Forecasting Room Availability:
                Room availability is the actual or projected number of rooms not yet occupied or reserved on a given date. Because rooms continually turn over, is almost impossible to compute the exact number that will be unoccupied. A room availability report is an estimate base on information about past reservations and occupancy.
                The following information is required to prepare an accurate room availability report.
Room Inventory
Previously Night Occupancy
Under Stay
Over Stay
Early arrivals
Room Inventory
The total number of rooms that could theoretically be sold on a given date is called rooms that could theoretically be sold on a given date is called room inventory. The inventory does not include rooms that are out of order for maintenance or redecoration or rooms that are currently under construction.
Previously Night Occupancy:
The total numbers of rooms were occupied by the guest on the previous night.
A departure is a guest who is scheduled to check out on the current date.
The report must take into considerable that the total numbers of rooms for which reservations have been received for the current date.
Under Stay:
Guest who indicated their intention to remain inn the hotel but checked out before their scheduled departure date is called under stay.
Over Stay:
Guest who remains in the hotel beyond the scheduled departure date is called over stay.
Reservation may be canceled for many different reasons. Bad weather and labour strikes almost always create high cancellation percentage. The average rate of a typical hotel is about 2% of reservation.
Besides cancellation there is a small percentage of people who make reservations and never check – in. The average number show rate is about 5% of reservations.
Early arrivals:
There is also a possibility that a guest will check in prior to the estimated arrival date.
                                The process of forecasting room availability generally relies on historical occupies data as well as business already committed. Historical data is used to take some of the guess work out of forecasting.  To facilitate forecasting the following daily occupy data should be collected.
Number of expected room arrivals:
Based on existing reservations and historical trends for few reservations and on cancellations prior to the arrival date. 
Number of expected room walk-ins:
Based on historical records
Number of room stay over:
 (rooms occupied on previous night that will continue to be occupied for the night in                                               Question)
Based on existing reservation
Number of expected room no-shows:
Based on historical records

Number expected rooms under stays:
(checkouts occurring before expected departure date)
                                Based on historical data
Number of expected room check out:
Based on existing reservation
Number of expected rooms over stays:
(Check out occurring after the originally reserved departure date) 
          Based on historical records.

                Some hotels with a very high double occupancy percentage may be as concerned with guest counts.  For example, an all inclusive resort with a large amount of business from vacationing couples may want to forecast guest as well as room count activity.  Conventional hotels may often have the same concerns.
                Chances are good that much of information is available in reports, documents and other data sources at the property.  The hotels daily reports will likely be invaluable in this research these reports should summarized and stored in a way (that is) easily accessible.
                Over all these data are important to room availability forecasting.  Since they are used in calculating various daily operating ratios that help determine the number of available rooms for sale.  Ratios are a mathematical expression is a relationship between two numbers that is determined by dividing one by the other.  Most statistical ratios that applied to front office are percentage of no-shows, walk-in, over stays, under stays.  Occupancy history data from the fictitious property are used to illustrate the calculation of each front office ratio.  Manager should look for consistency in ratios.  Consistency may roughly the same ratio every day or identifiable patterns without consistency, forecasting ratios and projecting operating performance very difficult.
Percentage of Walk – in:
                PERCENTAGE OF WALK-INS

% of Walk-ins =   Number of room walk-ins x100                                                                                                                                                                                      Total number of rooms arrivals


                The percentage of walk-ins is calculated by dividing the number of rooms occupied by walk-ins for a period by the total number of rooms’ arrivals for the same period.

                Walk-ins guest occupy available rooms that are held for guests with reservations often, hotels can sell rooms to walk -ins guest at a higher rate, since these guests may have less opportunity to considered to alternate property.  Front desk agents are some times asked to show a guest groom to a walk-in guest which tends to be much more effective than trying to sell rooms over the telephone or through a website.  Walk-in guest sales help to improve both occupancy and room revenues.  However, from a planning perfective, it is generally considered better to have reservations in advance than to count on walk-in traffic.
                Note that other ratios can dramatically affect the walk-in ratio.  Example, if a hotel has 10 no-shows beyond forecast it may accept more walk-ins than usual to make up for the last business.  When this information is tracked for historical purposes, it is essential that the other ratios also be tracked to show how they affect one another.  One effective way to predict walk-ins is to know what is going on in the market place.  Their will be a better opportunity for walk-ins (and a higher rate).  If near by hotels are experiencing high demand.
Percentage of Over Stay:
  The over stays represent rooms occupied by guests who stays beyond their originally schedule departure dates.  Over stay guests may have arrived with guaranteed reservations or as walk-ins.  Over stays should not over confuse with over stays.  Stay over rooms are room occupied by guests who arrived to occupy a room before the day in question and whose scheduled departure date isn’t until after the day in question.
                The percentage of over stays is calculated by dividing the number of expected room check outs for the same period.  The number of expected room check out equals the number of actual check outs on the books minus under stays plus over stays stated another way, the numbers of expected room check outs is the number of  rooms shown by the front office system or the manual count of occupied room as due for departure.
                                                Number of over stays rooms
% of over stays      =______________________________________________ x 100                                                                                                                                   Room check outs – under stay rooms + over stays room

                               = 47 / 346 – 33 + 47 x 100
                               = 47 / 313 + 47 x 100
                               = 47 / 354 x 100
                               = 13.06 %
                To help regulate room over stays, front office agents are trained to verify an arriving guest’s departure date at check-in.  Such verification can be critical, especially when the hotel is at or near full occupancy and there are no provisions for over stay guests.  Over stay may also prove problematic when specific rooms have been blocked for arriving guest.  This is especially important for suit or rooms that may have special importance to an incoming guests.
Percentage of Under Stay:
Under stay represents rooms occupied by guest who checks out before their originally scheduled departure dates.  Under stays guests may have arrived at the hotel with guaranteed or non-guaranteed reservation or as walk-ins.
                The percentage of under stay is calculated by dividing the number of under stay rooms for a period by the total number of expected room check outs for the same period.
                                                   Numbers of under stay rooms
% of Under stay    =  ______________________________________________  x 100
                                    Room check outs – under stays rooms + over stay rooms
                              = 33 / 346 – 33 + 47 x 100
                              = 33 / 346 + 47 x 100
                              = 33 / 360 x 100
                              = 9.17 %
                Guest leaving before their stated departure date create empty rooms that typically are difficult to fill.  Thus, under stay rooms may represent permanently lost rooms revenue.  Over stay, on the other hand, are guest staying beyond their started departure date and may best room revenues.  When the hotel is not operating at full capacity, over stays result in additional, unexpected room revenues.  In an attempt to regulate under stay and over stay rooms, front office staff should.
Confirm or reconfirm each guest’s departure date at registration.  Some guests may already know of a change in plans, or a mistake may have been made in the original processing of the reservation.  The sooner data are corrected the grater the chance for improved planning.
Present an alternate guest room reservation form to a registered guest, explaining that an arriving guest holds a reservation for his/her assigned room.  A note card may be placed in the guest room a day before or the morning of the scheduled day of the registered guest departure.
Review group history, many groups, especially associations, hold large closing events, for the entire group on the last day of the meeting.  Guest may make reservation to improve attending the final event.   However changes in plans or other priorities may required guest’s to leave early.  While it is difficult for the hotel to hold guest to the number nights they reserved.  Managers may be better able to plan for early departure, based on the groups departure history.  Some hotels that have a lot of association business or a history of transient guests departing before their schedule day may apply the reservation deposit to the last of the night of the stay not the first night.
Contact potential over stay guests about their scheduled departure date to continue their intension to check out.  Room occupancy data should be examined each day, rooms with guest expected to check out should be flagged.  Guest who have not left by check out time should be contacted and asked about their departure and intensions.  This procedure permits airlines an early revised count of over stay and allow sufficient time to modify previous front office planning if necessary.

                Once relevant occupancy statistics has been gathered, the number of rooms available for sale on given date can be determine by the following formula.
Total Number of guest room
(-) Number of out order rooms
(-) Number of rooms reservation
(+) Number of  rooms reservations (x) % of  no show
(-)Number of rooms over stays
(=) Number of rooms available for sale
Note that this formula does not include walk-ins.  They are not included because the number of walk-ins a hotel can accept id determined by the number of rooms that remain available for sale.  If a hotel is full due to existing reservations, stay over and other factors.  It can’t accept walk ins.
                 As an example, consider the hotel is a 120 room property where on April 1st there are 3 out of order rooms and 55 stay over.  On that day, there are 42 guests with reservations scheduled to arrive since the percentage of no-show has been recently calculated at 18.06 % the front office manager calculates that as many as 8 guests with reservation may not arrive (42 x .1806=7.59, rounded to 8 ).  Based on historical data, 6 under stays and 15 over stays are also expected.  The number of rooms projected to be available for sale on April 1st can be determined as follows.
Total number of guest rooms                                         120
( - ) Number of out of order rooms                                     3
( - ) Number of stay over                                                  55
( - ) Number of room reservation                                      42
( + ) Number of room reservation X  Percentage of
                               No-show                                                  8
( + ) Number of rooms under stay                                          6
( - ) Number of rooms over stays                                          15

= Number of rooms available for sale                                   19 rooms
                The most important long terms planning function that front office perform is budgeting front office operations.  The hotels annual operations budget is a profit plan that addresses all revenue sources and expenses items.  Annual budgets are commonly divided into monthly plans that, is terms are divided into weekly ( some times daily ) plans.  These budget plans becomes standards against when management can evaluate the actual results of operations.
                In most hotel, room revenues are greater than food, beverage, banquet or any other revenues.  In addition, rooms division profits are usually greater than those of any other division.  There fore, an accurate rooms division budget is vital to creating the over all budget of the hotel.
                The budget planning process requires the closely coordinated efforts of all management personnel.  While the front office manager is responsible for room revenue forecast.  The accounting division staff will be counted on to supply department managers with statistical information process.  The accounting division staff is also responsible for co-ordinating the budget plans of individual department wide operations budget for top management’s review.  The General Manager and controller typically a budget report for approval by the hotels owners.  If the budget is not satisfactory, elements requiring charges may be written to the appropriate division managers for review and revision.
                The front office manager’s primary responsibility in budget planning are forecasting rooms revenue and estimating related expenses.  Rooms revenue is forecasted with input from the reservations manager’s, while expenses are estimated with input from all department manager’s in the rooms divisions.

                Historical financial information often serves as the foundation on which front office managers build rooms revenue forecasts.  One method of rooms revenue forecasting involves an analysis of rooms revenue from past periods.  Dollar and percentage differences are noted and the amount of rooms revenue for the budget years is predicted.
                For example,  the table shows yearly increases in net rooms revenue for the Emily Hotel.  For the years 2001 to 2004, the amount of rooms revenue increased from $1,000,000 to $1,331,000, reflecting a 10 percent yearly increase.  If future conditions appear to be similar to those the past, the rooms revenue for 2005 would be budgeted at $1,464,100 a 10 percent increase over the 2004 amount.
Rooms Revenue Summary for the Emily Hotel
                Another approach to forecasting rooms revenue bases the revenue projection on past room sales and average daily room rates.  The table presents rooms revenue statistics for the 120 room Bradley hotel from  
2001 to 2004.  An analysis of these statistics shows that occupancy percentage increased three percentage points from 2001 to 2002, one percentage point from 2002 to 2003, and one percentage point from 2003 to 2004.  Average daily room rates increased by $2, $2, and $3 respectively over the same periods.  If future conditions are assumed to be similar to those of the past, a rooms revenue forecast for 2005 may be based on a one percentage increase in occupancy percentage (to 76 percentage) and a $3 increase in the average daily room rate (to $60).  Given these projections, the following formula can be used to forecast rooms revenue for the year 2005 for the Bradley Hotel.
Rooms Revenue Statistics for the Bradley Hotel
Forecast rooms revenue = rooms available X occupancy percentage X Average daily rate
                                       = 43,800                X      .76%                       X          $60
                                       = $1,997,280
                The number of rooms available is calculated by multiplying the 120 rooms of the Bradley Hotel by the 365 days of the year.  This calculation assumes that all rooms will be available for sale each day of the year.  This will probably not be the case, but it is a reasonable starting point for projection.  Note also that at some point occupancy will not be able to grow any further, and may actually decline.  For example, new competitors may enter the market, taking occupancy away from the hotel.  Management needs to anticipate this shift and adjust its forecast to take into account the  increased competition.  The same logic applies to projecting rate growth.  Hotel management may decide to hold or even reduce rates to maintain or improve occupancy when new competitors enter the market.
                This simplified approach to forecast to forecasting rooms revenue is intended to illustrate the use of trend data in forecasting.  A more detailed approach would consider the variety of different rates corresponding to room types, guest profiles, days of the week, and seasonality of business.  These are just a few of the factors that may affect room revenue forecasting.

                Most expenses for front office operations are direct expenses in that they vary in direct proportion to rooms revenue.  Historical data can be used to calculate an approximate percentage of rooms revenue that each expense item may represent.  These percentage figures can then be applied to the total amount of forecasted rooms revenue, resulting in dollar estimates for each expenses category for the budget year.
                 Typical rooms division expenses are patrol and related expenses, guestroom laundry (terry and linen), guest supplies (bath amenities, toilet tissue), hotel merchandising (in-room guest directory and promotional brochures), travel agent commission and direct reservation expenses, and other expenses.  When these costs are totaled and divided by the number of occupied rooms, the cost per occupied room is determined.  The cost per occupied room is often expressed in dollars and as a percentage.  The table presents expense category statistics of the Bradley Hotel from 2001 to 2004, expressed as percentage of each year’s room’s revenue.  Based on this historical information and management’s current objectives for the budget year 2005, the percentage of rooms revenue for each expense category may be projected as follows, payroll and related expenses 17.6%, laundry, linen and terry, and guest supplies, 3.2%, commissions and reservation expenses, 2.8%, and other expenses, 4.7%.
Expenses category as percentage of Rooms Revenue for the Bradley Hotel

                Using these percentage figures and the expected rooms revenue calculated previously, the Bradley Hotel’s room division expenses for the budgeted year are estimated as follows.
Payroll and related expenses
$1,997,280 X .176 = $351,521.28
Laundry, linen, terry, and guest supplies
$1,997,280 X .028 = $63,912.96
Commissions and reservation expenses
$1,997,280 X .028 =$55,923.84
Other expenses
$1,997,280 X .047 =$93,872.16
                In this example, management should question why costs continue to rise as a percentage of revenue.  If costs continue to rise ( as a percentage, not in real dollars), profitability likely will be affected.  Therefore, one of the outcomes of the budget process will be to identify where costs are increasing as a percentage of revenue.  Then, management can analyze why these costs are increasing disproportionately with revenue and develop a plan to address the issue.
                Since most front office expenses vary proportionately with rooms revenue ( and therefore occupancy), another method of estimating these expenses is to estimate variable costs per room sold and then multiply these costs by the number of rooms expected to be sold.
                Departmental budget plans are commonly supported by detailed information gathered in the budget preparation process and recorded on worksheets and summary files.  These documents should be saved to provide an explanation of the reasoning behind the decisions made while preparing departmental budget plans.  Such records may help resolve issue that arise during the budget review.  These support documents may also provide valuable assistance in the preparation of future budget plans.
                If no historical data are available for budget planning, other sources of information can be used to develop a budget.  For example, corporate headquarters can often supply comparable budget information to its chain-affiliated properties.  Also, national accounting and consulting firms can usually provide supplemental data for the budget development process.
                Many hotels refine expected results of operations and revise operations budgets as they progress through the budget year.  Reforecast is normally suggested when actual operating results start to vary significantly from the operations budget.  Such variance may indicated that conditions have changed since the budget was first prepared.  While operating budgets are seldom changed once they are approved by a hotel’s management and owners, reforecast provides a more realistic picture of current operating conditions.


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