The main emphasis today was understanding what it takes to overbook a hotel and how to handle it well. The main thing that happens when you overbook and you don't have any more rooms to support reservations, you make guests "walk out" as opposed to check in.
Walking a guest out simply means that you are instead having them book into a similar hotel in the area. We covered a lot of the fundamentals including how walk-outs can severely damage guest relations. Because of that, hotels follow revenue management strategy and give higher priority to business guests to have a held reservation until they arrive. This means that leisure guests are the ones who are walked out more often as business guests on average pay more for their room and any other services and facilities the property provides.
And while the hospitality industry is still a capitalist competition, special agreement "walk-out" rates are settled between hotels in the event that one has guests being walked out to the other. Reneta explained that this was one instance of good relations between hotels in the same market.
We also got into the more financial and technical part of overbooking and how much potential revenue can be lost by either overbooking or underbooking and how patrons that do not follow through with their own reservations affect this. To help explain how this all works, we were introduced to the payoff matrix. At first site, it made some sense as there is a strong component in the probability of a certain amount of "no-show" guests for any specific day. I could easily tell where numbers came from and how to get the numbers.
But when we arrived in the lab with Mark to make our own payoff matrix, I was absolutely befuddled at times. While for the most of the lab, I easily comprehended what was thrown at us, the near-endpoint was like a race between a bike and a jet-plane. Thankfully enough, the exercises he taught were accessible in a file and I copied that onto my flash drive in a heartbeat so I can better analyze what I did wrong.
At the end of the day, we broke into our groups and actually put our CHESS Hotel strategies and expenses to the final test. Fortunately, we managed to reach our goal of over $70,000 for weekly income! While many of our expense strategies made a major role in our success, it is fairly difficult to pinpoint how one expense affected our profit more than any other expense. We can only hypothesize at this point, but I believe that our past experiences with the program and the many strategies and lessons Reneta has taught us in the past two weeks have made a huge difference. In particular, I was really aggressive with my high-priced room rates in my individual report, but after consulting with Reneta, I decided that there is no need to focus on higher rates unless you can actually get a high occupancy rate. I put it to the test, leaving my lower-priced rates open more than I have done in the past, and we managed to get a great stream of customers into our virtual property.
I knew from the beginning that trying to reach that profit goal would be difficult, and when we found out we hit it nicely, I felt proud, happy, and excited. It's as if I accomplished the impossible, and from my view, it almost did feel like the impossible.