You are the revenue manager for a 220-room property. Your occupancy % is normally 85% on Tuesday nights with an ADR of $141.50. Your DOSM is proposing to place a bid to sell 125 rooms for a Tuesday night next month at a rate of $109.00 per room. If successful, you believe you can sell-out the rest of the hotel at the normal rate of $141.50, but you are not sure if it's worth it.

Knowing that your variable costs are $55.00 per room, answer the following:

1. What would be the total amount of revenue the hotel will achieve if:
   • It makes the group sale? _________________
   • It does not make the group sale? _________________

2. What would be the total amount of after-variable costs rooms revenue the hotel will achieve if it wins the group rooms contract? _________________

3. Would you tell your DOSM to go ahead and bid on the business or try your luck to sell-out at your rack rate? Why or why not?