Front OfficeThe Baywood Hotel Elena, Christine and Neli
IntroductionThe Baywood Hotel is located in Cape Town and issituated adjacent to the Victoria & Alfred Waterfront.Popularity of the Waterfront is the 16 million visitorsto the centre every year.The High season is from January to FebruaryThe Low season is from April to JulyThe Hotel has 670 rooms and good facilities.
Introduction cont.Calculate and decide on our rack rates 1. The methods to determine room rates 2. Competitive analysis 3. Room rates sheet for each categoryProperty management system (PMS) for the frontdesk 1. Critical comparison between 2 leading PMS 2.Advantages and benefits of the chosen system
Establishing Room Rates The front office manager shall assign to each room category a rack rate. In accordance, front office employees are expected to sell rooms at rack unless a guest qualifies for an alternative room rate. While pricing rooms, the hotel shall keep in mind that rate should be between a minimum: Minimum (Hurdle Rate) < Room Rate < Maximum (RackRate) Cost Structure < Room Rate < Competition Structure
Pricing StrategiesCost ApproachRule-of-Thumb ApproachHubbart Formula ApproachMarket Condition Approach
Cost ApproachThis Approach’s starting Point is on finding the Per Roomoccupied daily Direct and Indirect ExpensesThe biggest drawback of the Cost Approach pricing is thatit does not take into consideration how much Customersare actually willing to pay for the Hotel Services, and howother Hotels are actually charging for their Rooms.
Rule-of-Thumb ApproachRoom rate shall be $ 1 for each $ 1,000 of constructionand furnishing cost per room.Fails to take into consideration the inflation term, thecontribution of other facilities and services towards thehotel’s desired profitability.
Hubbart Formula ApproachThis very approach considers operating costs,desired profits, and expected number of rooms sold. Requires accurate forecasting, high cost, and verytime consuming.
Market Condition ApproachManagement shall lookat comparable hotels inthe geographical market,see what they arecharging for the sameproduct, and “chargeonly what the market willaccept”.
Market Condition ApproachSafest way not to price our self out of themarket.Guarantee an average number of guests.It does not take into consideration the value ofthe property.There is always subjectivity in coming up withsets of criteria against which hotel rooms can becompared and measured for similarity.
CompetitorsCape Royale Luxury Hotel Hilton Cape Town City Centre
2010 Pricing analysis High season50004700440041003800350032002900260023002000 Radison Blue Hilton Taj Cape Town
2010 Pricing analysis Low season41003800350032002900260023002000 Radison Blue Hilton Taj Cape Town
The Baywood Hotel’s High Season Rack Rates Room Type Price Standard Room 4000 ZAR Standard Suite 4250 ZAR Executive Suite 4500 ZAR Superior Suite 4850 ZAR Table Moutain Presidental Suite 5000 ZAR Baywood Presidental Suite 5200 ZAR
The Baywood Hotel’s Low Season Rack Rates Room Type Price Standard Room 3700 ZAR Superior Suite 4000 ZAR Standard Suite 3950 ZAR Executive Suite 4200 ZARTable Moutain Presidental Suite 4700 ZAR Baywood Presidental Suite 4900 ZAR
Corporate Rate Room Type Price (10-15%) Standard Room 3600 3420 ZAR Superior Suite 3870 3676 ZAR Standard Suite 3825 3633 ZAR Executive Suite 4050 3848 ZARTable Moutain Presidental Suite 4500 4275 ZAR Baywood Presidental Suite 4680 4445 ZAR
Airline Rates Room Type Price Standard Room 2400 ZAR Superior Suite 2910 ZAR Standard Suite 2550 ZAR Executive Suite 2700 ZARTable Moutain Presidental Suite Baywood Presidental Suite
Group Rates Room Type Price Standard Room 2800 ZAR Superior Suite 3395 ZAR Standard Suite 2975 ZAR Executive Suite 3150 ZARTable Moutain Presidental Suite Baywood Presidental Suite
Weekend Rate Room Type Price Standard Room 4600 ZAR Superior Suite 5577 ZAR Standard Suite 4887 ZAR Executive Suite 5175 ZARTable Moutain Presidental Suite 5750 ZAR Baywood Presidental Suite 5980 ZAR
Wedding package Room Type Price Standard Room 2400 ZAR Superior Suite 2910 ZAR Standard Suite 2550 ZAR Executive Suite 2700 ZARTable Moutain Presidental Suite 3000 ZAR Baywood Presidental Suite 3120 ZAR
Wedding packageSuperior SuiteBreakfast & Dinner includedSpa Centre treatment10% discount for the ShoppingCake and ChampagnePrice : 7500 ZAR10 % discount for room service and lunch inthe restaurant
Family package Room Type Price (10%) Standard Room 3600 ZAR Superior Suite 3870 ZAR Standard Suite 3825 ZAR Executive Suite 4050 ZARTable Moutain Presidental Suite 4500 ZAR Baywood Presidental Suite 4680 ZAR
Family package ( 2 days)Standard SuiteBreakfast & DinnerSpa centre treatment10% discount for the Shopping1 Family Ticket to the cinemaPrice : 5600 ZAR
Revenue PolicySelling the right product to the right guest at the right rate at the right time. If less then- Discount 75 % 10% 65% 20% 50% 30%
OperaScalable to suit the size of the Baywood HotelDelivers fast, accurate and online informationRuns on two operating systems: Microsoft Windows & IBMAIXOffers the ability to use a single database for informationsharing over multiple applicationsCompletely downloadable
Advantages Opera FidelioMore common Integrated, configurable, context sensitive help systemIntegrated with otherfunctionality Function keys with windowsfully configurable to anyspecific requirement User-definable screens and report menusComplex system which can doeverything in one package Report generatorcomplete set of features formaking and updating different Multiple installation parameterkinds of customers Unlimited security levelsExtensive set of features forrate management and revenueforecasting
Disadvantages Opera FidelioMore complicated as If proper locking is notthere are many different done, anyone will besoftware with different able to access and evenfunctions make changes to various files During night audit, the terminals are shut down for 2 hours.
ReferencesBoella M., Goss-Turner St. (2009). Human Resource Management inthe Hospitality Industry. An Introduction Guide. GB, Oxford: ElsevierLtd.Booking.com. (2011). Cape Town hotels. [online] Available from:http://booking.com [Accessed on November 2 2011].Cyber Cape Town. 2011. Cape Grace Hotel, Cape Town, V&AWaterfront, Accommodation South Africa. [online] Available from:http://CyberCapeTown.com [Accessed on November 2 2011].Jagels, M. G. (2007). Hospitality Management Accounting. 9th Ed.Hoboken, New Jersey: John Wiley & Sons, Inc.Kasavana, M. L. and Brooks, R. M. (2009). Managing Front OfficeOperations. 8th Ed. Lansing, Michigan: American Hotel & LodgingEducation Institute.Opera Property Management System. http://www.micros-retail.eu/en/sitecore/Content/micros-fidelio/Home/Solutions/Products-N-Z/OPERA-Property-Management-System.aspx [Accessed onNovember 1 2011]