Chuck Stout is the RM for the Holiday Inn Express. His 220-room property normally sells 85 percent of its rooms on Tuesday nights at an ADR of $141.50. All variable costs related to selling his rooms are $55.00 per room. The DOSM at his Holiday Inn Express is proposing to place a bid to sell 125 rooms for a Tuesday night next month at a rate of $109.00 per room. Chuck believes that if the hotel wins this group rooms bid, the transient room sales for that day will ensure a sell-out at the rate of $141.50.

Q1. What would be the total amount of revenue the hotel will achieve if:

It makes the group sale?

It does not make the group sale?

Q2. What would be the total amount of after-variable costs rooms' revenue the hotel will achieve if it wins the group rooms contract?

Q3. What would be the after-variable room's income if the hotel does not win the contract?

Q4. What additional factors might Chuck and the DOSM take into account before determining whether to bid on this piece of group rooms business?