotel chain central reservations system,
except that it serves one specific destination area instead of an
entire hotel company
• Eliminates the need to have separate reservations departments
in each of the participating hotels
• Advantages: labor costs are reduced, cross-selling opportunities
are created, room rates and availabilities can be coordinated
• Disadvantages: communication and coordination challenges
17
Cluster Reservations Office

• Global distribution systems (GDSs) distribute hotel reservation
information worldwide and provide a platform for selling hotel
reservations worldwide
• GDSs also support the worldwide distribution of airline tickets,
automobile rentals, and other traveler services
• GDSs directly link the reservation systems of hotels, airlines, car
rental agencies, and travel agencies
• Examples of GDSs: SABRE, Galileo International, Amadeus, and
Worldspan
18
Global Distribution Systems

• Businesses that contract to handle reservations for more than
one product line
• Intersell agencies typically handle reservation services for airline
companies, car rental companies, and lodging properties
• Intersell agencies typically channel room reservation requests to
a hotel central reservations system, but they may also contact a
destination hotel directly
19
Intersell Agencies

• Internet distribution systems (IDSs) enable travelers from many
different market segments to use desktop and mobile devices
to reserve hotel rooms, book flights, and select rental cars
• Examples of IDSs include Expedia, Hotels.com, Orbitz, Hotwire,
Priceline, and Travelocity
• Individual hotel websites commonly feature user-friendly and
secure procedures for making and paying for reservations
• Hotel websites also feature marketing tools such as links to
hotel products and services, and photographs and virtual tours
of the property
20
Internet Distribution Systems

• Revenues vary widely, depending on the the hotel (supplier) and
agent (seller) relationship
• Central reservations offices typically charge affiliate properties either
a fixed rate per room per night, or a transaction fee based on
reservation activity, or both
• Global distribution systems and Internet distribution systems receive
revenues from hotels through commissions, by charging transaction
fees or transmission fees, and/or by selling hotel rooms that have
been discounted
• When hotels sell rooms via distribution channels, the goal is to offset
associated commissions and other fees with an increase in occupancy
and overall room revenue
21
Distribution Channel Revenues

• Group reservations can involve a variety of contacts: guests,
meeting planners, convention and visitors bureaus, tour
operators, and travel agents
• Group reservations typically involve intermediary agents and
require special handling
• A group’s representative deals with the hotel’s sales or
reservations department
• If enough rooms are available for the group, an agreed-upon
number of guestrooms, called a block, is set aside for the
group’s members
22a
Group Reservations
Continued

Group Reservations Continued from previous slide…
• Group members may be given a special reservation
identification code or reservation web address to use to reserve
their rooms within the group’s assigned block
• As group members reserve rooms, the rooms in the group block
are moved from “blocked” status to “booked” status
• Unbooked rooms in the group block may be released to the
hotel’s available rooms inventory at a predetermined date—the
cut-off date
22b

• A contract must be created specifying the exact number of rooms required,
room rates, group arrival and departure dates, special considerations
(suites, comp rooms, group vs. individual billing arrangements, etc.), early
arrival and late departure dates, and cut-off date
• The reservations manager should double-check to be sure that the rooms
are available before confirming a room block
• If the group will take away rooms from transient business, the reservations
manager should notify the sales or general manager of this non-group
displacement
• The reservations manager should check the group’s history with the hotel (if
available) before finalizing the block; it may be possible to reduce a room
block, based on the group’s history (termed a “wash down” or a “wash”)
23a
Creating a Group Block
Continued

Creating a Group Block Continued from previous slide…
• The reservations manager must monitor the room availability in the
block as reservations come in and adjust the room block as needed
• A “definite group” has signed a sales contract; a “tentative group” has
been sent a contract, but the signed contract has not been returned;
the reservations manager must make sure a group is not allowed to
remain in the “tentative” status for too long, jeopardizing other
business
• Some groups allow attendees to make reservations directly with the
hotel, while others do not; reservations agents must honor whatever
arrangements the hotel has made with the group in question
23b

• Know the convention group’s profile
• Review all relevant hotel reservation policies with the convention planner
• Inform reservations agents that the convention has been scheduled, and go
over the group’s reservation process
• Produce regular reports to update the status of the convention block
• Generate an up-to-date list of registrants at regular intervals
• Correct errors found by the convention planner immediately
• Confirm reservations from attendees as soon as they are received
• Return rooms to the group’s block when cancellations are received and
inform the convention planner
• Distribute a final rooming list to the convention planner and all hotel staff
involved with the convention
24
Dealing with Convention Groups

• Large conventions sometimes require the use of rooms at more
than one hotel
• In these cases, the room requirements at the various hotels
often are coordinated by a separate convention and visitors
bureau
• Convention and visitors bureaus may use special software to
help monitor and coordinate the room reservations in the
various hotels in the city/local area
25
Convention and Visitors Bureaus

• Specify the number and types of rooms to be held in a tour
group block, including rooms for drivers and guides
• Clearly state a cut-off date
• On or before the cut-off date, the tour operator should supply
the hotel with a guarantee on the number of rooms the group
will need, or a final rooming list if that is available
• Specify the date by which the tour operator will provide a final
rooming list (if this date is different from the cut-off date)
26a
Dealing with Tour Groups
Continued

Dealing with Tour Groups Continued from previous slide…
• Monitor the amount of advance deposits required and their
due date
• Note on the reservation record any services and amenities the
property will provide as part of the group package
• Include on the reservation record the name and telephone
number of the tour group’s representative or agent
• Note any special group arrangements (early arrival, baggage
handling, registration, and check-out procedures)
26b

• Automates and simplifies the group reservations and registration process
• Relies on the Internet to communicate with potential attendees
• Provides information about the group event and reservations availability
• Allows the group leader to load e-mail and postal addresses so that the
leader can more quickly and easily send out e-mails and letters to
prospective attendees
• Captures the attendee’s name, mailing address, e-mail address, payment
card information, guestroom request, etc. when the attendee makes a
reservation
• May provide reservations reports for manual processing by the hotel, or
may interface directly with the hotel’s reservations system
27
Attendee Management and Housing Systems Software

• Whenever a reservation is received, a hotel can: (1) accept the
reservation as requested; (2) suggest alternative room types,
dates, and/or rates; or (3) suggest an alternative hotel
• Reservations must be closely monitored to control overbooking
• Overbooking is a strategy aimed at helping a hotel achieve 100-
percent occupancy by hedging against guests who do not arrive
or cancel their reservations
28
Reservation Availability

• An automated reservation management module in a property
management system can keep close track of reservation activities
• Reservation systems can tightly control room availability and
automatically generate many reservation-related reports
• The biggest advantage of an automated reservation system is the
improved accuracy of room availability and rate information
• Once all rooms in a specific category are sold, the system can be
programmed to refuse any further reservations in that category;
some systems automatically suggest alternative room types to help
reservations agents still make the sale
• Reservation systems can create waiting lists for high-demand periods
29
Reservation Systems

• Guest name (and group name, if applicable)
• Home/billing address
• E-mail address
• Telephone number
• Company name and telephone number (if appropriate)
• Name of person making the reservation (if not the guest)
• Number in party
30a
Reservation Record
Continued

Reservation Record Continued from previous slide…
• Arrival date and time
• Number of nights required or expected departure date
(depending on the system)
• Type of reservation (guaranteed, non-guaranteed)
• Special requirements
• Additional information as needed (late arrival, room
preference, and so on)
30b

• With a reservation confirmation, a hotel acknowledges and verifies a
guest’s room request and personal information
• A written confirmation states the intent of both parties and confirms
important points of agreement (name, dates, rate, room type, etc.)
• Confirmed reservations may be guaranteed or non-guaranteed
• Confirmations are sent out via e-mail or letter soon after the
reservation request is matched with availability
• Confirmations may also include a request for a deposit or
prepayment, or a request for updated information, depending on the
nature of the reservation
• Confirmations are especially important for guests with disabilities
31
Reservation Confirmation/Cancellation

• A confirmation number helps assure a guest that a reservation
record exists; a cancellation number assures a guest that a
cancellation has been properly processed
• Confirmation/cancellation numbers helps a hotel to quickly
reference a specific reservation record
• Confirmation/cancellation numbers protect both the guest and
the hotel, and can reduce misunderstandings
• Confirmation/cancellation numbers should be stored in
separate files for quick referencing
32
Confirmation/Cancellation Numbers

• Guests sometimes make non-guaranteed reservations but later
modify them (because of a delayed flight, road-construction
bottlenecks, bad weather conditions, etc.) to guaranteed
reservations, to avoid having their non-guaranteed reservations
canceled at the hotel’s reservation cancellation hour
• When changing a non-guaranteed reservation to a guaranteed
reservation, a system would typically: (1) access the correct
non-guaranteed reservation record; (2) capture the guest’s
payment card information; (3) assign a new reservation
confirmation number; and (4) complete the change from non-guaranteed
to guaranteed reservation status
33
Modifying Non-Guaranteed Reservations

• A prospective guest does the hotel a service when he or she
takes the time to cancel a reservation
• A canceled reservation allows the hotel to return a room to
inventory for possible resale
• Hotels should make processing a reservation cancellation as
easy and efficient as possible for guests
34a
Canceling a Reservation
Continued

Canceling a Reservation Continued from previous slide…
• Canceling a non-guaranteed reservation: may require the guest’s
name and address, number of reserved rooms, scheduled arrival and
departure dates, and reservation confirmation number (if available)
• Canceling a payment card guaranteed reservation: the employee
must access the correct reservation record, assign a cancellation
number, and add the cancellation number to the reservation
cancellation file
• Canceling an advance deposit reservation: policies vary among
hotels; deposits are normally returned to guests who properly cancel
their reservations; very important to assign and record a cancellation
number with this type of reservation
34b

• Reservation transactions report
• Commission agent report
• Regrets and denials report
• Revenue forecast report
• Expected arrival and departure lists
35
Typical Reservation Reports

• Indicate the number and names of guests expected to arrive,
depart, or stay over
• May be generated according to a pre-determined schedule or
on demand
• May be displayed or printed in the reservations department or
via any connected device
• Facilitates guest registration and check-out
36
Expected Arrival and Departure Lists

• Advance deposits for reservations should be processed by
employees who do not have direct access to reservation records
• A designated employee (the hotel’s general cashier, for example)
should endorse and record deposit payments immediately after
they arrive
• Information that should be recorded in a deposits-received
system file include: form of payment, identifying payment
number, amount of payment, date received, guest name, arrival
date, and reservation confirmation number; this file should be
accessible by the reservations department
37a
Processing Deposits
Continued

Processing Deposits Continued from previous slide…
• Each reservation record should be updated with the status of
its deposit information
• A transaction report should verify that the recorded deposits
balance with the total reservation deposits entered for the day
• Guests should be discouraged from sending cash; checks are
better, but payment card deposits are almost always preferred
37b

• Include statistics on all aspects of the reservations process:
number of guests, occupied rooms, reservations organized by
distribution channel, no-shows, walk-ins, overstays, and
understays
• Helpful in tracking individual groups and their booking patterns
38
Reservations Histories

• Legal implications
• Waiting lists
• Promotional packages
• Potential reservation problems
• E-commerce
39
Other Reservation Considerations

• The reservation agreement between the hotel and a guest
begins at the time of guest contact
• This agreement may be oral or written
• Confirming a reservation by stating that the guest will be
accommodated on a particular date may constitute a contract
binding the hotel
• If the confirmation is a response to a reservation request from
the prospective guest, it may bind both the hotel and the guest
to fulfill the reservation
40
Legal Implications

• Advise the guest that no rooms are currently available for the
requested date(s)
• Offer to take the guest’s name, telephone number, and e-mail
address
• Agree to notify the prospective guest immediately if a room
becomes available
• Help the guest find alternative dates or accommodations if no
rooms become available
41
Waiting Lists

• Always include a guestroom plus other features, such as meals,
golf, tennis, sports lessons, limousine service, and sight-seeing
or other activities in or near the property
• Typically, properties provide guests with a discount for
purchasing a promotional package
• Guests often consider a promotional package a bargain and a
convenience
• Reservations personnel and website content must be very
informative about all the packages a property offers
42
Promotional Packages

• Errors in the reservation record
• Misunderstandings due to industry jargon
• Miscommunication with central reservations systems
• Online reservation failures
43
Potential Reservation Problems

• E-commerce is online commerce via the Internet
• E-commerce extends the reach of hotels far beyond the
traditional distribution channels of a hotel reservations office,
call center, and global distribution system
• E-commerce allows hotels access to multiple distribution
channels
• E-commerce gives hotels direct access to consumers
• Guests can search for hotels and make reservations online
44a
E-Commerce
Continued

E-Commerce Continued from previous slide…
• Some hotels assign a manager to oversee online content and
transactions (the revenue manager, for example)
• E-commerce must be carefully monitored, to be sure that hotel
information and pricing are properly presented
• Single image inventory: all online distribution channels draw
from the same room availability, pricing, rate rules, services,
and amenities information
44b

• Merchant model
• Wholesaler model
• Opaque sites
• Transparent sites
45
E-Commerce Site Categories

• Also called the “markup model”
• An online intermediary negotiates a discount for the
guestrooms it will sell on its site (for example, 20 to 30 percent
off the hotel’s lowest published room rate)
• The discounted rate is called the “net rate” and represents the
amount the intermediary will pay the hotel for every room it
sells at the agreed-upon discount
46a
Merchant Model
Continued

Merchant Model Continued from previous slide…
• The intermediary marks up the net rate to achieve the room
rate it will charge guests; this is termed the “gross rate”
• The gross rate minus the net rate represents the profit that the
intermediary makes on selling a room on its site
• Merchant-model sites tend to rank hotels based on their
discounts, from highest discounts to lowest
• Examples of merchant-model sites include Hotels.com and
Travelocity
46b

• With the wholesaler model, the hotel sets the selling price for
the rooms it will give to the online wholesaler; the wholesaler
receives an agreed-upon sales commission (i.e., percentage of
the price) for selling the rooms
• Online sellers using the wholesaler model typically earn less
than sellers using the merchant model
• Hotels tend to favor the wholesaler model, because they
maintain more control over their rooms’ final price to guests;
online sellers tend to favor the merchant model, because they
can earn more money per room sale
47
Wholesaler Model

• Hotel rooms are marketed by online sellers by a price and/or
rating category; there is no reference to a hotel brand or
property specifics
• The brand of the hotel and its features are hidden from the
buyer until the transaction is completed
• Hotel rooms are treated as a commodity
• Examples of opaque sites include Priceline and Hotwire
48
Opaque Sites

• Hotel rooms are marketed by online sellers by a price and/or
rating category; however, unlike with opaque sites, transparent
sites reveal the identify of the hotels before purchase
• Transparency allows buyers to select a preferred brand or
property among competing hotels
• Examples of transparent sites include Expedia, Hotels.com, and
Travelocity
49
Transparent Sites

• Hotels have learned to exercise caution in selecting e-commerce
sites to partner with, and have developed distinct
strategies for each online partner
• Most hotel branded websites offer a best rate guarantee
• Hotel websites over the years have become more sophisticated
in the services they offer to groups, making it easier to process
group room reservations and group meetings
50a
E-Commerce Trends
Continued

E-Commerce Trends Continued from previous slide…
• More hotels and other online travel service providers are
offering affinity or loyalty club points
• More hotels are offering dynamic package pricing, which allows
online shoppers to select from a menu of hotel products and
services and create their own custom package at a special price
• Online booking sites can create “virtual” hotel brands by
grouping a proprietary set of preferred hotels at a destination
site (for example, Expedia’s Bargain Hotels)
50b

Chapter 4: Reservations

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Chapter 4: Reservations