Hotel Revenue Analysis: Comparing Apples and Oranges for Profitability

This report analyzes the profitability of different groups (Religious, Corporate, Fraternity, and Transient) for a hotel, based on provided financial data and assumptions. It calculates room revenue, non-room revenue, and contribution margins for each group. The analysis determines that the Religious Group generates the highest room revenue and is the most profitable option. The report also examines factors beyond contribution, such as customer loyalty and retention, that influence the decision-making process. The recommendations include accepting the Religious Group's proposal, rejecting the corporate group's proposal with an apology and offer of incentives for future bookings. The decision is to be made by the head or director of the sales or marketing Group.

Rooms Division and Facility Management
Comparing Apples and Orange
Answer 1
The answer for the question has been annexed in Excel.
Further, a brief snapshot of the revenue collection under the two proposition shall be $
3,19,880 for Religious Group and $ 2,87,100. The said computation is liaised with numerous
assumptions. The assumptions have been highlighted here-in-under
(a) There are two Shoulder Dates in the given case study i.e Monday and Friday;
(b) The collection from corporate group shall encompass only the room revenue and the non
–room revenue. Further, details regarding conference room and suite has not been
considered;
(c) The term potential revenue shall imply 100% accommodation and accordingly yield shall
be computed based on the total revenue collected/ potential revenue;
(d) Since category is B the CMRw considered is .35 and shall represent the contribution
earned from $1 of sales;
(e) Marginal cost is variable cost;
(f) Fraternity Group booking is for 4 days and not 6 days;
Answer 2
The Group shall select Religious Group based on Room Revenue as it is the highest revenue
maker for the group at $ 3,19,880.
Further, under second part of the report an analysis has been conducted whereby the
computation has been made for non-room revenue required by other options to match the
contribution earned by room revenue of Religious Group option.
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The computation has been detailed in excel. Further, the formula for computation used has
the following Abbreviations
A=Contribution earned from Religious Group, Transient Group and Fraternity Group
B = Contribution Earned from Transient Group
C= Contribution Earned from Fraternity Group
D=Contribution earned from Corporate Group, Transient Group and Fraternity Group
Accordingly, the solution has been done based on the following formula
(A–B-C)/ CMRw)/ No of Person
(D–B-C)/ CMRw)/ No of Person
For corporates
(A–D)/ CMRw)/ No of Person
Further, even after considering the non-room revenue, the highest margin bagger for the
company shall be religious group. Hence, Company shall proceed with the proposal of
Religious Group in the first week of October as it shall maximise the contribution of the
Hotel.
Answer 3
The variable other than contribution which shall be considered by the company for making
decision regarding options has been detailed here-in-below:
(a) Customer loyalty;
(b) Customer retention;
(c) Passing effect;
(d) Other business procurement;
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(e) Corporate Image;
(f) Future business;
(g) Any other incentives;
(h) Brand Promotion or any other miscellaneous incentives
Answer 4
The company shall make acceptance to Religious Group on the basis of contribution since
other variables have not been analysed by the case study. Further, the rejection letter to the
corporate group shall be accompanied with an apology stating the reason for not
accommodating. Further, it shall contain a request or concern to book the hotel for a prior
book. In addition, the hotel group shall offer incentive and discounts to lure the corporate
group and retain it.
Answer 5
The decision shall be made by the head or director of the sales or marketing Group i.e Ellen
Zurpava . In addition, the said decision shall be taken on advise of other personnel in group
and considering pros and cons of the said decision on the Group
Option 1 i.e. Religious Group Proposal shall be accepted
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