Hotel RM

HOTEL REVENUE MANAGEMENT

Historically, table games departments have been one of the hearts of a casino, especially in Asia. In places like Macau, Singapore, and the Philippines, the table games/slot ratio is closer to 80/20, so table games are huge revenue generators in Asia.

Since the highest-betting gamblers are estimated to be worth up to 50 times more than their lower-betting counterparts, casinos want to ensure that these high-rollers always have a seat at the table, even if that freezes out some lower-betting players. With so much money at stake, it is surprising that any casino bases its table game minimums on the judgment of human floor managers.

In her thesis Optimizing the Role of Hotel Front Office Staff in Modern-Day Revenue Management44, Nguyen Hanh Huyen My argues that revenue management can extend beyond rooms all the way down to the front office. For My, “the term ‘Front Office’ is used in hotels worldwide and refers to employees working directly with guests and often also as the first point of contact for the arrivals.”44 The front office department can be “part of the Rooms Division department and consist itself of different function areas namely [sic] reception, reservations, guest relations, concierge, switchboard, bell service, and so on.”44 Irrespective of the hotel size or type, “front office is still considered a highly visible department and an important information center for both guests and employees throughout the hotel.”44

 

Traditionally, front desk staff are primarily responsible for “checking the guests in and out, creating and processing reservations and guest accounts, answering phones and maintaining correspondence with guests, assisting guests and coordinating hotel services for them, accurately posting charges on guest folios and collecting payments, and many other tasks.”44

 

Figure 1: The guest cycle

Source: Baker et al., Principles of Hotel Front Office Operations. 2nd ed.

My’s research “focused on the position of the front desk clerk, also known as receptionist or guest service agent, rather than on other positions such as bell staff, telephone operator or the position of the front office manager.”44 In their book Principles of Hotel Front Office Operations. 2nd ed.[i], Baker et al. claim that the front office functions can be divided into front-of-the-house operations – handling booking requests, collecting and providing information at check-in, or settling guest bills – and back-of-the-house operations, such as managing guest accounts, rate check, or preparing guest bills and reports.” Baker et al. add that “front office functions can be organized into the different stages of the guest stay including pre-arrival, arrival, occupancy, and departure,”627 They present this idea in the form of a so-called Guest Cycle, as per Figure 1.627

The main model to be studied is Ivanov and Zhechev’s51 seven stage RM process (see Figure 2).

 

Figure 2: Hotel revenue management process

Source: Ivanov & Zhechev, Hotel Revenue Management: A Critical Literature Review.

Another component of a revenue management system that is worth studying is “hotel revenue centers”, i.e. the potential sources of revenue for a hotel, including but not limited to room revenue.45 Linked with this element in the conceptual framework is the concept of “total RM”, which will be discussed later.45

“Since this study is centered on individual staff members at the front desk, their conventional duties and their potential for upskilling, the “human resource” element will also be discussed as part of the hotel RM system,” says My.44 On the one hand, the discussion is about the role of hotel revenue management leaders and their ability to communicate and engage with front office employees; on the other hand, it is about human resource issues amongst the front office staff themselves, and how these issues affect their involvement in implementing revenue management.44

According to My, “The second key theme in the conceptual framework is RM tools, which refer to techniques or instruments hotels can utilize to execute RM strategies.”44 The third major theme is the “customer” factor and the concept of “customer-centric revenue management.”44 Although the concept of revenue management and CRM as complementary functions has been the subject of much research, it has yet to be fully embraced by the business community.44

For Ivanov, data and information are a decisive factor affecting the quality of revenue management decisions, and therefore should be one of the core elements constituting a hotel’s RM system.45 “To take part in the RM process, front office agents among all staff members should be informed about which RM-related data they can access and utilize,” says My.44 Ivanov also classifies the data requirements for practicing RM under multiple dimensions, including operational (internal), customer, competition, and distribution data.45 My believes that, “In terms of the level of data requirements, it is realistic to infer that front office staff can access and handle operational RM data and implement operational decisions, rather than data at strategic and tactical levels.”44

In My’s study, the interviewees were asked if and how they captured revenue management-related data and common responses including the following44:

1.       Briefing on the situation of the day at shift handover meetings;

2.       Checking Traces list and Alerts from Opera PMS as well as emails for new offers, last-minute promotions or changes in pricing and booking policies;

3.       Checking house status in terms of room demand – supply, occupancy, departures and arrivals of the upcoming day(s), which category is closed and arrival time of groups; and

4.       Identifying with which guests to follow up at check-in or checkout, for instance to collect charges or correct bills.

Ivanov categorizes the above information as operational (internal) data.45 Such data helps front office staff “to not only make timely arrangements for guests, but also to better prepare themselves e.g. [sic] for upselling opportunities to different guest segments, and for cases that require special RM decisions such as clarifications of the right prices to apply.”44 Based on operational data, the front office staff can also “help monitor and optimize the use of hotel inventory as well.”44 “For instance, they keep an overview of room availability, by number and room type, and other special instructions in order to judge if they can accept a last-minute reservation, day-use booking or stay extension request on a particular day,” say My.44

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