Marriot Forecasting Essay

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UVA-QA-0389 MARRIOTT ROOMS FORECASTING “A hotel room is a perishable good. If it is vacant for one night, the revenue is lost forever.” Linda Snow was commenting on the issue of capacity utilization in the hotel business. “On the other hand, the customer is king with us. We go to great pains to avoid telling a customer with a reservation at the front desk that we don’t have a room for him in the hotel.” As reservation manager of one of Marriott’s hotels, Snow faced this tradeoff constantly. To complicate the matter, customers often booked reservations and then failed to show, or cancelled reservations just before their expected arrival. In addition, some guests stayed over in the hotel extra days beyond their original reservation and others checked out early. A key aspect of dealing with the capacity-management problem was having a good forecast of how many rooms would be needed on any future date. It was Snow’s responsibility to prepare a forecast on Tuesday afternoon of the number of rooms that would be occupied each day of the next week (Saturday through Friday). This forecast was used by almost every department within the hotel for a variety of purposes; now she needed the forecast for a decision in her own department. Hamilton Hotel The Hamilton Hotel was a large downtown business hotel with 1,877 rooms and abundant meeting space for groups and conventions. It had been built and was operated by Marriott Hotels, a company that operated more than 180 hotels and resorts worldwide and was expanding rapidly into other lodging-market segments. Management at the Hamilton reported regularly to Marriott Corporation on both occupancy and revenue performance. This case was prepared by Larry Weatherford, research assistant, under the supervision of Professor Samuel E. Bodily. It was written as a basis for class discussion rather than to

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