Keith is the group sales manager at the 400-room full-service Triple tree Hotel. Carla is the front ofce manager. Together with Leona, the GM, they

Keith is the group sales manager at the 400-room full-service Triple tree Hotel. Carla is the front office manager. Together with Leona, the GM, they make the revenue management decisions for their property. For the Saturday night that is just one week away, they have 180 unsold rooms remaining. Keith would like to accept an available group contract for the entire 180 rooms. “We’ll sell out,” he proclaims, “and have a great RevPAR.”

Carla would like to reduce the room rates to $159.00 per night; which is a $20.00 reduction from the hotel’s normal rate of $179.00.

“How many rooms do you forecast we can sell at that rate?” asks Leona.

“I believe we can sell about 120 of them,” is Carla’s reply.

“That means we’ll leave 60 empty rooms, and a lower RevPAR,” protests Keith.

It costs $35.00 to prepare, sell, and clean (prepare for resale) a room at the Tripletree. Review the data and then answer the following questions:

Room Sold   ADR RevPAR GOPPAR

Keith’s Plan

220 $179.00 $ $

180 $109.00 $ $

Total $ $

Carla’s Plan

220 $179.00 $ $

120 $159.00 $ $

Total $ $

a. What will be the hotel’s occupancy % under each of the plans?

b. What will be the hotel’s ADR under each of the plans?

c. What will be the hotel’s Rev PAR under each of the plans? d. What will be the hotel’s GOPPAR under each of the plans?

e. If you were Leona, whose plan would you support?

f. The Triple tree is a full-service hotel. Would your position change if the hotel were a limited-service property? Explain your answers.