Daniel Leso is the RM for the Hampton Inn & Suites. His 200-room hotel normally sells 85% of its rooms on Tuesday nights at $131.50 ADR. All variable costs related to selling his rooms are $50 per room. The DOSM at the hotel is proposing to place a bid to sell 125 rooms for a Tuesday night next month at $109 per room. Daniel believes that if the hotel wins the group rooms bid, the transient room sales for that day will ensure a sell-out at the rate of $131.50.
1. What would be the total amount of revenue the hotel will achieve if:
- It books the group?
- It does not book the group
2. What would be the total amount of after-variable costs rooms' revenue the hotel will achieve if the hotel wins the group rooms contract?
3. What would be the total amount of after-variable costs rooms' revenue the hotel will achieve if it does NOT win the group rooms contract?
4. What additional factors might Daniel and the DOSM take into account before determining whether to bid of this piece of group rooms business?