Pearson New International Edition International pcl tp indd 1

REVENUE MANAGEMENT
ahead of time. Hotels that agree to walk rates (rates
they will charge each other in the event rooms are
needed) should be spelled out in writing. Allowable
rates to be charged and the duration of the agree-
ment should be clearly indicated. In most cases,
walk agreements of this type are written subject to
room availability. That is, one hotel is not obligated
to take guests that are walked from another hotel if
the FOM to receive the walked guests does not
think it is in his or her best interest to do so.
Whether Danielle should accept the guests
walked from Tim’s hotel on this day may depend on
their past history, the frequency with which walk
rates are requested, and the difference between
the negotiated walk rate and the rack rate Danielle
would receive for her remaining rooms. Danielle’s
response to Tim’s request may be, “Tim, I have
good news and bad news. I do have the rooms, but
unfortunately, because we are forecasting a sellout,
I am not able to honor a discount rate.”
Tim may decide to secure rooms from another
hotel. Danielle will sell her rooms without the
guests from Tim. As he phones other hotels, Tim is
likely to find few low-cost options available,
because most hotels are also likely to be full. This
is truly one of those cases where Danielle, as an
effective FOM, must know when to diplomatically
say no to discounted rates.