Overbooking Strategy

The Walking Dread:

Why Indonesian hotels need an overbooking strategy

Written by: Tracy Dong, Lead Advisor, APAC, IDeaS Revenue Solutions

No Hotel In Indonesia Likes Having To Walk A Guest Due To An Overbooking Situation – Just Ask Any Front Desk Manager Who Has To Deal With Irate Customers When They Have Been Informed The Room They Booked Is Not Available, And They Have To Be Relocated.

What is the expected transient wash for each market segment? What are the booking windows for transient business? Hotels could use revenue management systems to analyse booking pace by market segment at various days to arrival. When is the hotel’s group cut-off and how well are group blocks managed? Is the hotel consistently managing groups by days-to-arrival and adjusting overbooking accordingly?

Walking a paying guest can be hard and unpleasant, so why do hotels need to overbook in the first place?

Consider this all-too-common scenario: A high-profile international trade fair is occurring in your city and your hotel has been sold out for more than two weeks. There’s not a single room left within a 10-kilometre radius.

Your forecasted revenue numbers for the week are significantly outperforming the actual bookings from the same period the year before. However, as the morning reports rolled in, your hotel only finished at 96% occupancy opening day which led to a revenue underperformance compared to your forecast. Rather than trying to figure out who’s to blame for this situation, hoteliers should instead see the situation as an opportunity to enhance the property’s systems and technology and rethink their overbooking strategy.

From a revenue management point of view, to maximise occupancy and revenue during peak demand dates, overbooking can be a necessary evil driven by several internal and external factors.

Internal Factors: No-Show: Paying guests may turn out as a no-show on the arrival day due to various reasons, which leads to empty rooms at a hotel Cancellation/Wash: Prior to arrival day, hotels typically have cancellations from transient bookings or group wash. If hotels are not able to pick up bookings to compensate cancellations or wash, it will impact on hotel revenues Extension/Contraction: Besides no-shows and cancellations, revenue managers should track in-house guests’ extensions, especially for hotels with a high portion of longstay guests. Although in-house guests’ extensions are subject to availability, it has to be taken in consideration when setting up overbooking scenarios

External factors: If a hotel has a sister property to relocate their walked guests to based on a pre-negotiated rate, then they can be a lot more flexible with their overbooking strategy.

However, if a hotel has to relocate guests to a non-affiliated or competitor hotel, then management has to be very careful. The overbooking risks in this situation are compounded when the market demand is high, such as during a major event and guest relocation price, or ‘cost of walk,’ is prohibitively expensive.

The practice of overbooking weaves art into science to calculate risks against their rewards, and today’s advanced revenue management systems help hoteliers analyse and produce decisions for a customised overbooking strategy.

Below are some considerations and insights hotel revenue management systems can provide to maximise strategic overbooking opportunities:

How is the hotel’s room type overbooking strategy established? Are they deploying room type overbooking strategies only when they’re expected to sell out? Deploying room type overbooking strategies over nonsold-out periods can be an effective way to maximise property yield in both need and busy periods.

Is the hotel’s room type overbooking strategy static all year long, or is it deploying different strategies by dayof-week or season?

Hoteliers need to understand overbooking is a long-term strategy that requires constant review. By analysing overbooking numbers months in advance, hotels can better compensate for expected group wash with high-paying transient guests.

Consider a hotel that only overbooks their base room type all year long. Assume this hotel has a significant rainy season and struggles to find business to fill their weekends. However, during this period, they do remain consistently busy with corporate travel during the week.

How can they adjust their overbooking strategy to accommodate for this distinct day-of-week need?

Perhaps their base room type is open for generous overbooking on the weekends (keeping their hotel as competitively priced as possible), but a conservative strategy is employed during the weekdays to encourage bookings into upgraded room types. If the new strategy helps a hotel book just five upgraded room types every weekday at a $75 upcharge,

they’ve pulled in over an additional $80k in annual revenue by selling the same amount of rooms. And at the end of the day, it’s critical that hoteliers focus on their net maximum revenue.

The aggressiveness of any overbooking strategy needs to be balanced with an understanding that net revenue for a night can be impacted by high or frequent walking of guests.

Sometimes, it may be a better net revenue result to be one or two rooms short of a sell-out than to pay for a number of replacement rooms in another hotel for previously booked guests.

It’s also extremely important to evaluate how well the hotel’s front desk handles guest recovery.

One of the greatest opportunities afforded to any front desk is the ability to take a guest problem (such as being walked to another hotel) and convert it into guest loyalty.

To do this, though, hoteliers need to ensure that hotel staff are properly supported and trained to accommodate walking guests. Guest recovery in ‘walking’ situations should also be supported by amenities; complimentary room upgrades or no-walk / VIP statuses for future reservations.

In today’s world, it’s not enough to book a reservation for every room a hotel has to sell – and not overbooking can result in lost revenue and missed occupancy at the property’s highest price-point where profits can be maximised.

When overbooking is established strategically through analytics, hotels can better understand the wash and cancellation patterns of their market segments. This means hotels can then plan ahead to overbook with exceptional revenue results. ***

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Blue Diamond Almond Breeze Brings a Fresh Beverage Brand to Heritage Thai consumers

Bangkok – Heritage Group, a Thai leading healthy food and beverage manufacturer is launching Blue Diamond Almond Breeze, #1 almond milk brand worldwide, in Thailand. The delicious, dairy-free alternative to milk is being produced under license from Blue Diamond Growers, an agricultural cooperative based in California, USA that specializes in almonds. Blue Diamond Almond Breeze will be produced locally in Thailand for the Thai market and will be available in several varieties including Original, Unsweetened, Vanilla and Chocolate.

Heritage Group Vice President, Vittavat Phonphaisan is confident that Blue Diamond Almond Breeze will be a success. “Blue Diamond Almonds is a recognized brand in Thailand and especially in today’s market, consumers are interested in quality ingredients and manufacturer they can trust. The Blue Diamond Almonds label is renowned for its almond products and Heritage is proud to be producing Blue Diamond Almond Breeze in Thailand.”

Blue Diamond Almond Breeze is lactose-free and soy-free with no cholesterol, no saturated fats and is low in calories and fat while high in calcium and vitamin E.

Mark Jansen, President and CEO for Blue Diamond Growers believes that Blue Diamond Almond Breeze is a perfect product for the Thai market. “There is a growing interest amongst Thai consumers to follow a specific diet, such as low or no dairy but not compromise on taste. From our market research, we found that Thai people enjoy Almond Breeze’s light, refreshing taste with subtle almond note adds to its appeal not simply as an alternative to dairy but as a delicious drink in its own right.”

For more information, please visit https://www.facebook.com/ bluediamondthailand or tel 02-621-6126-7

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Nihiwatu Partners with The Legian

to Offer an Exclusive “The Best of Both Islands” Experience

12th May 2017 – Nihiwatu, the ultimate resort getaway located on Sumba Island, awarded #1 Hotel in the World by Travel + Leisure in 2016, has partnered with The Legian Bali to offer travellers a unique stay package – “The Best of the Both Islands”, perfect for experiencing the beauty of two distinctive Indonesian islands.

As members of Leading Hotels of the World, Nihiwatu and The Legian are delighted to extend a special combined stay package for guests.

With Bali as the main hub and transit airport for Sumba Island, a hidden gem in the Indonesian archipelago, guests can enjoy the best of both islands with the new exclusive island-to-island package.

Beginning the journey of exploration at The Legian on the vibrant island of Bali before continuing to Nihiwatu and experiencing the Edge of Wildness.

With a minimum of a two nights’ stay in The Legian Bali and three nights’ at Nihiwatu, guests will experience complimentary airport transfers and room upgrades at both resorts. The package is valid with a consecutive stay period at The Legian Bali and Nihiwatu, Sumba until 31st March 2018. Blackout dates are 1st July to 31st August 2017 and 16th December 2017 to 7th January 2018.

The inclusive benefits of “The Best of the Both Islands” package include:

The Legian Bali • Welcome drink • Daily breakfast • Daily newspaper and seasonal fruits • Daily afternoon tea • All snacks, soft drinks, beers, juices • from the minibar • Usage of Spa, health club, morning yoga class and bicycles • Wi-Fi access

Nihiwatu • Breakfast, lunch, dinner, snacks and all non-alcoholic drinks • Mini bar including beers & spirits • Laundry • Scheduled excursions and activities on land • Activities by Sea • Scheduled group yoga and meditation classes • Wi-Fi access

An additional layover option at The Legian Bali is also available to guests of this package at a supplementary price of USD 250 net per couple. The layover package provides guests an equal amount of credit at The Legian Bali to complete the journey. With The Legian Bali being located 30-minutes away from Ngurah Rai International Airport, its location provides an excellent base to relax and unwind before a flight home.Garuda Indonesia currently operates a daily flight from Bali’s Ngurah Rai International Airport to Sumba Island (50 minutes).

ABOUT NIHIWATU The experience of Nihiwatu is one of unregulated freedom, understated luxury and unforgettable memories. The resort, located on the island of Sumba in Eastern Indonesia, 400km east of Bali, is an outpost to world-class surfing, the best sport fishing in Indonesia, the most magnificent sunset horseback rides on the resorts 2.5km private beach, or hiking through breath-taking waterfalls and ancient villages; to a Spa Safari where a 90 minute hike through rice paddies brings you to Nihi Oka, a cluster of private Bales nestled between two pristine beaches, leaving you in the hands of assigned therapists indulging you in unlimited treatments of your choice.

Nihiwatu was born of a vision to protect and preserve the unique culture of Sumba and –empower the local communities to support themselves and their families. The resort is proud to employ over 90% local Sumbanese, a team that hold a genuine spirit of hospitality.

Stories of the heart, character and soul of Nihiwatu reached long-time friends, American brandbuilding entrepreneur Chris Burch and prolific South African-born hotelier, James McBride in 2011, who together began a transformation of the resort in 2012. Guests are encouraged to visit the local villages and the many Sumba Foundation (www.sumbafoundation.org) clinics, schools and communal farms that have resulted through the support from the Foundation, founded by the resort in 2001. In 2015, Nihiwatu has announced that it has joined The Leading Hotels of the World, Ltd., an uncommon collection of authentic and distinct luxury hotels. The philanthropic alliance will provide the award-winning resort access to The Leading Hotels of the World global network to further The Sumba Foundation efforts. www.nihiwatu.com

ABOUT THE LEGIAN BALI The Legian Bali is a dual concept hotel that sets a new standard for resort living with its contemporary approach to traditional Indonesian design. Set in landscaped tropical gardens with Indonesian sculptures and indigenous art, the resort features 67 all-suites that are among the most spacious in Bali, along with 14 private pool villas set in the neighboring compound of The Club, and the luxurious sea front, two-story Beach House; all designed to exude the feel of high-end private residences.

The Club in particular, features a more premium level of indulgence, with dedicated personal butler services trained by consultants from The Guild of Professional English Butlers.

The Legian Bali is a mere 25-minute drive from the Ngurah Rai International Airport and is situated on Bali’s southern coast, along Seminyak Beach and within walking distance of some of Bali’s trendiest shopping and nightlife; raising the bar on luxury amidst the serenity of the island’s natural beauty. www.thelegianbali.com

RESERVATIONS Nihiwatu Resort | T: (+62) 361 757149 reservations@nihi.com

The Legian Bali | T: (+62) 361 730622 reservation@thelegianbali.com Booking Code: LEGNIH