Inventory management on the forthcoming football Grand Final night The front-office manager enthusiastically reports about the benefits of the new data analysis software integrated into the property management system (PMS). She goes on to explain that the careful review of the report of the past 5 years data identified average no-shows 10% for Standard rooms on that Grand Final night. Given this information and the high unconstrained demand exceeding the capacity for the standard room this room type that night, the front-office team was highly confident when engaging in the common overbooking practice for standard rooms. She also noted that this would be the second time in the hotel's history to engage in overbooking. The first time was an unintentional overbooking, while this time constitutes an intentional overbooking. To show the impact on the current bookings, she attached an extract of the current PMS (see below). However, the team agrees to weigh up all possible outcomes in case all guests of the overbooked rooms will show. The Hilton London Metropole hotel has an arrangement with the neighboring hotel to pay $120 per night for accepting walked guests, Note: The cost per occupied room is $15/ room night Current PMS Extract before the Football Grand Final Room Type Rack Rate Available rooms 50 100 Nights Reserved (with overbooking) 6 10 Superior Parlour Suite City Skyline View Deluxe $240.00 $170.00 $155.00 222 Standard Total Room Nights 200 350 256 To conduct a comprehensive financial analysis of the strategic effectiveness of the overbooking approach: A. Compare the room-related revenue, ADR, occupancy rate, and RevPar for the Hilton London Metropole hotel under the two scenarios i. Scenario 1: With overbooking, due to border closure the reservations experience an unexpected no-show rate of 13.51% for standard rooms (30 rooms) and 10% for City Skyline View Delux (1 room) (5 marks) ii. Scenario 2: With overbooking in place, all guests showed and the excess guests must be walked to the neighbouring hotel. (4 marks) B. What is the percentage change of the total revenue? (1 mark) C. Under consideration of the additional costs and benefits in each scenario, without calculations explain how the GOPPAR would be affected. (4 marks) D. Comment on the effectiveness of the overbooking training in respect to the goals of revenue maximisation and optimisation and discuss other factors which need to be considered. [ Ensure the address the measures relevant to support your conclusion.) (4 marks) E. As the RM is genuinely concerned about overbooking, she asks you to explain an alternative inventory management strategy upon arrival to deal with the overbooking situation as it unfolds when all guests show. (2 marks) Inventory management on the forthcoming football Grand Final night The front-office manager enthusiastically reports about the benefits of the new data analysis software integrated into the property management system (PMS). She goes on to explain that the careful review of the report of the past 5 years data identified average no-shows 10% for Standard rooms on that Grand Final night. Given this information and the high unconstrained demand exceeding the capacity for the standard room this room type that night, the front-office team was highly confident when engaging in the common overbooking practice for standard rooms. She also noted that this would be the second time in the hotel's history to engage in overbooking. The first time was an unintentional overbooking, while this time constitutes an intentional overbooking. To show the impact on the current bookings, she attached an extract of the current PMS (see below). However, the team agrees to weigh up all possible outcomes in case all guests of the overbooked rooms will show. The Hilton London Metropole hotel has an arrangement with the neighboring hotel to pay $120 per night for accepting walked guests, Note: The cost per occupied room is $15/ room night Current PMS Extract before the Football Grand Final Room Type Rack Rate Available rooms 50 100 Nights Reserved (with overbooking) 6 10 Superior Parlour Suite City Skyline View Deluxe $240.00 $170.00 $155.00 222 Standard Total Room Nights 200 350 256 To conduct a comprehensive financial analysis of the strategic effectiveness of the overbooking approach: A. Compare the room-related revenue, ADR, occupancy rate, and RevPar for the Hilton London Metropole hotel under the two scenarios i. Scenario 1: With overbooking, due to border closure the reservations experience an unexpected no-show rate of 13.51% for standard rooms (30 rooms) and 10% for City Skyline View Delux (1 room) (5 marks) ii. Scenario 2: With overbooking in place, all guests showed and the excess guests must be walked to the neighbouring hotel. (4 marks) B. What is the percentage change of the total revenue? (1 mark) C. Under consideration of the additional costs and benefits in each scenario, without calculations explain how the GOPPAR would be affected. (4 marks) D. Comment on the effectiveness of the overbooking training in respect to the goals of revenue maximisation and optimisation and discuss other factors which need to be considered. [ Ensure the address the measures relevant to support your conclusion.) (4 marks) E. As the RM is genuinely concerned about overbooking, she asks you to explain an alternative inventory management strategy upon arrival to deal with the overbooking situation as it unfolds when all guests show. (2 marks)
