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  • #16
    Third Party rooms can be turned on and off like a spigot. The reality of that situation is that the people in control of the inventory selling it, like the sold situation described above, should be managing it correctly. I know what I would have done, seeing the spike in selling, I would have limited the flow of rooms on the third parties to capture demand through more revenue generating channels (i.e. Call Center/ GDS/ Travel Agency). Only if we were getting closer and it seems those avenue where not producing, would I even imagine opening up to bookings from a third party source. Selling a hotel is more complex than it used to be, as with so many variable, as well as sources of potential business, it has to be watched closely.

    If you see a low rate, on a night that you sold out, consider several factors. When was the reservation made, and at that time, was the hotel sold out. As well, if your rates are lower, there may be a mandatory minimum inventory that your third party contract requires. Also, depending where the source is coming from, the revenue manager may have considered maximization of overall revenue acheivable through a blended rate and length of stay, if the demand in one place was so great, it served to sell out the hotel. Finally, a reservation with a longer stay would entice me to sell, as long as I was making a good profit it, even at a third party rate.

    To sell on the day of arrival is good as you describe, but to be honest, it is a practice best served if you have a historical no show factor above 3-5%. As well, this is also compensated for by overbooking, to increase revenue by no show profit. I know it is great to make a fat rate on a same day walk in who is desperate for rooms, but unless you have a great ROI on this gamble, more and more hotels truly wont risk it unless you have a no show factor you can count on, or have a random happenstance where they pop up.

    Hotels operate with a perishable goods mentality. If you consider the factor of total rooms in a month and a per unit price on that value, you are looking an overall percentage growth if you have more sellouts at a blended rate. This is something banks love to see as it represents "in the month" growth that they feel will justify reports, when paying a mortgage. Also it helps cashflow for the month to keep salaries flowing. All I mean is that the way we used to sell is not the way we sell now. Some old school owners seem to be lost in the worry of day to day profits and not seeing an overarching picture and the benefits they can reap from it if they truly embrace it.

    Thanks for letting me ramble...I look forward to your thoughts as well, I love different perspectives on this topic as any and all opinions are a learning experience for me.
    Last edited by mircea12345; 06-15-2010, 07:04 PM. Reason: misspelling

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    • #17
      Ok, let me say something about the "could have sold at $120 but did sell at $40".

      If you are down to one room, and its midnight, and someone comes up to the desk and says they want a room, then walks out because the rate is high, what do you do? You probably won't get another person walking through the door when its so late at night.

      So you didn't sell out because you wanted to sell at a high rate. But in posting that availability on orbitz, it sold in minutes and you DID sell out.

      Better to sell out completely than to have one room empty because you kept insisting that you COULD have sold it at a higher rate.

      Also, especially in places that are destination markets, there's always a no-show factor. The amount of no-show varies, but it exists. Most hotels in these places over book by at least a few rooms because of that no-show factor and walk people to other hotels if they have. Very very rarely are there no hotels nearby for the hotel you booked at to walk overbooked rooms to.

      Its about maximizing revenue. Yes, hotels want repeat guests, but in busy areas it doesn't really matter as much because the hotel will sell out from all over the world anyway.

      As crucible said, third party contracts often require that you have a certain number of rooms open for their use that forces you to walk other guests if the third party contract produces.

      Meaning that... if the third party contract requires that you allow them to use 10 rooms, but you only have 9 rooms left, you are required by contract to give them those 10 rooms even if other guests paid more money. Breach of contract is a very big deal and can cost alot more lost revenue than just walking a single guest to another hotel. Losing one guest paying $120 a night, is alot less than losing thousands of dollars (or more) because you didn't honor the contract created with the third party.

      As a front desk clerk, I didn't understand any of this and it aggravated the daylights out of me when we had to walk a guest or something. But now that I've been in the industry for around 8 years, I understand alot more than I did about how hotels work and they make money.

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