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Four Thomas is the Revenue Manager of a 180 room Hampton Boutique Hotel and together with the management team, he makes decisions to ensure the
Four Thomas is the Revenue Manager of a 180 room Hampton Boutique Hotel and together with the management team, he makes decisions to ensure the successful performance of the Hotel. You have convinced Thomas and the team that they should implement Revenue Management at Hampton Boutique Hotel. However, Thomas is not sure he understands exactly what he has to do and has asked for your help with the following problem. Thomas has decided to set the hotel room rates at $320.00 per night to corporate clients and $275.00 per night for group bookings. Thomas needs to decide whether to accept a 4-week advance reservation for a group seeking accommodation for 60 rooms for July 18th. Corporate clients have already booked 110 rooms for this night. Past booking pace suggests that, subject to availability, corporate clients will book up to an additional 55 room nights on this date. Thomas has also discovered that Hampton Boutique Hotel incurs the following costs when it sells a room: Channel costs (a) Corporate clients - 4% of room revenue (based on corporate rooms booked) Group bookings - $9.00 per group room booked (b) Other variable costs of $55.00 per room Required 1) Complete displacement analysis for July 18 th and 2) Advise Thomas on whether it is in the hotels' interest to accept the group booking of 60 rooms on July 18th. Your advice must be supported with appropriate calculations and performance metrics and should include the rationale for your decision. 3) Comment on any other factors you think important to consider in determining if the Hampton Boutique Hotel should accept the group booking in optimising revenue in the long term and briefly explain why
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