Question

Chapter 1: Case Study Overviews

RM at Work 1.1

"How can you be unhappy?" asked Charles Lohr. "Our occupancy last month was 76 percent; that's almost 5 points higher than the same month last year. And our ADR was $144.85that's about $4.00 more than last year. And our guest satisfaction scores for the month were higher than ever. We had a great month!"

Charles was the front office manager at the Branchwater Hotel, a 225 room full-service property located near a busy industrial park. Charles also served as the leader of the hotel's revenue management team. The team's role in the hotel was to establish room rates and manage rooms inventory based on the data generated by the hotel's property management systems (PMS), as well as the information provided by the hotel's sales department. He was in his own office, talking with Sara Argote, the GM of the property.

"Well, I'm not looking at how we did compared to last year," replied Sara, "I'm comparing our change to our comp set's change. It's true we were up 5 occupancy points from last year, but the comp set was up just over 10 points."

"But what about their rates?" asked Charles. "What happened there? Did their rates go up or down, and by how much?

"Well, let's take a look at that," replied Sara, "and then we can assess what happened last month and see if we need to make our own rate strategy adjustments in the future."

RM Considerations:

1.Assume the ADR of the competitive set increased last month and still had a higher occupancy. What would be your assessment of the Branchwater's revenue management performance compared to its comp set?

2.Assume the ADR of the competitive set decreased very significantly last month (e.g., more than 10 percent) and still had a higher occupancy. What would be your assessment of the Branchwater's revenue management performance compared to its comp set?

3.Assume you were the hotel's GM. What additional revenue-related information would you want to have before assessing whether your property's revenue management team did a good job last month?

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