As you will soonsee, however, this reaction may be shortsighted and lead to more foregone profits than your intuition might lead you to expect. When approached from an annual revenue or occupancy perspective, theimpacts seem minor. Annual occupancy rate would increase by approxi mately 2/10 of 1 percent. That level of increase might not even make its wayonto an occupancy report. Also, annual revenue would increase by approxi mately ¼ of a percent. While no revenue increase might be too small to be of interest, I suspect it’s hardly at a level that would generate much interest. Although we don’t present the calculations here, the impact of the incremental revenue on the hotel’s profitability is much larger. Indeed, if the hotel’s profits were 5 percent ofgross revenue and if 80 percent of the incremental room revenue from selling these threeadditional rooms on the 30 soldout nights goes to the bottom line, the hotel’s annualprofits might increase by more than 4 percent! Now that probably would attract theattention of many hotel executives. When more aggressive booking policies are adopted, a hotel also needs toadopt policies and procedures that enable staff to deal effectively with guests
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