The Hilton Garden Inn is situated close to an airport and six miles from the city center. It has enjoyed good occupancy and average daily rates since its introduction to the market 10 years ago. A large citywide sporting tournament is soon to be held for the second year in a row and the event is large enough to affect revenue for the entire market. The priority for the HGI is to maximize revenue for the period of the tournament and to grow market share.

The sales manager does not want to be the first hotel to sell-out; however, he wants to have a good mix of business. Yes, $200 a room night could be charged, but what about length of stay? There are only two peak nights in a tournament of five nights. There is always a trade-off between rate and length of stay. A lot of tournaments have a peak of one or two nights, so it is a good strategy to accommodate teams that need to fly in. If the tournament has an established history, it is possible to look at booking patterns by day of the week and

Average Daily Rate (ADR) to gain helpful planning information. A Pace Report will show the hotel where it stands now for bookings during the days of the tournament by segment: transient, government, corporate, and leisure guests.

Much depends on the date and days of the tournament. For example, if the tournament is held on the weekend, it will be critical to avoid filling up the hotel with short-term stays and excluding long-term guests. Everyone will sell out on the one or two big nights, but what about the shoulder nights? Ideally, it would be better to attract guests who will stay several nights. One problem with tournaments is that losing teams want to check out before the end of thetournament, and that means a loss of revenue for the hotel unless they have made a contract for a certain number of days stay (in this case 5 nights). It is also important to look at the historical data of the competitive set and the profit and loss statement. In this case, the tournament starts on a Thursday, and continues until the next Tuesday. Figure 1 below shows the details of last year at the same time. Notice that on December 5, 2013, last year at the same time, 113 rooms out of 115 were sold for an occupancy percentage of 98.26, an Average Daily Rate of $124.46, and Rev PAR of $122.29. The figure also shows the next few days information.

2013	Revenue	Rooms Sold	Available	Occ%	ADR	REVPAR
12/5	$14,064	113	115	98.26	$124.46	$122.29
12/6	$12,806	105	115	96.52	$121.96	$111.36
12/7	$13,461	111	115	73.04	$116.01	$ 84.74
12/8	$ 9,745	84	115	81.83	$112.10	$ 98.46

Additional pertinent information:

There are 115 rooms in the hotel; only 40 of them are two-queen bedded rooms.

By Sunday afternoon about 75% of the teams are eliminated from the tournament.

The actual room rate charged includes a commission fee paid to the event organizers.

The tournament is due to take place in December 2014 from the 4th to the 9th.

Guests would arrive on a Friday and leave on a Tuesday if they stayed all nights.

The hotel has 40 two-queen bedded rooms. So that is the number of group rooms that can be allocated to the tournament.

QUESTION: Should the hotel offer a lenient policy for teams eliminated early? If so, what should it be?