Tool: Overbooking Ratio Step by Step

Size: px

Start display at page:

Download "Tool: Overbooking Ratio Step by Step"

Edgar Garrison
6 years ago
Views:

1 Tool: Overbooking Ratio Step by Step Use this guide to find the overbooking ratio for your hotel and to create an overbooking policy. 1. Calculate the overbooking ratio Collect the following data: ADR Variable cost (rooms) Cost to walk a guest (estimated) Calculate the cost of an empty room: ADR - Variable cost = Cost of an empty room To find the overbooking ratio, just divide the cost of walking a guest by the sum of the cost of walking a guest plus the cost of an empty room: Example 1 Walk (Walk + Empty room) = Overbooking ratio ADR = $250 Variable cost = $50 Cost to walk a guest (estimated) = $500 The cost of an empty room is: The overbooking ratio is: ADR - Variable cost = $250 - $50 = $200 Walk (Walk + Empty room) = $500/$700 = Find the distribution of no-shows Assemble your no-show data for some number of dates, and count the occurrences of various numbers of no-shows. Then find the no-show rates. 1

Example 2 Here are the no-show totals for 30 Sundays. In this collection of data, the maximum number of no-shows is four. Now consider how often the different numbers of no-shows occur.

2 Example 2 Here are the no-show totals for 30 Sundays. In this collection of data, the maximum number of no-shows is four. Now consider how often the different numbers of no-shows occur. For example, how many dates had zero no-shows? How many dates had one no-show? Here are the no-show totals: There are six occurrences of zero no-shows. There are six occurrences of one no-show. There are nine occurrences of two no-shows. There are six occurrences of three no-shows. There are three occurrences of four no-shows. To work with these values, let's record them as rates. Find the rate at which your hotel experienced zero no-shows by dividing the number of zero no-shows by the number of Sunday data points we have. Rate of zero no-shows = the number of zero no-shows/30 = 6/30 =.2 When you calculate the rates for all no-show amounts, you get the values in the following table. 2

(Note that these rates can be converted easily to percentages; just multiply by 100.) 3. Calculate the cumulative probabilities Restate the rates as cumulative probabilities.

3 (Note that these rates can be converted easily to percentages; just multiply by 100.) 3. Calculate the cumulative probabilities Restate the rates as cumulative probabilities. This can be done using the following steps: Rate of zero or more no-shows = sum of all rates = 1 Rate of one or more no-shows = rate of one on-show + rate of two no-shows + rate of three no-shows rate of [maximum] no-shows = Rate of [maximum or more no-shows = Example 3 Restate the rates in Example 2 as cumulative probabilities. 3

4 Note that the rate of zero or more no-shows will always be 1.0! It is impossible to have fewer than zero no-shows. Finally, note that the last cumulative probability in this sequence should be the same as the simple probability of the maximum number of no-shows. For example, in the table above, the maximum number of no-shows is four and the probability of four or more noshows is is also the simple probability of four no-shows. If these probabilities were not the same, you would know you d made a math mistake. Example 4 Another way of calculating a cumulative rate is to use subtraction. For example, the rate of one or more no-shows is found easily by subtracting the rate of one no-show from the cumulative rate of zero or more no-shows: Here s how the rates in Example 3 would be calculated using this method: 4

4. Use the overbooking ratio to get the recommended overbooking number Now use the information you've assembled to determine an overbooking policy.

5 4. Use the overbooking ratio to get the recommended overbooking number Now use the information you've assembled to determine an overbooking policy. Refer to the Table of Cumulative No-Shows to find the cumulative probability that is either the same or larger than the overbooking ratio. Then select the corresponding number of noshows and set your policy to overbook by that amount. Example 5 In Example 1 we calculated an overbooking ratio of To develop an overbooking policy using this ratio, compare it to the cumulative rates in the table above. Start at the last row of the Cumulative Rate column and, moving up one row at a time, look for a rate that is either the same as or larger than this number. The first rate (starting from the bottom) that is the same as or larger than 0.71 is 0.8. This 0.8 corresponds to one no-show, so you should overbook by one. The overbooking value is highlighted in the version of the Cumulative Rate table provided below. 5

Note that the steepest 8 direction pour point model slope in direction 64 is: 10.0

Note that the steepest 8 direction pour point model slope in direction 64 is: 10.0 GIS in Water Resources Exercise #3 Solution Part 1. 1.1 Hand Calculations (i) The standard ESRI surface slope function Grid size 10 m Diagonal distance= 14.142 m 47.5 48 47.7 50.6 48.3 dz/dx= -0.125 45.1