Diamond Peak Hotel Case Study: Group Revenue and Decision Making

The assignment analyzes the Diamond Peak Hotel's revenue management strategies, focusing on determining the most profitable group (corporate or fraternity) for room occupancy. It involves detailed financial analysis, including projected ADR, occupancy rates, and non-room revenue contributions. The analysis compares different groups to maximize revenue and profitability, considering factors like booking frequency, non-room revenue potential, and long-term relationships. The solution provides recommendations on which group to prioritize and how to handle potential booking conflicts, emphasizing revenue maximization and customer relationship management. It also addresses the importance of collaborative decision-making between the revenue management team and senior sales manager.

QUESTION 1:
Worked out in excel
QUESTION 2:
Based on the non-room revenue and data analysis the Diamond peak hotel should go for the corporate
group .The detailed analysis has been depicted here in the table below:
Based on Case Projections
Sun-Fri Comparisons: Projected
ADR
Projecte
d
Occupan
cy
Project
ed # of
Rooms
Rented
Projected
Room
Revenue
Project
ed
Yield
Statistic
Projected
Revenue
Contributi
on
Transient and Fraternity Only $150.00 33.62% 1160 $174,000.
00 36% 85%
With Revival OR Association
Group: $124.95 74.20% 2560 $319,880.
00 66% 82%
With Corporate Group $141.43 58.84% 2030 $287,100.
00 55% 84%
Determine the amount of Net Non-Room Revenue (F&B) spending required per room for each group
to match the revenue contribution of the highest group:
To Match
Trans. & Frat.
To Match
Revival Group
To Match
Corporate
Group
Transient and Fraternity Only $214.29 $278.57
With Revival OR Association Group:
With Corporate Group $28.98
Determine the amount of Non-Room Revenue (F&B) required per room for each group to match the
revenue contribution of the highest group:
To
Matc
h
Trans
. &
Frat.
Total
Req'd
Spendin
g
To Match
Revival
Group
Total
Req'd
Spending
To Match
Corporate
Group
Total
Req'd
Spending

Transient and Fraternity Only $87,000.
00
$248,571.
43
$113,100.
00
$323,142.
86
With Revival OR Association
Group:
With Corporate Group $20,590.
00
$58,828.5
7
QUESTION 3:
The other variables, which Diamond Peak Hotel should consider when determining which group,
whether fraternity group or corporate group the hotel should consider are depicted here in below:
 The hotel should consider the frequency of booking by both the group in future years, which
group will book mostly at present and in the coming years.
 The hotel should also consider the non-room revenue, which could arise from both the group.
The group who would maximum use the hotel bar and beverages counter, spa counter and
other paid activities counter of the hotel. Out of both groups, who will avail the maximum
service of the hotel should be considered as the priority and accordingly the hotel room should
be allocated.
 The Diamond Peak Hotel should also look on the long run relationship to be maintained with
which client in the future coming years. The hotel can derive more business through which client
and can gain maximum advantage.
 The hotel should also see look at the past records if any with both the client and should consider
the same to arrive at any decision.
QUESTION 4:
The Diamond Peak Hotel should deny any one of the group by specifying there complete problem and
specifying due to peak season the rooms are completely booked for this particular week .The hotel
management is very much sorry that they cannot do the honor of their booking .
The hotel should also provide a solution to the denial group that they could move to the hotel at the end
of the September, as the hotel does not have any contract for that particular week. The hotel also
cannot afford to adjust in the coming next week as they also have a signed contract with the Soccer
Coaches Association and they have signed the contract for 350 rooms.

In order not to lose revenue from both the groups and maintain a healthy relationship with them the
hotel would provide the suggestion as mentioned above .To convince the customer the hotel should go
for a offer discount for that particular group who will move to the hotel at the end of the September so
that the group is convinced easily and is ready to move in at the end of the September. In this particular
way, the hotel revenue is also not lost and a loon relationship is maintained.
ANSWER 5:
The revenue management team and the senior sales manager of the hotel should do the decision about
the room occupancy in the Diamond peak hotel jointly.
The Diamond peak hotel should go for fraternity group, as the total room revenue from the fraternity
group is higher as compared to the corporate group in six days .On the basis of total revenue
contribution the fraternity group contribution is higher as compared to the corporate group. The room
booked by the delta sigma Kappa fraternity has reserved at the rate of $ 150 each while the rate at
which the corporate group wanted to book the hotel is at $ 130 each. The difference in $ 20 each will
impact the profitability of the hotel go for the corporate group .The hotel rather should suggest the
corporate group to move in at the end of the September and offer them the discount so that they could
meet the requirement of both the customer as the hotel cannot also offer the corporate group to the
next week as they have a booking from Soccer Coaches Association.