Royal Blue is a 600-room resort, located on a serene Caribbean island. The manager believes that to maximise profits full room rates should be always charged. After three years of following this policy, management realised that the resort has registered poor financial performance every year to date. This situation led the management to hire the services of a marketing consultant to advise them on the way forward. On examining the organisation the following was found:

Room rates (daily) $1,000

Average occupancy (tourism season) 55%

Average occupancy (out of season) 35%

Length of tourism season (days) 150

The consultant has developed two options, in addition to the present one, for managements consideration. The options are outlined below:

Option1 Option 2

Room rates beachfront (40% of rooms) (tourism season) $1,000 $850

Room rates land side (60% of rooms) (tourism season) $850 $700

Room rates beachfront (out of season) $700 $600

Room rates land side (out of season) $600 $450

Average occupancy (tourism season) 80% 95%

Average occupancy (out of season) 55% 75%

The costs that the hotel incurs yearly are $45,000,000.

The tourism season lasts for 150 days and out of season a further 210 days

Based on the above information the management of Royal Blue asked you to calculate the yield of the three options as well as the cost per available room night, and revenue per available room night, and advise them.