Reference no: EM133184787
Read the following case study and answer the questions which follow:
"Run the numbers again," said Elijah, the FOM at the 400-room Radisson Riverview. "We need to make sure we are accurate about this."
"I ran them three times already," replied Jennifer. "Last year, in September, our RevPAR was $157.50. We ran a 70 percent occupancy and a $225 average rate."
"And so far, this September?" asked Elijah.
"Like I said before, with three days left in the month, we are at a 69 percent occupancy and $231.68 rate. That's a RevPAR of $159.86," said Jennifer.
"And we were budgeted for a 4 percent RevPAR increase?" asked Elijah.
"Right, and that's the problem. We are at a 1.5 percent increase now. And as you know, if we don't make budget, we don't make our bonuses."
"O.K. I got it. Now, one more time, what did the New York booking agent say when you talked to him on the phone?" asked Elijah.
"He said the entire Lion King cast was displaced because of a booking error at the hotel they had originally reserved. He's scrambling for housing. He wants to bring the entire cast and crew here for four days, starting tonight. They want 150 rooms each day, but their budget is only $159.00 a night. If we take them, we'll be sold out for the rest of the month," said Jennifer.
Assume that, with three days left in the month, Elijah's best estimate is that if he agrees to take the Lion King group it would mean 150 sold rooms per night at $159.00 and assume further that his hotel would indeed sell all of its remaining rooms on those nights at the $231.68 ADR the property is currently achieving in this month. Consider also average variable costs of $40.00.00.
- Do the calculations the team would need in order to make the booking decision. (show working)
- If he takes the group, would Elijah achieve the RevPAR needed to be granted the performance bonuses offered to him and his assistant?
- What additional factors would you advise Elijah to consider before he decides whether to accept the reservation for the rooms requested by the Lion King's booking agent?
- If you were the revenue manager at this property, would you advise Elijah to take the group? Explain your response