Bill O'Leary is the General Manager of the 500-unit Plazamar Hotel. Elizabeth, as of the Director of Sales and Marketing, had worked hard to secure a chance to bid on the annual meeting of the State Dental Association. While the Plazamar's regular ADR is $150 per night, Elizabeth wanted to bid the rooms for the dental meeting (350 rooms for three nights) at $99 per night. At that proposed rate, she was convinced that the hotel would win the the bid. And if only 150 rooms remained to be sold on those three nights, the hotel could eliminate all discounts on its remaining rooms and thus maximize its RevPAR. At a bid rate higher than $99 per night, she warned that the State Dental Association would likely elect to go to the Altoona Hotel, the Plazamar's biggest competitor.

"Let them have dentists," said Tony Baltimore, the hotel's front office manager. "The Altoona only has 400 rooms. If they sell out, we'll take their overflow. With our normal 65% occupancy and all of their overflow, we'll sell out anyway. And we can get $150 per night or more for all 500 of our rooms. That's how you maximize RevPAR."

Assume you are Bill, the General Manager. which argument makes the most sense to you and why?