6th Sem l Front Office l Solved Papers l 2017-18

Q.1 What is yield management software? With the help of the yield management cycle. Explain its significance in a hotel. List the reports generated by yield management software.

 The most effective way of handling data and generating yield statics is through a computer. Sophisticated revenue management soft-wares are available that can integrate room demand and room price statics and can stimulate high room revenue-producing scenarios.

The software provides information and supports managerial decisions. Computer store, retrieve and manipulate large data and can help management create models that produce the probable result of the decision. Decision models are based on historical data forecast and booked business.

Working of revenue management software

• RMS helps management to create models that produce probable results of decisions.

When different data is processed into revenue management software, then based on the data, it creates a model that produces probable results of decisions that help managers to take decisions.

• Decision models are based on historical data, forecasts & current business

The different model that revenue management software suggests are based on the historical data for the same period, future forecasting & also the current situation of the business.

• Rms stimulates high revenue producing product scenarios

Revenue management software also helps the management to find out which products/areas is producing high revenue and helps them in taking decisions about the product. 

Advantages of revenue management software

• Best available rate : Rms helps management to decide best available rate according to the situation i.e high demand, low demand.
• Continuous monitoring : Rms also hepls the management to have a continuous monitoring of its products & find out what can be improved.
• Consistency : Rms is an established technology that guarantees database consistency and durability. 
• Organized information : Using of rms helps us in getting the information in an organized manner, which leads in saving time and make the decision making process easy.
• Budgeting : Rms also helps in the budgeting process, as it keeps the record of the expense and revenue. It also provides us information that on which area we have to focus more.
• Performance tracking: Rms also acts as a performance tracker, which keep the record the product’s sell& because of this record the management is able to know about their products performance.

Softwares used in hotels:

Some leading RMS include:

• Beonprice – it is the cloud revenue strategy solution based on artificial intelligence that helps in increasing the profitability of the hotel.
• Easyrms –  founded in 1999. Easyrms is a global leader and provider of saas revenue and yield management solutions. Easyrms is dedicated to the introduction of new generation technology and procedures within the hospitality industry and aims to deliver these services to its clients. Backed by the confidence of more than 1,000 clients.
• Duetto – founded in San Francisco in 2012, has signed hundreds of properties in 19 countries. It has also received $33.2 million in funding.
• Irates– was founded in 2011 in san Diego. It says it has about 100 hotel clients.
• Pricematch– a Paris start-up, says it serves 800 hotels. Its goal is to serve 3,500 by year-end. It has raised more than $10 million in funding. It recently acquired its European rival power your room.
• Since 2012- rainmaker, which has long sold RMS to gaming companies like caesars, rolled out a guest rev, a solution aimed at hotels generally. Rainmaker has signed 100 hotels. Omni is a major client. In march rainmaker acquired revcaster, a rate shopping tool.
• Hotelogix is one of the popular RMS in the world. Hotelogix has partnered with price match revenue management system.

Some other RMS are-

• Hotelpartner yield management-
• Hotelsdot
• Ideas
• Lodgiq
• Maxengine
• Ratewise
• Revpar guru
• Revenue management software is also able to generate an assortment of special reports.

 Or What is break-even analysis? Explain how it can be used in room division to maximize room revenue . Suggest the role of non-room revenue.

Hotel managers, analysts and asset managers typically use the traditional operating and interest payment by breakeven analysis to assess the potential profit of their hotel properties, or before setting the strategic positioning of a hotel.

 A breakeven analysis involves calculating or estimating: ·

• The net change in room revenue due to room rate changes. ·
• The amount of net room revenue needed to offset any reduction in net room revenue(when room rates are discounted) or the amount of net room revenue needed to offset any reduction in net non-room revenue(when room rates are increased). ·
•  The average amount each guest spends in non-room revenue centers. ·
• The change in occupancy likely to result from room rate changes.

Required increase in

 Non-room revenue per guest = net non-room revenue + cmrw / number of extra guests

 Here, cmr is  contribution margin.

Revpag = total revenue/ no of guest

Goppar = gross operating profit for a period /total no. Of rooms available during that period

The operating breakeven point is defined as the threshold where total operating costs are equal to total revenues – where operating costs are a combination of both fixed and variable expenses.

 Hotel expenses have one component that is fixed and another that varies directly with occupancy or facility usage. The fixed component typically varies with inflation, while the variable component is adjusted for the percentage change between the occupancy and the facility usage that produced the known level of revenue or expense. The concept of identifying the cost structure of a hotel property is easier said than done, and requires proper statistical analysis, or comparable operating performance analysis. We briefly discuss each type of hotel expense item.

 Fixed costs

Fixed costs are the hotel manager’s nemesis because they do not change in the short run.. A primary example of a fixed cost is a manager’s salary at any level. Other fixed costs may include insurance, depreciation, rent, property taxes and income taxes, among others.

Variable costs

Unlike a fixed cost, variable cost changes in relation to sales revenue or volume. A primary example of a variable cost is the cost of sales for the food and beverage department. If food and beverage sales go up, more costs increase proportionally to purchase those food and beverage items.

Break-even calculations

Once you’ve separated your fixed costs from your variable expenses, it’s just a matter of applying a set and determined formulae to calculate the break-even point for your operation. Break-even calculations are broken down into three separate categories using the income statement. You can calculate your break-even point three of the following ways:

1. Break-even sales revenue
2. Break-even level in a number of rooms for a hotel or seats for a restaurant, and
3. Break-even occupancy percentage for a lodging operation.

It must be stated here that the farther away your breakeven results are from your actual numbers, the more favorable your financial position. If the break-even percentage is 30 percent or less than actual sales revenue, seats sold, or rooms sold, this would provide a favorable financial position for the operation.

Q.2 Explain the concept of timeshare and briefly describe the various types of timeshare .

The timeshare or vacation ownership strategy or concept has recently become very popular and timeshare properties are another preference of vacationers. It is an expanding part of the hospitality industry.

The world tourism organization defines timeshare as: “the advance purchase of time in holiday accommodation. The purchaser pays a capital sum to acquire the timeshare and then pays an annual contribution towards the maintenance of property. The period of time sold is usually based on modules of a week.”

A timeshare is a form of vacation property ownership. With timeshares, the use and costs of running the resort are shared among the owners. While the majority of timeshares are condominiums or cooperatives at vacation destinations, developers have applied the timeshare model to houseboats, yachts, campgrounds, motor homes, cruises and private jets.

Forms/types/classification of timeshare ownerships:

Resorts offer timeshare in a variety of formats. Over 90% sell interval interests in increments of one week of use each year or as point offerings. Various forms that timeshares are available in or methods that can be used when using timeshares are:

Fixed week method/fixed week ownership: The most basic timeshare unit is a fixed week; the resort will have a calendar enumerating the weeks roughly starting with the first calendar week of the year. An owner may own a deed to use a unit for a single specified week. If an owner owned week 26 at a resort, he or she could use that week every year.

Floating week method/ ownership: Sometimes a timeshare is sold as floating weeks. The ownership will be specific on how many weeks the owner owns and from which weeks the owner may select for the owner’s stay. An example of this, a timeshare may be a floating summer week where the owner may request any week during the summer season generally weeks 22 through 36.

The split week method/ split in time share: Is also now available where the owner can split his/ her week/period into smaller units, provided the cancellation of timeshare use has been made well in advance. A week’s holiday can be split in two parts for two different properties and locations for a period of 3-4 days each. In fact, a two weeks holiday can also be clubbed if the owner has not availed his vacations during the last year and he had intimated about his desire to club two weeks vacations during the year.

Rotating week method/timeshare: Some timeshares are sold as rotating weeks. In an attempt to give all owners a chance for the best weeks, the weeks are rotated forward or backward through the calendar, so one year the owner may have use of week 25, then week 26 the next year and then week 27 the year after that. This method does give each owner a fair opportunity for prime weeks but it is not flexible.

Points- based programs: Under a point-based system, consumers at chain timeshare properties purchase a number of points that are redeemed each year for a number of accommodation nights that vary depending on the season, day of the week, size of unit and location. These points can be redeemed in any of the hotels and timeshare product base.

The number of points required to stay at the resort will vary based on a points chart. The points chart will allow for factors such as:

• the popularity of the resort;

• the size of the accommodations;

• the number of nights;

• the popularity of the season; and

• the specific nights requested.

Resort- based points programs are also sold as deeded and as right to use. Points programs annually give the owner an amount of points equal to the level of ownership. The timeshare owner in a points program can then use these points to make travel arrangements within the resort group. Many points programs are affiliated with large resort groups offering a large selection of options for destination. Many resort point programs provide flexibility from the traditional week stay. Resort point program members, such as world mark, may request from the entire available inventory of the resort group.

So, with most point systems, owners may elect to:

•Assign their usage time to the point system to be exchanged for airline tickets, hotels, travel packages, cruises, and amusement park tickets;

•Instead of renting all their actual usage time, rent part of their points without actually getting any usage time and use the rest of the points;

•Rent more points from either the internal exchange entity or another owner to get a larger unit or more vacation time or at a better location;

•Save or move points from one year to another.

Some developers, however, may limit which of these options are available at their properties.

 Vacation clubs: Vacation clubs are another time sharing variation. A vacation club is an organization that owns multiple timeshare properties in different locations. If you are a club member, you can reserve space at the various resorts that are part of the club in accordance with club rules. You pay annual fees, and there is an initial cost to join the vacation club. As with a right-to-use property, the vacation club contract will either contain the timeshare program documents or will incorporate them by reference.

Q.3 Write an essay on resort condominium international.

Resort condominiums international (RCI) is a subsidiary of the firm Wyndham worldwide (previously cendant).

Founded in 1974, rci has grown to become one of the larger brokers of timeshare trades. Rci has over 4,000 affiliated resorts in over 100 countries around the world. Its membership base is just over 3 million members worldwide. It has 30 vacation accommodation brands including vacation ownership condominiums, villas, cottages, city apartments and second homes, fractional interest and private residences clubs, etc. And 50 worldwide offices. It has 37, 922 rooms worldwide and more than 7, 50,000 owners worldwide.

Currently, RCI’s biggest competitors in the timeshare market are interval international and trading places international. Rci provides the following services:

A. Exchange services

B. Rental programmes

C. Club services

D. Global advisory services

RCI weeks

Rci weeks is rci’s traditional exchange system. Vacation exchange adds flexibility and variety to vacation ownership by allowing timeshare owners to trade their vacation week for another similar unit.

A. Owner buys seven day period to a specific home resort

B. Owner buys a fixed week or floating week booked within a certain season based on the resort

C. Owner deposits time with RCI each year

D. Week exchanged for comparable week at another resort

To use the services of RCI it is necessary to hold a membership of the company which is valid for one to 5 years up to a maximum of 5 weeks at each affiliated resort. In order to process an exchange, a deposit has to be made in advance. Then an exchange request has to be made. This request can be confirmed immediately depending on availability.

If unavailable, the request keeps pending for a stated period and if nothing comes up later as well, the deposited week remains in the space bank and the member can add another request for future use.

For the exchange, the trading power of the unit depends on the size of the unit, the popularity of the location of the resort, the quality of the resort, and popularity of week or season. Rci keeps records of seasons and demand and usage of a resort to appreciate its value. Bonus weeks may be offered when there is a surplus in the space bank and the members can enjoy an extra week as a bonus without depositing any week.

RCI points

The rci points program is rcl’s global points-based vacation exchange system when you join the rci points program you’ll have the flexibility to customize the vacation that is perfect for you. As an rci points subscribing member you automatically gain access to the rci weeks affiliated resorts which include more than 3,700 resorts around the world plus, with the rci points partner program, you can exchange points toward other travel products and services such as airline tickets, cruises, hotel stays and much more.

With the rci points program you have the flexibility to:

• choose how many days you want to stay and where you want to stay

• vacation at your home resort

• stay at other great rci points affiliated resorts

Reserve a variety of resort unit types and seasons:

• save or borrow points to create your dream vacation

•use points to book airline tickets, hotel stays, rent a car or book cruises, and more through the rci points partner program

• use points to exchange into rci weeks affiliated resorts

Or Highlight the historical development of timeshare business and its subsequent spread and growth in India.

In India, the concept arrived quite late, and wholesomely welcomed since it meant buying future vacations at today’s price. · there exists a tremendous potential for timesharing in the Indian market and only 0.069% of the market are members (destination resorts India Pvt. Ltd., 2004). ·

The timeshare industry is growing manifold with big brands such as resort condominiums international (RCI), ramada hotels &resorts, club mahindra, hyatt vacation club, etc. Entering the business.

India and china are expected to be potential targets of vacation ownership developers in the long-term (official wire 2009). ·

The market for timeshare models in India is huge, and more importantly, domestic traffic is adopting a lifestyle that supports the timeshare model. ·

 The timeshare concept in India was introduced by Dalmia resorts in 1985 after which sterling resorts were fast to catch up which came into existence in 1986.

 During the years following incorporation, sterling has built a network of 14resorts in 12-holiday destinations in India and is having a membership base of over 100,000 vacation ownership members. In addition, the resorts in the sterling network also offer vacationers in India, the option of staying as a one-time hotel guest.

In today’s date, one of the major players in the timeshare industry in India is club Mahindra which has over the years evolved a position for itself and as of may 31, 2009, the company was having 19 branches and 61 retail outlets across India of which45 are owned and 16 are franchised. The company was also able to sell 91,997 club Mahindra holiday vacation ownership memberships.

According to an India report (2009) impact of branded hospitality players and reputed conglomerates is the need of the hour. Potential consumers, while agreeing to the benefits of the product, have often cited the lack of branded players as their reason for not purchasing a timeshare, thus indicating a requirement for both credibility and glamour in the product.

Further, the report indicates that the demand for timeshare products in India is likely to grow at about 16 percent annually from 2006 to 2015, facilitated by supply growth of about 12 percent annually over the same period. This is reflected by the growth in holiday exchange bookings that increased by 28 percent in January-November 2008. ·

 The average unit sale for a typical timeshare development is likely to grow at 3 percent annually from 2006 to 2015. The average unit cost per day for a consumer is likely to grow at 4 percent annually during the same period compared to 5-8 percent for a pure hotel product.

Every business has its success and failure stories and timeshare is no exception. From the time this concept was introduced in India, a lot of companies have entered this segment out of which most have been successful and a few unsuccessful.

Timeshare schemes are being run by both public and private sector companies in India. Statistics from the latest survey of the timeshare industry confirm that the consumer satisfaction index is reaching a high of 85%. There are 40 timeshare companies, 80 resorts, 200,000 memberships with 15,000 annual additions, and 4000 units. The average age of timeshare consumer is 42 years out of which89.8% are males having an average household size of 4 people with atypical children count of 1 to 2 children (AIRDA, 2008).

Even though the customers are quite happy with the quality of timeshare resorts that they are offered still they feel that the number of destinations (resorts) is quite less and they do not get much on their platter.

For the segment that private timeshare companies are serving, competitive advantage emerges out of overall condition, access & location of the resort, room furnishing, food, the competence of the staff, view from the room, and convenience in buying a timeshare. There appears to be potential in targeting the growing Indian middle class as the trend now is towards more fun-filled holidays rather than visiting friends and relatives (VFR).

The company may improve the condition of its resorts and furnishing of its rooms as timeshare owners are the persons who will not come to the resort only once but they are the people who are going to visit the resorts year after year and that too at least for a week’s time in one go. The company was only having a few properties in its timeshare scheme which are quite less as compared to any other timeshare company which offers hundreds of properties.

Q.4 (a) What does the equvilent occupancy equation,consider that the identical yield equation does not?

(b) Why is the difference significant?

Calculations of different combinations of occupancy and actual average room rate may result in identical room revenue and yield statistics. Identical yields do not generally represent identical operating situations, however.

Therefore, identical yield occupancy % = current occupancy % x current rate/ proposed rate

Clearly, identical yields should not be assumed to reveal equivalent operating positions. When identical yields are computed, judging which scenario is best often requires property specific criteria and management evaluation.

 Now, identical yield equation cannot consider because they fail to take direct account of operating costs and non-room revenues.

A more effective way of determining whether a change in room rates is justified it involves calculating an equivalent occupancy. This equivalent occupancy can be used when management needs to know what other combinations of room rate and occupancy percentage provide equivalent net revenue.

 The equivalent occupancy formula is similar to identical yield occupancy formula, but takes marginal costs into account by taking into account contribution margin.

Here, cost per room (also known as marginal cost) of providing a room is the cost the hotel incurs by selling that room. Example: Housekeeping expenses such as cleaning expenses.

Similarly, contribution margin is that portion of the room rate that is left over after the marginal cost of providing that room has been subtracted out.  

Therefore,

Equivalent occupancy% = current occupancy% x (rack rate – marginal cost) / rack rate x (1- discount percentage) – marginal cost

= current occupancy% x current contribution margin / new contribution margin

Or What are the challenges and problems in yield management?

1. Rate recovery

There has been a rally of rate dropping over the past year – the rates in some markets decreased by 20-30%, sometimes even more. These rates in general, but especially now, that the demand is growing are leaving a lot of money on the table.  

• The customer is trained to look for a deal and constantly negotiate for lower price

 With the emerging strength of online travel agencies and flash sales sites, we’ve gotten so far away from trying to sell our services that we have forgotten what we are selling.

• Rate parity

The big challenge is the rate parity over the internet. Even without the flash sales sites and online travel portal offers, the hoteliers are not able to keep the rate parity in internet. The reason is clearly lack of knowledge in how to control the rate parity over various channels and manage it. The transparency of the internet and the fact that customers are aware of hotels not keeping rate parity has resulted a deal seeking becoming a norm in travel purchasing.

• Ota dominate online sales

Distribution costs are increasing twice as fast as room revenue, and ota booking shares are increasing as well. New, important channels are appearing as well, demanding that hotels increase their channels offers to include google hotel ads, tripadvisor and similar channels.

• Pricing factors

Pricing factors include both macro and micro issues. Macro issues may include economic and social effects into account when setting prices over the next few years. Micro issues might include prices being changed by third parties due to regional differences, discounts, or errors.

• Flexibility over pricing and strategy

 Branded chain hotels have strictly defined rules, regulations, processes, and associated costs. Independents have greater flexibility, providing greater freedom to explore and innovate. They can genuinely distinguish its customer service and property as unique. They can respond to guest needs quickly, delivering a personal experience which gains the hotel greater loyalty from their guests.

Conclusion

 Hotels, at the end of the day, should focus on optimising each channel, and driving direct bookings. Direct bookings reduce costs and produce a higher lifetime value for each guest. At net affinity, our reporting assists hotels in driving direct bookings and increasing revenue.

Q.5 List and explain high demand tactics for both transient and group business.

 Revenue management strategies during high demand period

1. Try to define the right mix of market segments in order to sell out the highest possible room rates.
2. Monitor new business bookings and use these changed conditions to reassign room inventory (as occupancy increases, consider closing out low room rates and open them only when demand decreases)
3. Consider establishing a minimum number of nights per stay
4. Select the group that offers the highest total revenue
5. Try to displace price-sensitive groups to low demand days

High demand tactics includes:-

1. Close or restrict discounts – analyze discounts and restrict them as necessary to maximize the average rate. You may offer discounts to those who book longer stays, or restrict bookings to shorter stays.
2. Apply a minimum length of stay restrictions carefully – a minimum length of stay restriction can help a property increase room nights. For groups, study the groups’ patterns and decide how many days they are likely to add to their stay.
3. Reduce group room allocations is another great tactics– communicate with group leaders on a regular basis. Make sure the group actually needs the number of rooms identified in its contract. If not, make adjustments.
4. Reduce or eliminate 6 p.m holds – reduce or eliminate the number of unpaid rooms that are being held until 6 p.m. When demand is high, you need rooms available to fill.
5. Tighten guarantee and cancellation policies tactics– tightening guarantee and cancellation policies helps to ensure payment for room nights. Charge credit cards for the first night’s stay on the day the reservation is made.
6. Tactics on raise rates to be consistent with the competitors – charge rates consistent with the competition, but the limit rate increases to those rates published in the central reservations systems and listed in brochures for the period.
7. Consider a rate raise for packages – if you are already offering a package discount, consider raising the rate for that package.
8. Apply full prices to suites and executive rooms – in a high-demand situation charge full price for suites and executive rooms.
9. Reserve close to arrival dates – by allowing the reservations to be taken for a certain date as long as the guest arrives before that date, a property is able to control the volume of check-ins.
10. Evaluate the benefits of sell-throughs – with a sell-through, the required stay can begin before the date the strategy is applied. This is often used when one day has a peak in occupancy and management does not want the peak to adversely affect reservations on either side of the peak day.
11. Apply deposits and guarantees to the last night of stay – for longer lengths of stay, make sure the deposits and guarantees apply to the last night of the stay, minimizing early departures.

Q.6 Differentiate between

Deeded contract and right to use

Deeded time share	Right-to-use time share
Deeded ownership is like traditional real estate ownership in the sense that once you purchase the timeshare, you own it for the rest of your life or until you sell it.	Right to use (rtu) ownership is a system in which you purchase the right to use a specific unit or week at a resort for a set period of time (often between 10 and 50 years).
At resorts that sell deeded timeshares, once all the units and weeks have been sold, an hoa typically controls the operations of the resort on behalf of all the individual owners.	The expiration date for your rtu timeshare is written into your contract, at which time you are no longer legally responsible for the timeshare.
A deeded property timeshare can also be rented, given away, bequeathed to heirs, or sold at the owner’s discretion.	With the right to use system, control of the resort never passes to an hoa or other management group; instead, it remains in the developer’s control.
If the developer goes into default or goes bankrupt, with a deeded property you would still own your fraction of the property.	However with a right to use you never had an ownership of the property and would lose the ability to use the program in most cases.
With a deeded property the owner has a voting right to maintenance and operations within that resort.	The right to use properties, however, have little to no control over many things, including increasing annual fees, or imposing special assessments.

Timeshare and condominium

Timeshare	Condominium
When purchasing a timeshare, you choose a specific location and set week or two you will use your vacation home each year.	In purchasing a condo hotel, you have the flexibility to use your unit whenever you want, though there are usually restrictions that prohibit making it a permanent residence.
In choosing a timeshare, your amenities may be limited to use of the swimming pool and other common areas	Choosing a condo hotel provides you access to those amenities as well as those you would traditionally find at a luxury hotel such as restaurants, lounges, spas, exercise facilities and bars.
At a timeshare you’re responsible housekeeping and unit upkeep during your stay	Similar to a hotel, you have access to daily housekeeping, maintenance services, room service and more.
Owning a condo hotel gives you deeded ownership to the property.	With a timeshare, you’re only purchasing one to two weeks of usage.
During the time you’re not staying at the timeshare, you can’t generate any revenue, unlike a condo hotel.	When not staying at a condo hotel, your unit can be entered into the management’s rental program.

Q.7 Explain the following terms in brief (any ten)

• Vacation excahnge

Answer: When timeshare owners join an exchange company, they deposit their week or points in the exchange program. That week then becomes available for other members of the program to choose from. At the same time, the new member can choose from other timeshare locations that have been deposited in the program.

• Achievement factor

Answer : Formula for calculating room achievement factor af (rate potential percentage) the room achievement factor is also known as rate potential percentage of a hotel, is defined as the percentage of the rack rate that the hotel actually receives by selling their rooms.

• Revpar index

Answer: Revpar index, is a measure that originates from revpar. It focusses on comparing your hotels revpar with the revpar of the hotels in your competitive set. This calculation will allow you to see how well you are executing your sales and revenue management strategies relative to your competition.

• Booking lead time

Answer: Booking lead time is the period of time between when a guest makes a reservation, and the actual check-in da

• Non-room revenue

Answer:Non-room revenue accounts for up to 50% of the total revenue. As such, the modern revenue management system today has evolved to a more holistic approach that requires the collaboration from all functions within the hotel instead of each department operates independently.

Non room related revenues turn them up for a unique geographical marketing which is hotel’s own local area. Restaurants, night club, salons, bar and banquet and hotel shops are examples of these revenue sources.

• Capacity management

Answer : It involves

• Controlling and limiting room supply
• Hotel accepts statistically supported room reservation in excess of actual number of rooms to offset loss because of early check out, no show and cancellation. It is also called as selective overbooking. It reduces the risk of overselling or no selling. Generally overbooking is done on lower category of rooms and then upgraded. Overbooking price depend on the level of demand of rooms.
• Determining how many walk-ins to accept keeping in mind no show.

• Fiar market share

Answer :Fair market share forecasting involves understanding how well the hotel is doing in relation to the competition

A hotel within a competitive set can work out if it’s getting its fair market share through a simple calculation:

Fair market share = total number of rooms at the hotel / total number of rooms in the comp set

However large or small the comp set, a hotel trying to make itself more competitive can use a fair market share tool to compare its individual percentage to their comp set.

• Rate spread

Answer:  Rate spread is another important matrix used by revenue management team in large hotels or by the front office manager in smaller hotel operations. The value for rate spread is derived from various room types in the hotel in order to make essential yield decisions by the hotel management.

The formula for calculating rate spread:

Rate spread = potential average double rate – potential average single rate

• Points program

Answer: Timeshare points are similar to currency. Based on the frequency of your ownership (annual, biennial, biannual etc.), you get a number of points to use for your vacation. These can be purchased directly from the resort, or you can save thousands buying timeshare points for sale on the secondary market.

• MLOS

Answer: A minimum length of stay through restriction limits availability by specifying a number of nights that must be booked for stays that include the restriction date in any part of the stay date range.

Q.8 Explain with example any two of the following terms:

• Capacity management
• Discount allocation
• Duration control
• Revenue management software

Answer : Duration control–

Places time constraints on accepting reservations in order to protect sufficient space for multi-day requests on high price – “a reservation for a one-night stay might be rejected, even though space is available that night”

Strategies dealing with room availability are as follows:

1. Minimum length of stay: Requires that a reservation must be for at least a specific number of nights. Some resorts use the approach during peak occupancy or hotels during special events or high occupancy period.
2. Closed to arrival: Strategies allow reservation to be taken for certain date as long as the guest arrives before those date e.g. 100 arrivals on 30^th july therefore any arrival on 28^th and 29^th is accepted that will stay till or after 30^th july.
3. Sell through: Strategy works like a minimum length of stay requirement except that the length of the stay can begin before the date the strategy is applied e.g. If a 3 night sell through is applied on wednesday, then the sell through applies on monday, tuesday and wednesday. Arrivals on each of those days must stay for 3 nights in order to get accepted. It is effective when 1 day is peak and management does not want the peak to affect the either side reservation.

All the three strategies may be combined together e.g. Duration control can be combined with discount allocation and so on.

Revenue management software:

The most effective way of handling data and generating yield statics is through a computer. Sophisticated revenue management softwares are available that can integrate room demand and room price statics and can stimulate high room revenue producing scenarios. Software provides information and supports the managerial decisions. Computer store, retrieve and manipulate large data and can help management create models that produce probable result of decision. Decision models are based on historical data forecast and booked business.

Benefits of revenue management software’s:

1. Continues monitoring- track and analyze business 24 x 7
2. Consistency- software responds to the specific change in the market place with specific corporate and local management rules.
3. Information availability: It store, retrieve and analyze.
4. Performance tracking: Analyze sales and revenue transactions to determine how well revenue management goals are achieved.
5. Offers discounts during a certain period and at other times; the hotel increases the price of the rooms.

Revenue management software generated reports

1. Market segmentation reports: Information about customer mix that help in forecasting market segment.
2. Calendar/ booking graphs: Present room night demands and volume of reservation on daily basis.
3. Future arrival dates status report: Furnish demand dates of each day of a week. It enables to forecast the occupancy trends by comparative analysis.
4. Single arrival date history reports: Indicate the hotel’s booking patterns. This report relates to the booking graph by documenting how a specific was constructed on the graph.

Weekly recap report: Contains the sales rate for rooms and the number of room authorized and sold in marketing programs with special and discounted rates.

Or (a) A hotel which is currently operating at 60% average occupancy and with an a.r.r of rs.7,000/- is planning to increase its a.r.r to rs.8000/-,what occupancy percentage it must achieve to obtain identical yield percentage.

Current occupancy percentage = 60%

1. R.R.=   Rs .7000/-

Increased A.R.R=8000/-

Identical Yield % = Current occupancy% * Current Rate / Proposed Rate

                               = 60% * 7000/8000

                               =0.6 * 7/8

                                =4.2/8 = 0.525

                  That is   =52.5%

If the same hotel has the marginal cost( cost per occupied room) of rs.700/- and the hotel plans to offer an off-season discount of 25%. What would be the equivalent occupancy percentage needed to get the same level of net revenue ?

Marginal Cost =Rs. 700/-

Discount % = 25%

Equivalent Occupancy = Current occupancy%*(Rack Rate- Marginal Cost )/Rack Rate (1-Discount %)-Marginal Cost 

=60% *(700-700)/7000(1-0.25)-700

=0.6*6300/(7000*0.75)-700

=0.6* 6300/5250-700

=0.8307

=83.7%

Q.9 Consider the following data of hotel ABC.

Total room -400,Room sold -320,140 rooms sold @rs.2,500/-,100 rooms sold @rs.2,200/-,80 rooms sold @rs.2,000/-,Rack Rate -3000

Calculate the yield percentage for the Hotel.

Yield = Actaul revenue / Potential Revenue

Actual Revenue =(140*2500) + (100*2200) + (80*2000)

                          =3,50,000 + 2,20,000+1,60,000

                         = Rs.7,30,000

Potential Revenue =400*3000

                             =12,00,000

Yield = 7,30,000/12,00,000

           = 73/120

           =0.608

            =60.8%

Q.10 Select the correct French translation of the following statements in English:

(A) Please bring my luggage

1. S’il vous pla^it apporter mes bagages
2. Obtenir mes baggages

Answer :1. Sil vous plâit apporter mes baggages

(B) May i help you?

1. Puis-je vous aider?
2. Puis-je l’aider?

Answer: 1.Puis-je vous aider?

Answer: 2.Quel est le taux de change du dollar américain?

(D)That is an Indian restaurant.

1. C’est restaurant indien.
2. Ou’est un restaurant indian.

Answer : 2. C’est un restaurant indien.

( E) Your room is on second floor.

1. Votre chambre est au deuxie’me e’tage.
2. Ma chambre est au deuxie’me e’tage.   

Answer : 1. Votre chambre est au deuxième étage.