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Planning and Evaluating

Forecasting Room Availability


The most important short-term planning performed by Front Office Manager is forecasting the number of rooms available for sale on anyfuture date. Room Availability Forecast are used to help manage the reservation process and to guide Front Office staff in effective room management. Forecasting may be especially important on nights hen a full house is possible. A room availability forecast can also be used as occupancy forecast. !ince there is a fi"ed number of rooms in the hotel# forecasting the number of rooms available for sale and the number of rooms e"pected to be occupied forecasts the occupancy $ e"pected on a given date. The forecasted availability and occupancy numbers are very important to the daily operations of the hotel. Room occupancy forecast can be useful to the Front Office Manager for manpo er planning. This forecast may be useful to other departmental managers as ell. For e"ample# %ouse &eeping department needs to 'no the occupancy for scheduling staff. Restaurant Manager also needs the data for the same. The (hef needs the figures to order for ra materials for the restaurant. A forecast is only as reliable as the information on hich it is based. Forecast can serve as a guide in determining operating costs) every effort should be made to ensure forecasting accuracy. Forecasting is a difficult s'ill to develop. The s'ill is ac*uired through e"perience# effective record 'eeping# and accurate counting methods. E"perienced FO Managers have found that several types of information can be helpful in room availability forecasting +. A thorough 'no ledge of the hotel and surrounding area. ,. Mar'et profile of the constituencies the hotel services. -. Occupancy data for the past several months and for the same period of the previous year. .. Reservation trends and a history of the reservation lead times. /. A listing of special events schedules in the surrounding geographic area. 0. 1usiness profiles of specific groups boo'ed for the forecast dates. 2. The number of non-guaranteed and guaranteed reservations and an estimate ofthe numberof e"pected nosho s. 3. The percentage of rooms already reserved and the cut-off date for room bloc's held for the forecast dates. 4. Plans for remodelling or renovating the hotel that ould change the number of available rooms. +5. (onstruction orrenovating plans for competitive hotels in the area. For forecasting room availability Front Office Manager depends on occupancy data. To facilitate forecasting# follo ing daily occupancy data needs to be collected. +. 6umberof e"pected Room Arrivals. ,. 6umber of e"pected room 7al'-ins. -. 6umberof e"pected room !tay-overs. .. 6umberof e"pected room 6o-!ho s. /. 6umberof e"pected room 8nderstays. 0. 6umberof e"pected room (hec'-outs. 2. 6umberof e"pected room Overstays. Resort and (onvention hotels are also interested to calculate guest count besides room count as they have high double occupancy percentage. The above data are important for room availability forecast to calculate various daily operating ratios to determine the number of available roomsforsale.

Percentage of 6o-!ho
This data indicates the proportion of reserved rooms that the e"pected guest did not arrive to occupy on the e"pected arrival date. This ratio helps the Front Office Manager to decide hen to sell rooms to al'-ins or the amount of overboo'ing. 6o !ho $ 9 No. of No-Show Rooms 6o. of Rooms Reservations X 100

7al' :n $9 No. of Walk In Rooms X 100 No. of Room Arrivals ;fora period e.g. day# ee'# month# year< Overstay $ 9 No. of Overstay Rooms X 100 No. of Ex e!te" #he!ko$ts ;fora period e.g. day# ee'# month# year<
7here= 6o. of E"pected (hec'outs 9 Actual (hec'outs % &n"er stay - Overstay

8nder stay $ 9 No. of &n"er stay Rooms X 100 No. of Ex e!te" #he!ko$ts ;fora period e.g. day# ee'# month# year<
7here= 6o. of E"pected (hec'outs 9 Actual (hec'outs > 8nder stay - Overstay

Forecast Formula Total 6umber of Cuest Rooms 'less( N$m)er of O$t-of-Or"er Rooms 'less( N$m)er of Stay over Rooms 'less( N$m)er of Room Reservations 'a""( N$m)er of Room Reservations X No Show * 'a""( N$m)er of &n"er stay Rooms 'less( N$m)er of Overstay Rooms 'e+$al to( N$m)er of Rooms Availa)le for Sale

!ample Forecast Forms


The Front Office prepare several different forecasts depending on its needs. Occupancy forecasts are developed on a monthly basis and revie ed by Food and 1everage and Rooms ?ivision Manager to forecast revenues# estimate e"penses# and develop staff schedules. Ten-?ay Forecast The ten-day forecast at most hotels is developed @ointly by the Front Office Manager and the Reservation Manager. A ten-day forecast usually consists of= A ?aily forecast occupancy figures# including room arrivals# room departures# rooms sold# and number of guests. A The number of group commitments# ith a listing of each group name# arrival and departure dates# number of rooms reserved# number of guests# and perhaps *uoted room rates. A A comparison of the previous periodBs forecasted and actual room counts and occupancy percentages.

Indian Hotel
Ten Day Occupancy Forecast Weekendinq Date Prepared To be submitted to all Department H #$ Date % Day '$ (stimated Departure )$ Fteservation *rrivals + ,roups -$ Reservation *rrivals+ Individuals .$ Future Reservations /a!ter t"e !orecast is complete0 1$ (2pected Walk+ins /based on past ' eeks0 3$ Total *rrivals 4$ Stayovers 5$ Total Forecasted Ftooms #6$ Occupancy &ultiplier /based on no o! 7uests per occupied room !or avera7e o! t"e same day !or last ) eeks0 ##$ Forecasted no o! 7uests #'$ *ctual Rooms Occupied #)$ Forecasted 8ariance /di!!erence bet een actual % !orecasted occupancy0 #-$ (2planation /to be completed by FO & Ona7er % submitted to ,&0 Prepared By eads at least one eek be!ore t"e !irst d ay listed on !orecast Fri Sat Sun &on Tue Wed T"u Fri Sat Sun

*PPRO8(D

,eneral &ana7er9s Si7nature Three-?ay Forecast

Date:

A three day forecast is an updated report that sho s a more current estimate of room availability. :t details any significant changes from the ten-day forecast. The three-day forecast is intended to guide management in finetuning staff schedules and ad@usting room availability information.

Indian Hotel
Three Day Forecast Form

?ate of ForecastEEEEEEEEEEEEEEEEEEEEEEEEEE Forecast (ompiled byEEEEEEEEEEEEEEEEEEEEEEEE


Total Rooms :n %otel

Toni7"t

Tomorro

)rd =i7"t

?ay ?ate Previous 6ight Occupied Rooms

+ (2pected Departures + (arly Departures > ?ne2pected Stay+overs > ?noccupied Rooms @ Rooms *vailable !or Sale > (2pected *rrivals > Walk+Ins + =o S"o s @ Occupied Rooms @ Occupancy A @ (2pected House <ount

?aily (hec'list for Accurate Room (ount


A A A A A A A A A A

?istribution= Ceneral Manager D Front ?es' D %ouse'eeping I F% B &ana7er ; (2ecutive <"e! I *ccounts I Sales I Banquets I Security
Ma'e counts of the rac' and reservations ;usually t ice in a day<. (hec' room rac' against the folio buc'et to find sleepers and s'ippers. (hec' %ouse'eeping reports against the room rac' to find sleepers and s'ippers. (hec' for rooms that are due out# but still have balances on theirfolios# especially here credit cards are the indicated source of payment. (hec' reservations forany duplication. (all the reservation system to ma'e sure all cancellations ere transmitted. Ma'e sure that the guest is not already registered. (all the local airport and Rail ay !tation for a report on cancellation. (hec' the eather reports for cities from hich a numberof guests are e"pected. (hec' ith other hotels for duplicate reservations ;especially for (onvention and (onference boo'ings<.

A A A A A

(hec' arrival dates on all reservation forms to be sure none ere misfiled. (hec' the room cancellation list. Afterthe cut-off time# pull any reservations that ere not guaranteed. :f any rooms are out of order# chec' to see if they can be made up. At the end of the shift# log all pertinent information for the incoming staff. Cood communication is essential.

Room (ount (onsiderate


(ontrol boo's# charts# computer applications# pro@ections# ratios# and formulas can be essential in short and long range room count planning. Each day the Front office performs several physical counts of rooms occupied# vacant# reserved and due to chec' out# to complete the occupancy statistics for that day. AcomputeriFed system may reduce the load as it continuously updates the room availability information. :t is important to 'no for the Front ?es' staff e"actly ho many rooms are available. Once procedure for gathering room count information are established# planning procedures can be e"tended to longerperiods of time to form a more reliable basis for revenue# e"penses and staff forecasting.

Evaluating Front Office Operations


This is an important management function. 7ithout thoroughly evaluating the results# managers ill not 'no hether Front Office is achieving the planned goals. The reports are evaluated on periodical or daily basis. The important tools that Front Office Manager can use to evaluate achievement are A ?aily operations Report A Occupancy Ratios A Rooms Revenue Analysis A %otel :ncome !tatement A Rooms ?ivision :ncome !tatement A Rooms ?ivision 1udget Reports A Operating Ratios and Ratio !tandards

?aily Operations Report


:t is also called & ana7er9s ReportB Daily Report or Daily Revenue ReportB hich is a summary of the hotelGs financial activities during a ,.-hour period. :t provides a means of reconciling cash# ban' account# revenue and account receivable. RoomsB statistics and occupancy ratios form an entire section of a typical ?aily Operations Report. (opies of this report are circulated to all departments.

Occupancy Ratios
:t measures the success of the Front Office in selling the hotels primary products i.e. guest rooms. The follo ing data must be collected to calculate basic occupancy ratios 6umber of rooms available for sale 6umber of rooms sold 6umber of guests 6umber of guests per room 6et rooms revenue Cenerally all the above said data are available in the ?aily Operations Report. Occupancy Percentage# Average ?aily Rate ;ARR<# Average Rate per Cuest# Revenue per Available Room# and Multiple ;?ouble< Occupancy Ratios can be obtained from these data. Occupancy Percentage and A?R ;ARR< also appear on the ?aily Operations Report. The 6ight Auditor computes the Occupancy Ratios# hile Front Office Manager analyFes the information to identify trends# patterns or problems. :t should be considered that a particular condition may produce different effects. For e"ample# if double occupancy increases# the ARR also increases as the tariff for double occupancy is higher than single occupancy and at the same time the Average Rate per Cuest decreases. The follo ing data of Rooms ?ivision is needed to calculate occupancy ratios.

Planning and Evaluating.................................1 Forecasting Room Availability.....................1 Percentage of No-Show........................... Sam!le Forecast Forms........................... "ndian #otel..........................................$ %aily &hec'list for Accurate Room &ount...........( Room &ount &onsiderate............................) Evaluating Front *ffice *!erations................) %aily *!erations Re!ort.........................) *ccu!ancy Ratios................................+ Rooms Revenue Analysis.........................., #otel "ncome Statement.........................., "ndian #otel.......................................1Summary Statement of "ncome For the year ended 1Rooms Revenue Rs. +-4,55 Occupancy Percentage Most commonly used operating ratio in the Front Office. :t indicates the proportion of rooms eithersold or occupied to numberof rooms available during a specified period of time. :t is important to note that# some hotels use the number of rooms sold to calculate# hile others use the numberof rooms occupied# including complimentary rooms or OOO rooms in calculation# hich alter some vital operating ratios# e.g. RevPAR. 7hen OOO rooms are included in the number of rooms available then the front Office Managers are forced to rectify I repair the rooms and sell it as early as possible. (onversely# not including OOO rooms may allo managers to artificially increase the calculated Occupancy Percentage simply by improperly classifying unsold rooms as out-of-order. !ome hotels do not include OOO as they are not actually sellable. Also to the e"tent that the occupancy percentage is used to evaluate the performance of Front Office staff having no control over out-of-order rooms. Regardless of the approach chosen# it should be used consistently.

Multiple Occupancy Ratio Also called Double Occupancy Ratio is mainly used to forecast Food H 1everage revenue# to indicate clean linen re*uirements# and to analyFe Average ?aily Room Rate. Multiple Occupancy can be calculated

by determining a multiple occupancy percentage or by determining the average number of guests per room sold or occupied ;also called the Occupancy &ultiplier or the &ultiple Occupancy Factor0$

Average ?aily Rate ;A?R< Also called Average Room Rate ;ARR<. Most Front Office Managers calculate an average daily rate even though the room rates vary significantly ithin a property.

some hotels include complimentary rooms in the denominator to sho the true effect of complimentary rooms on the average daily rate. This is sometimes called *vera7e House Rate$ Revenue Per Available Room ;RevPAR< :n this the total revenue generated is divided by the number of available rooms. :t measures# the revenue generating

capability of the hotel. %otels ith strong food# beverage# ban*uets and recreational facilities have RevPAR ell above the A?R

Another approach of RevPAR can be of calculating total revenue earned by the hotel including F H 1 outlets# 1an*uets# %ealth (lub and others and divided by number of available rooms# e.g.

Average Resort 'no ing is including

Rate Per Cuest %otels# in particular# are often interested in the average room rate perguest ;ARC<. This rate normally based on every guest in the hotel# children.

Rooms Revenue Analysis


Efforts are al ays ta'en by the Front Office staff to sell rooms at the rac' rate# unless situation demands to offer discounted rate. Rooms hich have been sold at discounted rates are listed in a report 'no n as Room Rate 8ariance Report$ This report is revie ed by Front Office Managerto chec' hether staff have follo ed the laid do n policies and procedures of offering discounts# in computerised system this can be programmed and room rate variance report can be generated easily. This is one ay to evaluate the effectiveness of Front Office staff in selling rooms in terms of yield statistics# hich is actual rooms revenu as a percentage of potential rooms revenue. 7e ill discuss Iield Management in details in a separate chapter.

%otel :ncome !tatement


This statement reveals valuable financial information of hotel operation fora fi"ed period of time e.g. monthly# *uarterly# half yearly or yearly. The statement provides the information about net income for a specific period hich helps in evaluating the overall success of operations. :t is an important financial indicator of operational success and profitability. This is also 'no n as <onsolidated Income Statement as it reveals composite picture of entire hotelBs financial operations.

The net income generated by rooms division is calculated by deducting payroll and other related e"penses from the amount of revenue generated by rooms division over a specific period. Rooms ?ivision is considered the largest earning revenue centre ithin the hotel.

:ndian %otel
!ummary !tatement of :ncome For the year ended.................................
OPERAT%J ?EPAR:%D1JT! Rooms Food Bevera7e Telecommunication Rentals H Other :ncome Total ?ndistributed Operatin7 (2penses *dministrative % ,eneral &arketin7 Property Operations and Maintenance 8tility (osts her #B 4'B ##B614 16B .)B34')B )1B5#) 1B -#B')' .B 1-B'31 '#B 55B#3# )'B 6.B#-5 -B 41B33-!chedules#4B .)B##. .B 6#B451B #3B15# 1 5-B'1) :ncome #-C '6B-1# .B 61B)4' 'B )1B)-5 .#B5'3 #B ).B 4.B-.4 #-B 5.B##1 5B 51B655 /+0 1B4.'

Operated Departments

'B34B63B'3)

)#B43B4)5 - .3B36B'#4
. /

''B#.B##5 #B11B)-B653
5B 5-B1)4 #1B 33B.-) #'B 11B44. #1B #-B444 -C 5#B1-6 ##B 6.B)-3 #1B )4B55) #1B )4B55)

1B 4'B56. )B -4B66) 1B #)B363

Total ?ndistributed Operatin7 (2penses TOTAK!

0 2 )

#1B--B1#.

-)B5'B#.1 16B)1B33# 11B63B'3.


E"penses ;Rs.< ;Koss< ;Rs.< +B 6.B 53B)'1 +4B ')B643

:ncome After 8ndistributed Operating E"penses Rent# Property Ta"es H :nsurance :ncome 1efore :nterest# ?epreciation H Amortisation and :ncome Ta" :nterest E"pense :ncome 1efore ?epreciation# H Amortisation and :ncome Ta" ?epreciation H Amortisation Cain on !ale of Property :ncome 1efore :ncome Ta" :ncome Ta"

'B34B63B'3)
6et Revenue ;Rs.<

)#B43B4)5 5 3-B#-B4))
(ost of !ales ;Rs.< E"penses ;Rs.<

6et :ncome
Pa yro ll H Re lat ed Ot

30B 3-B')5 +-B 4-B6-# 2,B 56B#54 +0B .3B'6) EEEEEEEEE-B3'' /0B )3B3#3 +.B 65B-)6

.,#,3#,32

:n the :ncome !tatement# !chedule refers to departmental income statement# e.g. !chedule + is the income statement of Rooms ?ivision

Rooms ?ivision :ncome !tatement


This rooms division income statement is made by finance department of the hotel and not by Front Office (ash. The figures are obtained from various sources. They are as follo s

Fi7ures
Salaries and Wa7es (mployees Bene!its <ommission <ontract <leanin7 ,uest Transportation Daundry Dinen Operatin7 Supplies Reservation (2penses /!ees !or <RS0 Ot"er Operatin7 (2penses

Sources
*ttendance <ard ; Payroll re!erred Payroll Records Travel *7ency Billin7 Supplier Invoice Invoice Housekeepin7 Supplier Invoice Supplier Invoice Reservation System Invoice Supplier Invoice /equipment rental etc$0

7ith the helpofRoom ?ivision :ncome !tatement# the Front Office Manager determines the action plan in terms of revenue and services.

Indian Hotel
Rooms Division Statement o! Income For t"e year ended$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ Revenue *llo ance =et Revenue (2penses Salaries % Wa7es (mployees Bene!its ,otal -ayroll . Relate" Ex enses Ot"er (2penses <able ; Satellite Television <ommissions <omplementary ,uest Services <ontract Services ,uest Relocation ,uest Transportation Daundry % Dry <leanin7 Dinen Operatin7 Supplies Reservations Telecommunications Trainin7 ?ni!orms Ot"er ,otal Other Ex enses ,otal Ex enses Departmental Income /Doss0 4B4.B5#5 'B#'B-110/01/212 '6B#66 11B33. 'B-'6 )6B43#B'-# -4B.1. -'B-5. #'B#-6 #B''B166 -6B564 #'B--' 3B#'' 16B36. .B#66 -B3)B-43 13/41/150 Rs$ -.B'4B-41 <urrent Period Rs$ 1#B'-B55# .-B1). 16B36B).1

Room ?ivision 1udget Reports


Cenerally finance division of the hotel ma'es monthly budget report to compare actual revenue and e"penses ith the budgeted figure. This report helps Front Office Managerto ta'e corrective action if any# for effective operation of the department. This report sho s monthly as ell as year to date variances for all budgeted items. This also represent both amount and percentage variances. Lariance may be categorised as Favourable and 8nfavourable Lariance. Follo ing is an e"ample of Rooms ?ivision 1udget Report.

Indian Hotel
Bud7et Report + Rooms Division For EanuaryB '661
*ctual Bud7et Reven$e Room Sales *llo ances =et Revenue Ex enses Salaries % Wa7es (mployee Bene!its Total Payroll % Related (2penses Ot"er (2penses <ommissions <ontract Services ,uest Transportation Daundry % Dry <leanin7 Dinen Operatin7 Supplies Reservations ?ni!orms Ot"er Operatin7 (2penses Total Ot"er (2penses ,otal Ex enses 7e artmental In!ome

8ariances % Rs$

Rs$ #.B1'B-66 -B)36 #.B.4B6)6 'B64B'16 -6B#.6 'B-4B-#6 -B)36 5B'#6 #3B.66 #'B#46 #5B616 #5B)36 #3B)-6 )B3-6 .B#.6 #B63B5'6 )B.1/220 Rs. 16/01/500

Rs$ #-B.6B466 )B666 #-B-3B466 #B44B'#6 .3B5#6 'B-1B#'6 3B.'6 4B3)6 #'B666 5B3.6 #4B3.6 #)B-46 '6B#'6 'B5'6 1B3'6 55B556 2/40/110 Rs. 11/01/080

Rs$ #B##B166 /#B)360 #B#6B')6 /'6B6.60 #3B316 /'B'560 )B#.6 /-460 /.B.660 /'B-)60 /)#60 /.B4560 'B346 /4'60 #B.36 /3B5)60
'10/660(

3$15 /-.$130 3$1# /#6$1.0 )6$13 /6$5)0 -#$45 /.$.60 /-.$4)0 /'-$5'0 /#$1.0 /-)$150 #)$4' /'4$640 ')$)1 /3$5)0 /'$5.0 5$64

Rs. 1/00/010

Favourable 8ariance Revenue (2penses


A#,&A9 EX#EE7S :&7;E, :&7;E, EX#EE7S A#,&A9

?n!avourable 8ariance
:&7;E, EX#EE7S A#,&A9 A#,&A9 EX#EE7S :&7;E,

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