Pearson New International Edition International pcl tp indd 1

MODERN FRONT OFFICE ISSUES AND TACTICS
But We Were Supposed to Be Busy!
Forecasting room demand can be complicated, especially when no historical data exist on
the event driving demand. A good example are presidential nominating conventions. They
are held every four years, but not in the same city.
In August 2004, the Democrats held their convention in Boston. As soon as the deci-
sion was announced, hotels in the city and suburban areas assumed increases in demand,
and their telephones began to ring with reservation requests.
However, in mid-July 2004, the Boston Globe reported that the room demand anticipated
by suburban hotels never materialized. For each night of the convention, one hotel had
blocked 328 of its 367 rooms for convention guests. Hotel managers subsequently learned that
convention organizers would need only 50 rooms per night, potentially costing the hotel more
than $350,000 in lost revenue. Another suburban hotel had originally expected that the Secret
Service would require as many as 100 of its 180 rooms. One month before the meeting, hotel
managers learned that the agents would be staying at a hotel closer to the city. Even worse for
some hotels, many convention attendees decided to stay in the area only three nights, rather
than the five or six nights the hotels had expected. Room demand was there—or was it?
Adapted from Talcott, S. 2004. The Boston Globe, July 14.
In times of minimal demand, the management of occupancy is more closely tied
to pricing and sales efforts than to the individual decisions made by revenue man-
agers. In times of strong demand and potential sellouts, however, their decision mak-
ing is extremely important. Many revenue managers believe that, in times of strong
demand, they must oversell to maximize the chances of a sellout. This technique, per-
haps the most well-known but least understood method of managing occupancy, is
known as overbooking the hotel.