Section 11: Inventory and Price Management Let me make sure I understand this. You want to set the rates for the third week in October at full rack, close out all discounts, and immediately block any inventory we are not contractually obligated to provide our discount intermediaries," said Leah, the front office manager at the Ewok Resort "That's right," said Rey, the resort's DOSM. "We really have to. The bid I just submitted to the International Association of Academic Authors for their annual meeting in October was at full rack rate for all our currently available rooms." That event will sell out our entire area," said Harrison, the RM. "We certainly don't want to offer transient rates lower than our group rates for that week." Leah and Rey were members of the Ewok Resort's Strategic Pricing and Revenue Management Advisory Committee, which was headed by Harrison. They were finishing the last agenda item for the week's meeting. It concerned a group rooms bid submitted by Rey's department as part of an area-wide effort coordinated by the local Tourism Development Bureau. The Bureau was the entity charged with the task of generating sales leads, primarily for group and meetings business, for all of the hotels in the area. Rey had submitted her bid through the Bureau and had appealed to Harrison not to let the hotel advertise low room rates during the period of the projected convention. "If we do," said Rey, "the academics will book outside the group block and we'll never hit the occupancy targets we can make if the group accepts our bid. "Do you feel you have a good chance to get it?" Harrison had asked "We have an excellent chance. I would say 90 percent or more," Rey had replied. "When will we know?" Harrison asked. The group will be making its decision in the next 90 days," Rey had replied. Based on Rey's confidence about the bid, Harrison supported the approach that, for the next 90 days, the hotel would eliminate all discounted rates for the time period of the Author's convention and remove all rooms from sale. Leah was not happy with the decision. "Well, I do hope we get the bid," said Leah, "because if we close all our discount rates for 90 days, shut down all our room sales, and then we don't get the bid, this hotel will be empty the third week in October. That's all I have to say!" 1. Why do you believe Leah is concerned about the elimination of discount rates during the period of this convention? ume the tactic proposed by Harrison is implemented. What will be the likely outcome if Rey's bid is accepted by the Author's group? 2. Ass ume the tactic proposed by Harrison is implemented. What will be the likely outcome if Rey's bid is rejected by the Author's group? 3. Assu 4. What are the dangers to the future success of this revenue management team i f Leah is not brought "on board" with the decision made by Harrison and Rey? Whose job is it to see that Leah and her entire front office team actively support the final decision
