Reservation in the hotel industry is defined as ‘blocking a particular type of guest room (e.g., single room, double room, deluxe room, executive room, suite, etc.), for a definite duration of time (i.e., number of days of stay), for a particular guest’.
TYPES OF RESERVATION
- Tentative Reservation:
- Waitlisted Reservation
- Confirmed Reservation
It is a reservation request that a prospective guest makes on a tentative basis for particular stay dates. The hotel holds the room for the guest till a cutoff date, by which the guest should confirm the reservation. Upon confirmation from the guest the hotel changes the tentative reservation to a confirmed reservation, otherwise it cancels the tentative reservation, and updates its records accordingly.
Once a guest confirms a reservation request, the hotel blocks a room for specified stay dates and sends a written confirmation of the same to the guest. A confirmed reservation can be of the following two types:
- Guaranteed reservation
- Non-guaranteed reservation
A guaranteed reservation is a confirmation that the hotel will hold the reserved room for the guest and not release it to any other guest even if the guest doesn’t arrive on time. This requires the guest to make an advance payment (part or full, depending on the hotel policy and the hotel occupancy for the requested stay dates), irrespective of whether the guest avails the reservation or not, unless the reservation is cancelled according to the hotel’s cancellation procedures.The guaranteed reservation can be obtained through one of the following ways:
- Credit Card
- Contractual agreement- Corporate, Travel agencies/Tour operators
- Advance Deposit
A guaranteed reservation requires the payment of the room rent or a specified amount in advance, known as pre-payment. As the hotel holds the room for the guest even after the cancellation hours, pre-payment protects the hotel from any loss of revenue in case of a last moment cancellation or a no-show.
- Pre-payment can be made by sending demand draft or depositing cash at the hotel.
- Cash deposit is the most preferred mode of accepting guaranteed reservation
- Contractual agreement: A hotel may have a contract with an individual or a company for providing guaranteed reservations. According to such a contract, the hotel confirms the reservation for the individual or a person referred by the company on a guaranteed basis, and the person or the company agrees to pay for the reservation, even in the case of a no-show. Hotels may have contractual agreement with the following:
- Travel agencies/Tour operator: Travel Agencies/Tour Operators: Travel agencies and tour operators make bulk purchases of rooms at a relatively low contracted price. They guarantee the hotel a minimum number of room nights in a particular period and agree to pay the room charges even if they are unable to fill the number of rooms as per their agreement with the hotel.
- Corporate Houses: In this case, a company or a corporate body may enter into a contract with a hotel, whereby the company guarantees payment for its employees or sponsored guests and accepts the financial responsibilities for any no-shows.
When a guest confirms her reservation at a hotel but does not guarantee it with an advance deposit, it is treated as a non-guaranteed reservation. In this type of reservation, the hotel agrees to hold the room for the guest till the cancellation hour, unless the guest informs the hotel about her late arrival.
The cancellation hour is the time fixed by a hotel after which a non-guaranteed reservation stands cancelled and the room is released to a walk-in guest—it is generally 6 p.m.
Wait listed Reservation
A reservation is wait listed when the requested category of room is not available for the requested dates. The waitlisted reservation is confirmed when the hotel receives a cancellation request for a room of the same category. This way the hotel ensures that its rooms will not remain vacant in case of cancellations. The hotel does not guarantee a room for waitlisted reservations; it is understood that the guest will be assigned a room only in the case of a cancellation or a no show.
Modes of Reservation
The process of reservation begins with an inquiry. A guest may contact a hotel for reservation either through:
- Written Mode
- Verbal Mode
When a reservation request reaches the hotel in writing, the mode is classified as a written mode of reservation.The advantages of the written mode of reservations are that they are clear, unambiguous, and provide a written record for the hotel, which can be referred to in case of any miscommunication or confusion. The correspondence with the guest is filed for future reference.The various written mode for reservation request are as under:
Reservation requests may also be made through oral communication known as verbal mode of reservation requestThe advantage of oral communication is that it is fast, convenient, and generates immediate response or feedback; and one can get the complete information and clear any doubts through oral communication. The disadvantage is that it does not provide a permanent record.The various modes of verbal reservation request are as under:
- In person
Sources of Reservation
A hotel receives reservation requests from different sources like:
- Direct reservation
- Central reservation system
- Inter-sell agencies
- Global distribution system
- Corporate bodies
- Government sector
- Hotel websites
A reservation request that a hotel receives directly from an individual or a group without a mediator is known as a direct reservation. The direct reservation request is processed by the reservation manger and his team of reservation assistant in large hotel. In case of a small hotel the same may be processed even by receptionist
Central Reservation System
Central reservation system (CRS) is a computer-based reservation system, which enables guests to make reservations in any of the participating lodging properties at any destination in a single call. The central reservation office typically deals with direct guests, travel agents, corporate bookers, etc. by means of toll-free telephone numbers. The CRS is of two types:
- Affiliated system: In affiliated reservation systems, all the participating hotel units belong to the same chain or group, like Welcome net by Welcome group of Hotels, Holidex by Holiday Inn Hotels, Image by Hyatt Hotels, and ITT by Sheraton Hotels.
- Non-affiliated system: Non-affiliated system is a subscription-based system, designed to connect independent or non-chain properties, like the Leading Hotels of the World (LHW), Small Luxury Hotels of the World (SLH). This enables non-chain properties to enjoy the benefits of CRS.
Global Distribution System
Global distribution system (GDS) is a worldwide computerized reservation network, which is used as a single point of access for reserving hotel rooms, airline seats, rental cars, and other travel-related items by travel agents, online reservation sites, and large corporations. GDS provides a bundle of products and services to the prospective user across geographical boundaries.Some examples of GDS are:
- Amadeus IT
- Galileo CRS
An intersell agency is an agency that deals with many products such as hotel reservations, car rentals, travel arrangements, tour operations, airline reservations, railway bookings, etc.
Hotels also receive bookings from companies (FMCGs, pharmaceutical, etc.), non-governmental organizations (such as Care, Oxfam, Red Cross, WHO, etc.), and institutions (which may be educational, financial, banking, etc.).
Hotels receive bookings from government sectors such as public sector undertakings, embassies, and consulates.
A hotel’s website is another potential source for receiving reservations. The website contains a link for reservation requests. By clicking the link, guests can make a hotel reservation as per their requirements from the comforts of their house/office/cyber cafe.
Processing Reservation Request
Every hotel has its own standard operating procedure (SOP) to deal with a reservation request from a guest. The standard procedure of responding to a guest’s reservation request is first receiving the reservation inquiries, then determining room availability, and then accepting or denying the request for reservation.
Receiving Reservation: The request for a room reservation may reach a hotel from any one of the various modes discussed earlier.
Determining Room: The following information will help to determine the availability of the room requested by the guest:
- Date and time of arrival.
- Date and time of departure.
- Number and type of rooms required.
- Number of persons in the party.
Accepting or Denying Reservation: Once the reservation agent has established the availability of the room for the guest, she will either accept or deny the reservation request and conclude the processing of reservation request.
Amending Reservation: When guests with confirmed reservations change their travel plans, they convey the same to the hotel. This change–in the type of reservation (guaranteed or non-guaranteed), date of arrival, duration of stay, type of room, etc.–is termed as amendment. In case of amendments, the hotel has to check the availability of rooms again as per the fresh details given by the guest. The changes are recorded in a specialized form known as the reservation cancellation/amendment form
Cancellation of Reservation: The cancellation of a reservation occurs when a guest with a confirmed reservation informs the hotel about her intention to cancel the reservation. As cancellation might lead to the loss of room revenue, hotels discourage cancellations by imposing retention charges
The reservation department compiles many reports for the use of all departments. Some of the most commonly used reservation reports include:
- Reservation transaction report: The reservation transaction report is the summary of the daily activities of the reservation department.
- Commission agent report: This report includes the amount payable by the hotel to the different commission agents
- Turn away or refusal report: At times hotels have to ‘turn away’ guests due to unavailability of rooms.
- Revenue forecast report: The revenue forecast report is a projection of the volume of business that the hotel will be generating in a specified duration.
- Expected arrival list: The list of names and surnames, along with the respective room types, of the guests who are expected to arrive the next day.
- Stayover list: The list of names and surnames, along with the respective room numbers, of the guests who are expected to continue to occupy their rooms the next day.
- Expected departure list: The list of names and surnames, along with the respective room numbers, of the guests who are expected to depart the next day.
Importance of Reservation
Reservation is important for guest as well as for the hotel too.
Importance of Reservation for the Hotel: The reservation process is of vital importance to a hotel as it:
- Gives the first impression of the hotel to guests.
- Sells the main product of a hotel (accommodation).
- Generates customers for other departments.
- Provides important management information to other departments.
Importance of Reservation for the Guest: A confirmed reservation has the following advantages for the guest:
- Assurance about accommodation:
- Choice in the type of accommodation
- Type of room or suite as per the guest’s Preference of floor, view, and personal choice or low-floor room; sea view/pool view/garden view/monument view room; smoking/non-smoking room; etc.
- Receive correspondence at the hotel address
There is no specific number of people to be considered as a group. Normally at least ten persons or more should amount of business. So, a special discount is normally allowed for them. The group leader should be given special facilities; sometime his discount depends on the number of persons of the group and the length of stay. While handling group reservation, we should keep in mind finally at the last moment if the reservation is cancelled, the hotel will lose the normal business. So, considering the reliability of the company/should be taken or not. While confirming the group reservation, it should be noted down that the party has to give at least 15 days advance condition should be there saying that equivalent to one night’s stay of the group will be charged. But this charge can be exempted considering
- Number of persons of the group.
- The volume of business you did and you are expecting to do in the future.
- Relation between the party and the hotel.
Group reservations can involve a variety of contacts: guests, meeting planners, convention and visitors bureaus, tour operators, and travel agents. Group reservations typically involve intermediary agents and require special handling. A group’s representative deals with the hotel’s sales or reservations department. If enough rooms are available for the group, an agreed-upon number of guestrooms, called a block, is set aside for the group’s members. Group members may be given a special reservation identification code or reservation web address to use to reserve their rooms within the group’s assigned block. As group members reserve rooms, the rooms in the group block are moved from “blocked” status to “booked” status. Unbooked rooms in the group block may be released to the hotel’s available rooms inventory at a predetermined date—the cut-off date.
A contract must be created specifying the exact number of rooms required, room rates, group arrival and departure dates, special, early arrival and late departure dates, and cut-off date. The reservations manager should double-check to be sure that the rooms are available before confirming a room block. If the group will take away rooms from transient business, the reservations manager should notify the sales or general manager of this non-group displacement. The reservations manager should check the group’s history with the hotel (if available) before finalizing the block; it may be possible to reduce a room block, based on the group’s history (termed a “wash down” or a “wash”).
The reservations manager must monitor the room availability in the block as reservations come in and adjust the room block as needed. A “definite group” has signed a sales contract; a “tentative group” has been sent a contract, but the signed contract has not been returned; the reservations manager must make sure a group is not allowed to remain in the “tentative” status for too long, jeopardizing other business. Some groups allow attendees to make reservations directly with the hotel, while others do not; reservations agents must honor whatever arrangements the hotel has made with the group in question
Know the convention group’s profile
- Review all relevant hotel reservation policies with the convention planner
- Inform reservations agents that the convention has been scheduled, and go over the group’s reservation process
- Produce regular reports to update the status of the convention block
- Generate an up-to-date list of registrants at regular intervals
- Correct errors found by the convention planner immediately
- Confirm reservations from attendees as soon as they are received
- Return rooms to the group’s block when cancellations are received and inform the convention planner
- Distribute a final rooming list to the convention planner and all hotel staff involved with the convention
- Large conventions sometimes require the use of rooms at more than one hotel
- In these cases, the room requirements at the various hotels often are coordinated by a separate convention and visitor’s bureau
- Convention and visitors bureaus may use special software to help monitor and coordinate the room reservations in the various hotels in the city/local area
- Specify the number and types of rooms to be held in a tour group block, including rooms for drivers and guides
- Clearly state a cut-off date
- On or before the cut-off date, the tour operator should supply the hotel with a guarantee on the number of rooms the group will need, or a final rooming list if that is available
- Specify the date by which the tour operator will provide a final rooming list (if this date is different from the cut-off date)
- Monitor the amount of advance deposits required and their due date
- Note on the reservation record any services and amenities the property will provide as part of the group package
- Include on the reservation record the name and telephone number of the tour group’s representative or agent
- Note any special group arrangements (early arrival, baggage handling, registration, and check-out procedures)
Overbooking is a situation when the total number of rooms reserved for a certain period of time exceeds the total number of rooms available for sale for the same period. In other words it is the number of additional reservations need to achieve 100% occupancy. Overbooking for hotels is a revenue management strategy that helps to maximize the total capacity and increase the Room revenue. But on the other hand overbooking for guests means waiting and inconvenience that result in their dissatisfaction with the services. Below statistical and historical data should be stored and processed by the reservation manager or revenue manager to calculate optimum overbooking levels.
Total number of rooms available.
- Confirmed reservations vs no-shows based on historical data.
- Credit Card / Guaranteed reservations vs no-shows based on historical data.
- Expected cancellations.
- Predicted stay overs and predicted under stays.
- Predicted Walk-in guests.
- Room type wise overbooking levels.
Advantages of Overbooking:
- Helps the hotel to achieve 100% occupancy by hedging against guests who do not arrive or cancel their reservations.
- Maximize expected revenue.
- Optimizes the operations efficiency by increasing profitability.
- Long term revenue and profit increases
- Overbooking is a Low risk and the oldest most commonly used method to increase profitability.
- Widely used strategy in hotel revenue management.
- When overbooking done based on past statistics then chances of miscalculation decreases.
- Compensation are normally cheaper than keeping a room empty.
- Rules of refusing are predetermined and also acceptable.
- Because hotel rooms are considered as perishable products, overbooking yields considerable impact on hotels revenue.
- Disadvantages of Overbooking:
- Do not justify the guest expectations which result to bad experience and reputation.
- Additional financial loss for example guest staying at the hotel might have used other hotel facilities.
- Guests can be negatively affected by it and therefore it is not good long-term strategy for hotels.
- Negative reviews on internet eg. Social media, Tripadvisor, lodginglists.com and OTA’s reviews.
- Requires professionally trained and experienced staff to reduce risk of miscalculation.
- Guests need to be walked to other hotels in case predicted overbooking is more than actual availability.
- Reservations must be closely monitored to control overbooking.
- Loss of room and other potential revenue.
- Decreased customer loyalty.
- Loss of hotel reputation.
- Potential risk of denied services.
- Lost future business from walked guest.
- Negative word-of-mouth publicity.
- If communicating compensation and process is not appropriate there is a risk of significant financial loss.
Potential Reservation Problems:
While processing reservations, reservation clerks might be faced with lot of problems. Below is a tentative categorization of 4 main common problems that might be encountered:
Errors in a reservation record:
- Record a wrong arrival or departure date
- Misspell the guest’s name or reverse it
- Reserve for the caller instead of the guest
Misunderstandings due to industry jargon:
- Confirmed versus guaranteed reservation
- Double room versus 2 beds
- Connecting rooms versus adjacent rooms
Miscommunications with external reservation systems:
- Book a guest in the wrong hotel
- Book a guest in the wrong city [ex: Pasadena, California versus Pasadena, Texas]
Central reservation system failures:
- Fail to update central reservation system concerning room availability or to communicate rate changes in real time
- Delays in communicating reservation requests
- Equipment used may become technologically obsolete or inoperable