The Marquis Hotel is considering a major remodeling effort and needs to determine the best rates and room sizes to maximize revenues. Although the rooms may be renovated, there are no plans to change the current 450-room capacity. The accompanying model and spreadsheet maximizes revenues for the three types of rooms currently available, standard, gold, and platinum. Suppose that the hotel is considering adding suites to its room mix. Based on an analysis of local competitors, suites can sell for a rate of $180, and they expect to sell 20 per day to business travelers. The price elasticity of demand is estimated to be −2.5. The hotel would want to keep the price of suites between $150 and $200. Modify the model to include suites and find prices that will maximize total revenue.

Complete the table of prices that maximize total revenue.

A C F 1 Room type Current Rate Average Daily Sold Elasticity Total Room Capacity $90.00 $100.00 $139.00 2 Standard 250 -1.5 450 3 Gold 100 -2 4 Platinum 50 -1 6. Room type Projected Rooms Sold Projected Revenue B8*E8 7 New Price Price Range O $70.00 O $90.00 o $120.00 $90.00 $110.00 $149.00 C2+D2*(B8-B2)*(C2/B2) C3+D3*(B9-B3)*(C3/B3) 8 Standard 9 Gold B9*E9 10 Platinum C4+D4*(B10-B4)*(C4/B4) B10*E10 11 12 Totals SUM(E8:E10) SUM(F8:F10) 13 14