CHAPTER 5

Individual and Group Reservations

Objectives and Student Goals:

Student Objectives for this chapter are:
• understand the essential information required to complete a reservation as well as an
awareness of the nonessential information some chains additionally ask for on their
reservations.
• develop an ability to contrast the differences between manual reservation systems and
electronic reservation systems with regard to the storage and alteration of existing
reservations. Discuss the potential customer service and marketing benefits associated
with automated guest history databases.
• create an understanding of basic reservations vocabulary terms and industry jargon.
• develop a practical working model of the group business cycle. Explain the
distinctions between group reservations and individual reservations. Recount the
financial benefits to the hotel from selling to both the convention and tour and travel
segments. Discuss why some hotels refuse to cater to such a lucrative market.

At the conclusion of this chapter, the student should be able to:

• list the essential information required for a reservation.
• identify at least five pieces of nonessential data
• detail at least five common reservation codes a front desk might use to identify types
of guests and/or reservations
• describe the group business reservations cycle.

Chapter Summary:
Chapter 5 continues the unit entitled "The Reservations Process," by examining the steps
through which individual and group reservations are successfully taken. The basic sales
information contained in a reservation remains constant across the industry. All hotels
need to know the "essential information" such as the customer's date of arrival, name,
requested room type, etc. In addition, many reservations computer systems prompt the
reservationist to ask "nonessential information" like estimated time of arrival, discounts,
or smoking preference, as a means of better understanding guest needs and rounding out
the marketing database.

Once created, the reservation can be electronically recalled for easy alteration,
cancellation, or statistical forecasting. On the specific date when a future reservation
becomes today's arrival, a new set of challenges face the front office. Promises and
assurances made at the time of reservation (a nice view or close proximity to an exit, for
example) must be carried through by the front office staff.

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Customer information, collected during the normal flow of the room reservation and
arrival, can be stored in guest history databases, manipulated, and used to improve
marketing and guest service. Guest history databases improve the most basic component
of guest service, namely recognition. Frequent guests to a property or even to other
properties within the chain can quickly make future reservations because much of the
information requested (company affiliation, credit card number, address, etc.) remains the
same time and again.

Chapter 5 also addresses group reservations and their methodologies. Group business,
usually divided into conventions or tour and travel, represents a highly profitable market
for many hotels. There are three primary reasons why hotels seek this market. Group
business represents a large percentage of the entire lodging industry; certain economies of
scale can be realized when dealing with large room reservation blocks, group arrivals,
and departures; and group delegates generally spend more in the hotel and on related
services than individual travellers.

Most communities have a convention and visitors’ bureau that acts on behalf of all
member hotels to bid for conventions that are too large to be held at just one property. It
is not uncommon for such bids to be made 5, 10, or more years in advance. Quoting rates
and blocking an accurate number of rooms for such a long lead-time can be a tricky
process for many hotels.

Key Concepts of the Chapter:

Convention Reservations. Convention reservations (and to a lesser degree tour and
travel reservations) are quite different from individual reservations. There is significant
lead-time, sometimes as much as ten years or more, with convention reservations.
Another difference is size; many groups are too large to be housed at just one property.
In such cases, the city's convention and visitors' bureau (CVB) or Housing Bureau may
become involved as they identify additional hotels to serve as overflow facilities. Even
room prices are quoted differently (spread rates or flat rates) when dealing with group
reservations.

Essential Reservation Data. A great deal of information is exchanged between the

customer and the hotel or CRO in a two or three-minute reservation call. Most of this
information is essential to the successful acceptance of the reservation. There would be
no reservation without first knowing the guest’s name, dates of arrival and departure,
type of room requested, rate, and method of guarantee, to name a few.

Group Rooms Contribution. Marketing towards group rooms business allows a hotel
to take advantage of certain economies of scale associated with selling larger blocks of
rooms. Such benefits include the significant savings derived from reserving and
delivering rooms in large group blocks. In addition, group business represents a growing
segment of the lodging industry. Add the fact that convention delegates, staying on

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corporate expense accounts usually spend more in other hotel departments than
individual travellers.

Negotiating Convention Rates. The hotel room rate is generally the largest expense
item for each convention delegate. As such, there is a direct correlation between
favourable room rates and higher convention attendance. Therefore, hotels must negotiate
with convention association executives to develop a rate, which is fair to all parties. This
is especially difficult when you factor in the long lead time (up to 5 or 10 years)
experienced with certain conventions, the number of comp rooms requested by the group,
and the impact of food and beverage functions on the room rate, etc.

Nonessential Reservation Data. Once the basic reservation questions have been asked
and answered, some reservations centres ask additional nonessential questions. The
guest’s estimated time of arrival, smoking preference, view, discounts, and other special
requests are examples of nonessential reservation data that may be asked of the guest,
time permitting.

Reservation Coding. Each reservation has its own unique set of circumstances. Some
are commissionable to a travel agent; others have advance deposits, a few request a
special view or lower floor, etc. By identifying a reservations characteristic with a preset
coding scheme, the reservationist and front desk clerk are more readily alerted to
important differences among arriving guest reservations.

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Chapter 5 Instructors’ Manual Overhead #1

Exhibit 5-7 (p.153)

An out of town convention delegate spends more than 4 times as much as an in town
delegate, and the average stay of a convention delegate in Canada is 3.01 nights.
International conventions have higher event expenditures per delegate ($888.14) than
provincial, territorial or local conventions ($200.76). The average expenditure per
delegate per convention for all conventions in Canada is $824.70. This exhibit shows
how the average delegate spent their travel dollars. (Source: 1998 Convention Income
Survey Report)

Professional Vocabulary:
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Advance Deposits. The quality of the reservation depends on the method by which it has
been guaranteed. Advance deposit reservations, where guests prepay the first room night
by sending in a check or other payment, are the highest quality of all reservations. Next
in order of quality are guaranteed reservations (guaranteed to either a major credit card or
a corporate account). Nonguaranteed reservations are the lowest quality reservations.

Confirmation. A guaranteed reservation is usually provided with a confirmation number

that uniquely identifies that specific reservation. Some confirmation numbers are
systematically devised so the date of arrival, the hotel location, and the clerk's name are
all visible to the trained eye. Other confirmations are merely computer-generated random
numbers. Another use for the term confirmation is when referring to a postcard or slip
mailed to the guest immediately following the reservation request.

Convention and Visitor Bureaus. Found in most large- and mid-sized cities, CVBs are
quasi-governmental agencies usually funded, in part, by local lodging taxes,
memberships, and all three levels of government. The CVB represents the city in
numerous group rooms bids each year. Once a group rooms contract has been negotiated,
the CVB’s Housing Bureau steps in to systematically distribute group room reservations
to the various member hotels.

Guest History Databases. One of the ancillary benefits of an automated reservations

system is increased data storage capability. Individual properties as well as centralized
chains have begun to provide enhanced customer service as a by-product of their growing
guest databases. Knowing a guest’s birthday, room type preference, and even favourite
breakfast can prove valuable marketing tools for increasing repeat visits.

IT Package. The inclusive tour (IT) package is the hotel's marketing attempt at
attracting tour business. IT packages combine a number of hotel services into one
complete discounted package. The guest might receive lodging, several meals, a round or
two of golf, a few cocktails, and ground transportation for one set price. In fact, the IT
package price (including all the various services) may actually be less than the hotel's
standard rack rate for room only. Although tour operators may offer similarly priced
packages, hotels prefer to sell IT packages whenever possible because with IT packages
the breakage (savings from guests who fail to take advantage of all items in the package)
accrues to the hotel.

Late Arrival. One popular piece of nonessential reservation information is the guest's
estimated time of arrival (ETA). A guest who is planning to arrive late (usually due to a
late flight schedule) should ask for this information to be included on the reservation. In
this way, the guest is assured that the room will not be sold in the late hours of the night.
Without such a designation on the reservation, it is possible that a well-meaning front
desk clerk might actually sell the reserved room to another customer thinking that the
reservation is not going to arrive.

Answers To End-of-Chapter Questions:

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1. As a courtesy and convenience, corporate reservations are allowed to guarantee arrival
against their corporate account. However, such reservations are not really “guaranteed” if
the hotel is timid about charging the no-show for fear of retaliation from the corporate
account. Therefore, the cost and incidence of no-shows should be discussed with the
corporate account each year when a new rate is being negotiated. Since better rates can
be promised to those accounts who avoid no-shows, the responsibility of preventing no-
shows becomes as much the corporation’s responsibility as the hotel’s.

2. Automated reservations systems help eliminate a number of common manual errors.

For example, most reservations systems will not accept a reservation that leaves blank
certain essential data. Yet in a manual property, it is conceivable that the reservationist
might forget to ask the guest’s name or arrival date, etc. In addition, those properties
using a guest history database gain even more efficiency. Frequent guests need merely
tell the reservationist their name and the date of arrival, and the system will complete
most other fields (address, credit card number, corporate name, room type and rate
preference, etc.).

3. The fastest reservation is not always the best reservation. A slower, friendlier
approach to reservations has been demonstrated to improve customer service perceptions,
selected room rates, and reservation booking rates. The computer tends to add an
impersonal element between the guest and the reservationist. Training reservationists to
remember the person on the other end of the telephone—some centres even stick pictures
of guests on res terminals— goes a long way towards improving the overall reservations
experience.

4. Group guests may be quoted spread or flat rates. Spread rates seem fairer to the guest,
because they can choose which level of rate they wish to spend and understand that the
more rate paid the nicer the accommodation. It is difficult for the guest to understand how
the same flat rate can get an upgraded accommodation for one delegate while another
merely receives a standard room. Granted, flat rates are easier for the house to manage,
but when managers factor in the loss of goodwill from the lack of understanding by
guests as to why one rate generates substantially different accommodations, they may
find the ease of booking is not worth the guest dissatisfaction.

5. Research on CVBs will generate a lot of information to support the delivery of this
service without a fee to member hotels. First the industry standard is for CVBs to
represent the hotels in a given community without fee. It is in essence, a service designed
to improve the amount of revenues generated by the lodging tax. If the CVB is doing a
good job, the lodging tax will be higher. In addition, more visits to the community
translate into more local jobs. (In Australia, they find that one job is created for every 250
domestic visits or 32 international visits). Finally, the multiplier effect should be
discussed. For every dollar spent at a member hotel, the dollar multiplies throughout the
community.

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6. Some convention or group guests accidentally slip through the reservations process as
regular leisure or corporate guests rather than members of the in-house group. Other
guests purposely refrain from telling the reservationist they are affiliated with the group.
In some cases it benefits the guest—especially when they book early enough to take
advantage of deep leisure discounts or even IT packages. Other times it harms the
guest—if they book late in the cycle, there may be no available rooms to regular guests
even as the group room block remains open. Or, the corporate rate may be far higher
than the negotiated group rate.

Answers to Case Study Questions:

1. It depends. In this actual case the GM wrote a letter to all service clubs stating that the
hotel appreciated their business, but needed to concentrate on attracting out of town
overnight conference business. The letter suggested that rooms booked for organizations
would only be guaranteed 3 months out from the date of the function and that already
booked dates may be bumped for out of town overnight business. Needless to say the
letter was not well received and the following year all of the groups moved to competitor
hotels. Even though contracts were signed with these groups no legal challenges
evolved. The hotel did go on to become quite successful with corporate overnight
bookings and within 5 years turned a $500,000.00 loss into a $250,000.00 profit.

2. As described above the move created some anger in the clubs memberships toward the
hotel. Interestingly enough the GM found that prior to the cancellation when any of the
club members had a function that was profitable such as a wedding they had it at another
hotel. The problem was that the clubs had negotiated low rates for meals and the chef
was quite cost conscious. Therefore the meals served to the service clubs were average at
best. Members booked their profitable functions elsewhere because their impression was
that the food was not that good at the host hotel. The GM also instructed the chef to
serve the remaining clubs excellent meals and the hotel had to absorb the loss and high
food cost, but at least “word-of –mouth” advertising became positive.

3. The consequences of not cancelling these groups would have been the financial ruin of
the hotel.

4. The GM will ultimately be judged on the profitability of the hotel. In this case the
GM did get the approval of the ownership group before making the decision, as he
correctly expected some negative backlash and indeed some calls were made and letters
sent to the ownership group by the irate clubs.

5. Other things that might be offered are barbeques, theme nights (e.g. casino nights). At
this particular hotel a local theatre group was hired to put on a themed dinner for the
conferences creating themes such as mediaeval feasts, Capone’s birthday, Harbour High
and others. These themes were a great success with the groups and by having a different
theme each year it kept the groups returning to the same hotel for several years in a row.
Golfing was also included in the packages.

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