Evaluate the scenario below and make recommendations. Remember to include all the relevant incremental revenues and costs associated with your decision.

Wedding Expo

You are the event specialist at a mid-sized hotel with 3,500 sq feet of meeting space. Most of your revenue comes from local company meetings. You have had occasional weddings at your property but feel there is significant opportunity to increase your revenue from meetings. This is especially attractive because weddings are typically over weekends when your meeting rooms go underutilized; furthermore, wedding groups often request sleeping rooms which could benefit the rooms division of the hotel. Below is a summary of anticipated costs associated with the wedding show:

• Booth rental: $1,500
• Equipment purchase for show: $750 (depreciated over 2 years, $250 salvage value after year 2)
• Photo shoot and wedding album to showcase weddings: $1500 (album compiled last week)
• Marketing collateral printing costs: $300
• Food and giveaways to attract potential clients: $500
• Booth setup and staffing labor-hours: 30
• Average hourly wage of labor used to set-up and staff the booth: $12
• Your time needed to organize, setup and supervise the booth: 60 hours
• Your annual salary: $39K + $13K in sales commissions
• Average increased event revenue from your outside sales activities: $50/hour
• Other miscellaneous related expenses: $300

Below is a table that shows a sample of typicaltotal event revenue and # of rooms booked by wedding groups at the hotel:

Wedding Group	Total Revenue	Total Room-Nights Booked
Tucker Wedding	$4,400	5
Shamo Wedding	$5,700	15
Robinson Wedding	$2,300	0
Shaw Wedding	$3,400	10
Runia Wedding	$9,200	10

Below is information pertaining to the current hotel revenues and expenses:

• Wedding group average rate $90
• Banquet variable cost 60%
• Variable cost per occupied room $20
• Total cost per occupied room (fixed and variable) $70
• Discount rate (required rate of return): 12%
• Ordinary Incremental Tax Rate: 35%
• Chance to displace otherwise paying guests: 0%

In order to attract groups you have decided to offer a discount of 25% off the event and an additional $10 off wedding group room rates to anyone who attended the wedding expo. With all your efforts you anticipate the results below.

• Incremental increase in weddings as a result of participation in the wedding expo:
  • Anticipated Scenario: 4 in first year, 2 in second year
  • Worst Case Scenario: 2 in first year, 1 in second year
  • Best Case Scenario: 6 in first year, 3 in second year