Originally Posted by
writerguyfl
This is a true statement. As a former Revenue Manager, here are a few reasons why no-shows can actually cost the hotel money through lost revenue.
- Ancillary Revenue: While not every guest provides ancillary revenue (food/beverage, parking, etc), a no-show guarantees that the hotel will not make any extra profit for that room.
- Displacing Another Guest: The hotel may have been able to sell the room to a someone else. That guest might have also stayed for several nights. Note: This can happen even when the hotel is not sold-out. The no-show room may have been the last available room with a specific bed-type. Or, it might be the last base-level category. (Some corporate clients might have a policy to purchase only base-level rooms.)
- Employee Compensation: Positions like Bell Staff and Food/Beverage are paid via tips. Those employees can't earn any money from a no-show.
- Staffing Levels: For departments like Housekeeping, staffing is a function of the total expected occupancy on a given night. While a single no-show wouldn't matter, multiple no-shows means a hotel is overstaffed. (In one hotel in which I worked, we would occasionally have 12-15 no-shows in our 360-room property.)
- Disputed Charges: Despite being able to prove that the reservation was valid, there is a decent chance that a credit card company will side with the guest in a dispute over a no-show charge. In that situation, the hotel will lose all revenue plus the labor cost association with the chargeback.
Other than the last reason, none of this should cost the hotel money. It may not provide maximum revenue, but it should create a loss. It would be easy to turn this around and say that occupancy would increase utility charges, there are more goods consumed, toilets clogged, etc.
While you could argue that housekeeping got paid for nothing, didn't the hotel? And the cost of the room should have a profit priced in to cover all costs, some of which weren't incurred.