ACCT 2011 – WINTER 2017Group Case # 1 –Sheraton Hotel“I will give you my decision in about a week,” said Jean Lafleur, managing director of the Sheraton Hotel in Montreal, as he put down the phone and looked pensively at the letter before him. The letter was from the airline Alitalia requesting a one-year contract for 40 rooms at $42 per night. In addition, the hotel would have to provide a crew allowance of $25,000 per day. Bills are to be paid within seven days of receipt of statement on a weekly basis. The problem facing Lafleur was a simple one: does he take Alitalia and fill the 40 rooms at $42 or does he refuse the businessand hope that he can sell the rooms at the full rate of $105 per night. Last year he had 115 rooms sold out.BackgroundThe Sheraton Hotel was located in the downtown area of Montreal. It was viewed as a corporate/convention hotel. In 1987 the hotel was named winner of the Canadian Automobile Association “Four Diamond Award” and the “Four Star Award” from the Mobil Travel Guide. The hotel had 824 rooms including the Sheraton Towers – a prestigious hotel within a hotel. The Towers had its own check-in facilities, lounge, and special amenities. It contained 131 rooms, including 16 suites. The balance of the hotel offered a choice of king, queen, and double beds with an additional 24 suites and six rooms specially equipped for people with disabilities. All rooms were equipped with a pay-TV system.The Hotel opened three restaurants. Le Point de Vue on the 37th floor offered Gourmet French cuisine and an exceptional wine list. It had a seating capacity of 84.Le Boulevard on the third floor was open for breakfast, lunch, and dinner and had a seating capacity of 259. La Musette was a European-style “express” restaurant on the promenade level for people in a hurry. It had a seating capacity of 60. In addition to the restaurants, the hotel had five lounges and 14 function rooms, including a ballroom that would accommodate 1,100 people for banquets and 2,600 people for receptions. Other features of the hotel included a five-story glass-in-atrium, a glass-enclosed year-round pool and a health club with gymnasium, sauna, whirlpool, and masseuse. There was indoor parking for 500 cars and boutiques and specialty shops on the promenade level. Other services included multilingual staff and audio-visual services. All meeting rooms had cable-TV, audio-visual facilities, and telephone jacks.1

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Sheraton Hotel's Decision on Alitalia Proposal

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