News

During the Advisory Council on tourism held on 28.02.03 in the Radisson Slavyanskaya, discussion was raised on the interaction problems facing hotels and tour operators in the processing of guestroom bookings These problems become particularly alarming during the summer period, when local hotels are having to deal with many refusals, last minute cancellations, turn-away business and related guest frustration. The local press has also stressed that the current local hotel supply is not capable of accommodating 100 per cent of peak demand during the summer months and that the government should steadfastly promote the expansion of more hotels to better accommodate peak demand. The hotel council, presided by the Vice President of Foreign Relations, Boris B. Averianov, acknowledges that such a problem exists, but that a closer examination of coordination problems between tour operators and hoteliers should be undertaken to define ways of avoiding confusion in the handling of bookings during peak seasons.

Hotels accuse tour operators of carrying out last minute cancellations, thus blocking opportunities by hotels to resell the room to other demand sources. In the reservation system, the room appears to have been sold and only appears available much too late for the hotel to act. It should be stressed at this stage, that last minute booking cancellations is one of risk factors in hotel industry as a whole, and that the Moscow hotels are no case the exception.

To reduce the chances of losing rooms revenue due to last minute booking cancellations, many hotels apply overbooking techniques, which can lead to turn-way business in the case that all reserved bookings should materialise. The reasons for overbooking rests on the assumption that a certain percentage of guests booking a room will not arrive (no shows), but this percentage can fluctuate depending on many factors such as weather scheme, traffic jams, external circumstances which a computer simulation package cannot anticipate. Usually, the overbooking percentage applied on the total room nights available is small enough that the risk of turn-away business is minimal. However there always is a risk that overbooking can turn against the hotel’s room yield strategy.

Poor application of double booking techniques can lead to unpleasant confrontation between guest with a confirmed booking in hand and an embarrassed management. Professional hotel management usually handles turn-away business by quickly finding alternative accommodation for the client at a higher price and pocketing the room tariff differential, thus incurring a loss on the room. Unless experienced in the matter, overbooking is to be applied with great caution, as an abuse can lead to permanent loss in business.

Despite sophisticated computerized booking simulations and forecasting models, it is impossible for a hotel to be absolutely sure that guest behaviour will mirror the computer booking predictions. As a preventive measure, the hotel and tour operator usually apply contractual guidelines, which stipulate the rules and conditions regarding advanced deposits and commitments to securing the room. All of this, as it was already marked, represents a standard set of preventive measures used by all hotels, irrespective of their country of location, to reduce loss margins on budgeted operational targets.

It is obvious that tour operators are not going to cancel contracts because of hotel infringers, because there are not so many hotels in Russia, which actively work with foreign tour groups.Some hotels consciously exclude group tourism by jacking up tour group prices at higher tariffs than for the corporate clients, or offering accommodation without discount thus leaving tour operators little ground to defend their position, particularly during peak times of the year when hotel demand outstrips existing room supply. It is necessary to adopt a mutually polite approach between hotel booking partners in sensitive markets such as Saint Petersburg, when the peak season last for six weeks from early May to mid-June and to a lesser extent Moscow, where seasonality is less pronounced. As the group tour influx increases, the booking problem between hotel and tour operators will exacerbate and lead to more discussion in the press and on the side. Apart from more polite relations between partners, increase in competition among local hotel players should in the long run neutralize the problems caused by inadequate hotels in the mid-tier category, a deficit evident in both Moscow and Saint Petersburg, and help alleviate this interaction problem.