Revenue Management Strategy Analysis in Hotel Industry - Case Study

Question 1

Oscar is the revenue manager for the 180 room Belle Suites. Last year his ADR was $149.99. Disappointed in his occupancy rate last year, he decided to reduce his room rates this year by 10% to help increase his sales and improve RevPAR. The action resulted in an upswing in occupancy, from 73% last year to 85% this year.

Last year, Oscar’s controllable operating costs were $60 per room and this year they rose to $62 per room.

In your response to the question, make sure you address the following:

a. Complete a chart with occupancy, rooms sold, ADR, rooms revenue, RevPAR, controllable operating costs, gross operating profit, and GOPPAR for this year and last; and

b. Discuss the effectiveness of Oscar’s revenue management strategy.

You are the revenue manager at the Airport Getaway Hotel. Over the past 12 months you have been working hard to improve the performance of your hotel. You have just received the data below (see Table 2 below).

In your response to the question, make sure you address the following:

a. Complete Table 2 (indices and RevPAR); and

b. Given the information provided and your calculations, comment on the performance of your hotel over the past 12 months.  Have you been doing a good job?

Question 3

Claudia Schmidt is the front office manager at the 125 room limited service Best Stay Inn. Claudia has just received a call from Tyler, a friend and the revenue manager at a hotel within her comp set. Because of an oversight, Tyler’s hotel is overbooked by 70 group rooms next Saturday. Tyler would like to purchase that number of rooms from Claudia a their previously agree rate of $80. The normal rack rate is $139. Currently, she has 70 rooms booked for that night and estimates that she could sell, at her normal ADR, another 35 rooms for that night.

In your response to the question, make sure you address the following:

a. Calculate total rooms sold, ADR, total revenue, and RevPAR for the hotel with and without the walks from Tyler;

b. Should Claudia accept the walks? Why or why not? What other factors might Claudia consider?