this presentation is about front office approaches.

1. Front Office
The Baywood Hotel
Elena, Christine and Neli

2. Introduction
The Baywood Hotel is located in Cape Town and is
situated adjacent to the Victoria & Alfred Waterfront.
Popularity of the Waterfront is the 16 million visitors
to the centre every year.
The High season is from January to February
The Low season is from April to July
The Hotel has 670 rooms and good facilities.

3. Introduction cont.
Calculate and decide on our rack rates
1. The methods to determine room rates
2. Competitive analysis
3. Room rates sheet for each category
Property management system (PMS) for the front
desk
1. Critical comparison between 2 leading PMS
2.Advantages and benefits of the chosen system

4. Establishing Room Rates
The front office manager shall assign to each room category
a rack rate. In accordance, front office employees are
expected to sell rooms at rack unless a guest qualifies for an
alternative room rate.
While pricing rooms, the hotel shall keep in mind that rate
should be between a minimum:
Minimum (Hurdle Rate) < Room Rate < Maximum (Rack
Rate)
Cost Structure < Room Rate < Competition Structure

5. Pricing Strategies
Cost Approach
Rule-of-Thumb Approach
Hubbart Formula Approach
Market Condition Approach

6. Cost Approach
This Approach’s starting Point is on finding the Per Room
occupied daily Direct and Indirect Expenses
The biggest drawback of the Cost Approach pricing is that
it does not take into consideration how much Customers
are actually willing to pay for the Hotel Services, and how
other Hotels are actually charging for their Rooms.

7. Rule-of-Thumb Approach
Room rate shall be $ 1 for each $ 1,000 of construction
and furnishing cost per room.
Fails to take into consideration the inflation term, the
contribution of other facilities and services towards the
hotel’s desired profitability.

8. Hubbart Formula Approach
This very approach considers operating costs,
desired profits, and expected number of rooms sold.
Requires accurate forecasting, high cost, and very
time consuming.

9. Market Condition Approach
Management shall look
at comparable hotels in
the geographical market,
see what they are
charging for the same
product, and “charge
only what the market will
accept”.

10. Market Condition Approach
Safest way not to price our self out of the
market.
Guarantee an average number of guests.
It does not take into consideration the value of
the property.
There is always subjectivity in coming up with
sets of criteria against which hotel rooms can be
compared and measured for similarity.

11. Competitors
Cape Royale Luxury Hotel Hilton Cape Town City
Centre

12. Competitors
Cape Town Hotel Radisson Blu Hotel

13. 2010 Pricing analysis
High season
5000
4700
4400
4100
3800
3500
3200
2900
2600
2300
2000
Radison Blue Hilton Taj Cape Town

14. 2010 Pricing analysis
Low season
4100
3800
3500
3200
2900
2600
2300
2000
Radison Blue Hilton Taj Cape Town

15. The Baywood Hotel’s High Season
Rack Rates
Room Type Price
Standard Room 4000 ZAR
Standard Suite 4250 ZAR
Executive Suite 4500 ZAR
Superior Suite 4850 ZAR
Table Moutain Presidental Suite 5000 ZAR
Baywood Presidental Suite 5200 ZAR

16. External Factors
No
Holidays
school
Climate

17. The Baywood Hotel’s Low
Season Rack Rates
Room Type Price
Standard Room 3700 ZAR
Superior Suite 4000 ZAR
Standard Suite 3950 ZAR
Executive Suite 4200 ZAR
Table Moutain Presidental Suite 4700 ZAR
Baywood Presidental Suite 4900 ZAR

18. Corporate Rate
Room Type Price (10-15%)
Standard Room 3600 3420 ZAR
Superior Suite 3870 3676 ZAR
Standard Suite 3825 3633 ZAR
Executive Suite 4050 3848 ZAR
Table Moutain Presidental Suite 4500 4275 ZAR
Baywood Presidental Suite 4680 4445 ZAR

19. Airline Rates
Room Type Price
Standard Room 2400 ZAR
Superior Suite 2910 ZAR
Standard Suite 2550 ZAR
Executive Suite 2700 ZAR
Table Moutain Presidental Suite
Baywood Presidental Suite

20. Group Rates
Room Type Price
Standard Room 2800 ZAR
Superior Suite 3395 ZAR
Standard Suite 2975 ZAR
Executive Suite 3150 ZAR
Table Moutain Presidental Suite
Baywood Presidental Suite

21. Weekend Rate
Room Type Price
Standard Room 4600 ZAR
Superior Suite 5577 ZAR
Standard Suite 4887 ZAR
Executive Suite 5175 ZAR
Table Moutain Presidental Suite 5750 ZAR
Baywood Presidental Suite 5980 ZAR

22. Wedding package
Room Type Price
Standard Room 2400 ZAR
Superior Suite 2910 ZAR
Standard Suite 2550 ZAR
Executive Suite 2700 ZAR
Table Moutain Presidental Suite 3000 ZAR
Baywood Presidental Suite 3120 ZAR

23. Wedding package
Superior Suite
Breakfast & Dinner included
Spa Centre treatment
10% discount for the Shopping
Cake and Champagne
Price : 7500 ZAR
10 % discount for room service and lunch in
the restaurant

24. Family package
Room Type Price (10%)
Standard Room 3600 ZAR
Superior Suite 3870 ZAR
Standard Suite 3825 ZAR
Executive Suite 4050 ZAR
Table Moutain Presidental Suite 4500 ZAR
Baywood Presidental Suite 4680 ZAR

25. Family package ( 2 days)
Standard Suite
Breakfast & Dinner
Spa centre treatment
10% discount for the Shopping
1 Family Ticket to the cinema
Price : 5600 ZAR

26. Revenue Policy
Selling the right product to the right
guest at the right rate at the right
time.
If less then- Discount
75 % 10%
65% 20%
50% 30%

27. Opera
Scalable to suit the size of the Baywood Hotel
Delivers fast, accurate and online information
Runs on two operating systems: Microsoft Windows & IBM
AIX
Offers the ability to use a single database for information
sharing over multiple applications
Completely downloadable

28. Advantages
Opera Fidelio
More common Integrated, configurable,
context sensitive help system
Integrated with other
functionality
Function keys with windows
fully configurable to any
specific requirement User-definable screens and
report menus
Complex system which can do
everything in one package Report generator
complete set of features for
making and updating different Multiple installation parameter
kinds of customers
Unlimited security levels
Extensive set of features for
rate management and revenue
forecasting

29. Disadvantages
Opera Fidelio
More complicated as If proper locking is not
there are many different done, anyone will be
software with different able to access and even
functions make changes to
various files
During night audit, the
terminals are shut down
for 2 hours.

30. Q. & A.

31. References
Boella M., Goss-Turner St. (2009). Human Resource Management in
the Hospitality Industry. An Introduction Guide. GB, Oxford: Elsevier
Ltd.
Booking.com. (2011). Cape Town hotels. [online] Available from:
http://booking.com [Accessed on November 2 2011].
Cyber Cape Town. 2011. Cape Grace Hotel, Cape Town, V&A
Waterfront, Accommodation South Africa. [online] Available from:
http://CyberCapeTown.com [Accessed on November 2 2011].
Jagels, M. G. (2007). Hospitality Management Accounting. 9th Ed.
Hoboken, New Jersey: John Wiley & Sons, Inc.
Kasavana, M. L. and Brooks, R. M. (2009). Managing Front Office
Operations. 8th Ed. Lansing, Michigan: American Hotel & Lodging
Education Institute.
Opera Property Management System. http://www.micros-
retail.eu/en/sitecore/Content/micros-fidelio/Home/Solutions/Products-
N-Z/OPERA-Property-Management-System.aspx [Accessed on
November 1 2011]