Sharon Cronin is the revenue manager for a hotel company that owns and operates five fullservice hotels affiliated with the Holiday Inns brand. Each is located on an interstate highway exit, and the average age of the properties is 20 years. As newly built selectservice hotels located near her own properties have chipped away at the occupancy levels of her companys hotels, Sharon is seeking to identify characteristics of travelers who still seek the amenities offered by midsized fullservice properties.

List five identifying characteristics of room buyers you believe Sharon should target as her potential rooms buyers. Describe a distinct distribution channel you feel Sharon could use to communicate and sell to each of her targeted groups. Do you believe Sharon should sell to your identified groups at room rates higher or lower than the rates offered by her newer selectservice competitors? Explain your answer. Tom Rodgers is the director of purchasing of Dart Industries. Tom is responsible for booking approximately 1,000 guest rooms per month in the city in which his companys corporate office is located. The rooms are used to house the companys many corporate office visitors. Tom approaches Robin Mars, the DOSM/revenue manager of the local Hawthorne Suites hotel, with a proposition. Instead of paying $159.99 per night, the hotels normal room rate for corporate travelers, Tom proposes the following rate structure:

Rooms Purchased

Per Month Room Rate

1 to 100 $ 149.99

101 to 400 $ 139.99

401 to 600 $ 119.99 Complete the Dart Industries Rooms Sales Worksheet Robin has begun to prepare in response to Toms request, then answer the questions that follow.

Dart Industries Room Sales Worksheet

Rooms Sold Room Rate Total Revenue Variable Cost per Room Total Variable Costs After Variable Costs Revenue

50 $ 149.99 $ 7,499.50 $ 65.00 $ 3,250.00 $ 4,249.50

250 $ 139.99 $ $ 65.00 $ $

350 $ 139.99 $ $ 65.00 $ $

401 $ 119.99 $ $ 65.00 $ $

What would be the hotels room revenue if Tom booked:

250 rooms in a month? _________ 350 rooms in a month? _________ 401 rooms in a month? _________

Assume the variable cost associated with selling each room is $65.00. What would be the After Variable Costs Revenue if Tom booked:

250 rooms in a month? _________ 350 rooms in a month? _________ 401 rooms in a month? _________

If you were advising Robin, what would you tell her to consider prior to agreeing to Toms proposal?

Sandy Miley owns Fox Meadows golf club. The current greens fees for playing one round (18 holes) of golf on her course is $75.00 per player. To increase sales, Sandy partners with six different area hotels that have created golf packages marketed to their own hotel customers. Each hotel pays Sandy a different amount for the rounds of golf included in their package. Sandy wants to calculate a net round yield for each hotel using the formulas: and

Fox Meadows Weekly Sales Recap

Source Standard Fee Net Round Fee Dist. Costs Net Round Yield % Rounds Sold Net Revenue

Comfort Suites $ 75.00 $ 69.00 $ 6.00 92.0% 20 $ 1,380

Hampton Inn $ 75.00 $ 67.00 $ % 30 $

Hilton Garden $ 75.00 $ 65.00 $ % 30 $

Springhill $ 75.00 $ 61.00 $ % 20 $

Sheraton $ 75.00 $ 60.00 $ % 35 $

Hyatt Place $ 75.00 $ 59.00 $ % 45 $

Total

$

%

$

What will be Sandys Distribution Costs for each channel? __________ What will be Sandys Net Round Yield % for each channel? __________ What will be Sandys Net Revenue for each channel? ___________ What will be the overall average Net Round Fee for the 180 rounds of golf Sandy received during the week from these six channels? ___________ Which channel(s) do you believe are Sandys best partners? Explain your answer.

Lara is the managing owner of the The Pound Charburger kiosk at Metro Airport. Her menu is limited. She sells burgers, fries, and drinks. Last week, she served 1,000 customers. Most of her guests order at least a burger and a beverage. Some order a burger, fries, and beverage, while still others order only fries and a beverage. Sales data from last week are presented in the following table.

The Charburger 1,000 Customers Served

Item # Sold Selling Price Item Cost Item Cont. Margin Total Cont. Margin

Burger 822 $ 5.99 $ 2.05 $ $

Fries 640 $ 1.99 $ 0.54 $ $

Drink 972 $ 1.79 $ 0.32 $ $

Total

$ 9.77 $ 2.91 $ $ Item Contribution Margin is defined by Lara as:

Given the data presented, what is the lowest price at which Lara could sell a burger, fries, and a drink combination and still equal the per customer served contribution margin she currently achieves? _______________ Do you think Lara could sell the bundle for more? Explain your answer.

Keith is the group sales manager at the 400room fullservice Tripletree Hotel. Carla is the front office manager. Together with Leona, the GM, they make the RM 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. Well sell out, he proclaims, and have a great RevPAR.

Carla would like to lower the room rates to $159.00 per night, which is a $20.00 reduction from the hotels 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 Carlas reply. That means well 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 rooms sold data under the two alternative plans, then answer the questions that follow.

Tripletree Hotel Sales Alternatives

Rooms Sold Occupancy % Room Rate RevPAR GOPPAR

Keiths Plan

220 $179.00 $ $

180

$109.00 $ $

Total

$ $ $

Carlas Plan

220 $179.00 $ $

120 $159.00 $ $

Total

$ $ $

What will be the hotels occupancy % under each of the plans? ___________ What will be the hotels ADR under each of the plans? ___________ What will be the hotels RevPAR under each of the plans? ___________ What will be the hotels GOPPAR under each of the plans? ___________ If you were Leona, whose plan would you support? The Tripletree is a fullservice hotel. Do you think Leonas position would change if the hotel were a selectservice property? Explain your answer.