Revenue Management Test 3 Study Guide 1 Overbooking Ethical The ends justify the means o The legitimacy of an act is judged by the ultimate outcome o let justice be done through the heaven fall o The act of entering into a contract when one party knows Legal its unable to fulfill Why overbook o Damaged rooms o Staff errors o Inventory availability errors o Guest overstays Who shouldn t walk o Loyalty members o Group meetings o Contracted rooms airlines o Couples celebrating o Families Elements of walking people Walking formula o In a 200 room hotel o Overbook 5 Rack Room Discounts o Secure a guest room comparable hotel o Pay for guest 1st night stay alternative hotel o When the length of the nights stay offsets the rate o When one or more of the dates requested overlaps a low reduction demand day o When of rooms purchased is large o When buyer has special status Casino Facts 1 of people in US are addicted to gambling no clocks no windows designed like mazes so you get lost Give free alcohol Pachinko machines in Japan make 2 2 trillion annually on roulette add up to 666 How many slots are there in a roulette 38 40 million people visit Las Vegas annually 5 say they visit to gamble 88 actually gamble 320 weddings daily in Vegas 2300 BC in China beginning of gambling betting history of past guests o will turn down a guest opening and closing tables min and max bets set hotels cant change prices but players and casinos can Variable prices o Varying table limits to increase revenues determines willingness to pay o Want high rollers to have spot Theoretical win o Average wager X of hands played X house odds o Higher average bet higher theoretical win o Actual win is what the hotel realizes Casino Revenue Management o Lower table bets during day and weekdays o Optimum level for blackjack table 7 Optimizing table revenues o Forecast demand by average wager Notes Quality Enhance Plan QEP Critical Thinking o Explain an issue problem clearly and comprehensively o Select and use evidence effectively in conducting a comprehensive analysis of an issue problem o Analyze contexts assumptions and perspectives when presenting a position on an issue o Formulate a thesis that takes into account the complexity of an issue and a variety of perspectives on this issue o Draw logical conclusions and implications from the analysis of an issue Wait List Management Policies o Party size seating o VIP seating o Large party reservations o Call ahead seating Party Size Seating o Place individuals at seats according to party size o Is it okay to join dinner tables with others when they o Is it okay to give a couple a two seat table when they request a four request a four o How would you go about doing this is you were the hosts VIP seating o Seating VIP s at preferred tables Revenue Management Test 3 Study Guide 3 o Seating VIP s before others waiting longer Large Party Reservations o Advances time for large parties they could not walk in after or before their times Call ahead seating Perceived Fairness o People are not guaranteed a seat but will most likely have a shorter wait than individuals you do not call ahead o Reference transactions the way the customers expect the transaction to be conducted o Social justice making sure the policy and the outcome are fair to everyone involved o Familiarity with the policy Reference Transactions o Usually based on past experiences and similar situations o If a restaurant has always served its waiting customers on the basis of first come first served That becomes the customers reference transaction o Customers may think that a policy is fair procedural justice but after experiencing the policy firsthand they may decide that the outcome is unfair distributive justice Social Justice Familiarity o The more familiar a customer is with a transaction the greater the likelihood that he or she will view the transaction as being fair and the more sensitive he or she will become to changes in that transaction Baseline Performance RevPOSH o Step 1 Establish baseline Average check Seat occupancy Meal duration Party size o Step 2 o Step 3 Study causes of speedy and slow service Managers should develop a revenue management strategy which can involve a mix of duration control and demand based pricing o Step 4 o Step 5 Implement the strategy Monitor the strategy Review What is revenue management o Maximize profits Bundling o Eat lunch get to play golf for free Bundling in a hotel o Stay 3 nights and get the 4th free o Combining amenities from different departments American food plan o 3 Breakfast Lunch Dinner European food plan o None B B o Breakfast Modified American food plan o 2 Why we bundle o Upselling o Getting them to spend more 4 antecedents to Revenue Management o fixed capacity o predictable demand o perishable o high fixed costs low variable cost same goes for a hotel room though Cost based pricing Selling a shirt no time constraint can sell tomorrow Not the o Pricing based on covering cost plus of profit you want to make Competitive pricing o Pricing based on competition Demand based pricing use in Revenue Management o Pricing based on supply and demand Which business better off using revenue management on demand cost pricing use antecedents Revenue management on a hotel off 75 no Math on test o ADR room revenue rooms sold o RevPAR Total room revenue total rooms available Or occupancy X Average room rate o Contribution Margin sales price variable cost o RevPAC c customer Forecasted Revenue per available room Sustainability in hospitality industry determine of block rooms chart in power point o Long term Revenue Management Test 3 Study Guide 5 o Keep guests coming back o Environmental sustainability o Incentives to go green o Brand Know difference between o Spas and Revenue Management article o Casinos Rev Man sell more night o Golf Rev Man sell more during the morning o Hotels Rev Man o Restaurants Rev Man make more night room rate Elasticity change in demand unit occupancy change in What are the key differences between cruises and airlines Cruises do not charge on the basis of cabins rooms but rather per guest What are two types of capacity constraints Number of cabins and number of lifeboats One of the four antecedents High fixed costs and low variable costs