Transient vs. Group Booking

Transient vs. Group Booking

“How many rooms do we still have available on those three days?” asked Josephine Cico, the manager of the 300-room Holiday Inn Capitol Plaza hotel.

“52 left on Thursday and Friday, 50 Saturday,” replied Erick, the hotel’s front office manager.

“And my client wants to add 40 more rooms to her block each of those days. They have already picked up the 150 rooms we previously blocked for them each day, and registrations for their meeting are still coming in. The client text messaged me with the request about an hour ago,” said Elizabeth, the hotel’s DOSM.

“So we have the rooms. What’s the problem?” asked Josephine.

“The problem is their rate. The group rate we gave them was $129.00, but I can sell all of the remaining rooms to transients at $199.99,” said Erick.

“But,” protested Elizabeth, “we all agreed to that discount rate last year when I bid for the group. We bid it at $129.00 because they were bringing us 450 room nights. They picked up all the room nights they promised. I think we should give them the extra rooms they want.”

“That’s right. I did agree with our original bid and I had no problem with that,” said Erick, “but if we can’t get rack rate for our unsold rooms on a weekend we know we can sell out, when will we ever get it? Your group missed their estimate. That’s not our fault. Let them buy their additional rooms at rack. It’s continually doing things like adding rooms to discounted group blocks on sell-out dates that keep us from hitting our monthly RevPAR targets and making our bonuses. And I’m tired of missing my bonus!”

1. What are some possible reasons you believe would motivate Elizabeth to support granting her group’s request?
2. Mathematically, it should be easy for Erick to prove the superior short-term RevPAR impact of his position. What, if any, impact would those same mathematical results have on the likelihood of future sales to Elizabeth’s group?
3. Assume you were Josephine. How important would data management be to your decision to increase or to maintain at present levels the size of this group’s room block? How important would insight be to the process? Would you favor adding rooms to the group’s block at the discounted rate?