Diamond Peak Hotel: Revenue Analysis and Group Comparison Assignment

This report analyzes a case study focused on the Diamond Peak Hotel's revenue management, comparing the profitability of different group bookings (Religious Association vs. Corporate Group). The analysis involves calculating revenue based on various assumptions, including shoulder dates, room rates, and marginal costs. The report computes revenue projections, analyzes non-room revenue requirements to match contributions, and identifies the most profitable group for the hotel. The report also considers additional variables such as long-term relations, brand image, and potential opportunities. The report concludes with recommendations on how the hotel should handle the corporate group's denial and the decision-making process by the director of sales and general manager. The assignment highlights the importance of considering both room revenue and non-room revenue when evaluating group bookings and maximizing overall profitability.

Rooms Division and Facility Management
Comparing Apples and Orange
Answer 1
On the basis of case study and details provided, the computed revenue for the hotel based on
two strategies has been detailed here-in-below:
(a) Religious Association: Revenue of $3,19,880.
(b) Corporate Group: Revenue of 2,87,100
Assumptions made for the purpose of computation
(a) Shoulder Dates : Monday and Friday;
(b) Revenue from Meeting room or conference room has not been considered;
(c) It has been assumed that the religious group accommodated rooms on Friday shall be 70;
(d) Potential revenue shall be 100% as the official occupancy rate details has not been
provided;
(e) CMRw represents the margin earned for selling food expenses i.e. contribution;
(f) Marginal cost is room wise and not on head count wise and it is variable. Thus, only the
room accommodated shall bear the same;
(g) There has been two contradictory lines in the case study whereby it has been stated that
Fraternity Group has booked the hotel for a week. Under the second line, it has been
stated that the said booking has been for four days. The second view has been held for
doing the question;
(h) Yield Statistic has been computed on the basis of total revenue of the hotel and potential
revenue of the hotel;
(i) Revenue from hospitality suites have not been provided.
Answer 2
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In the second part of the assignment computation for required non-revenue per guest has been
done so as to match the contribution of highest revenue getter i.e. Religious Group has been
done in the following manner
((Contribution from Religious Group _+ Trasient + Fraternity – Contribution from Trasient +
Fraternity)/ CMRw)/ No of Person
Similarly with corporate group
((Contribution from Corporate Group + Trasient + Fraternity – Contribution from Trasient +
Fraternity)/ CMRw)/ No of Person
Accordingly, the non –room revenue required for Transient and Fraternity Only is detailed
here-in-below:
(a) To Match Religious Group : $273.52 per person
(b) To Match Corporate : $ 390 Per person
Similarly for corporate group, the formula for computation is detailed here-in-under;
((Contribution from Religious Group + Trasient + Fraternity – Contribution from Trasient +
Corporate Group+ Fraternity)/ CMRw)/ No of Person
Accordingly, the non –room revenue required for Transient, Fraternity and Corporate Group
is detailed here-in-below:
(a) To Match Religious Group: $37.44
The detailed computation has been provided in excel.
Further, assumptions made in the said computation has been detailed here-in-below:
(a) Shoulder Dates : Monday and Friday;
(b) Revenue from Meeting room or conference room has not been considered;
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(c) It has been assumed that the religious group accommodated rooms on Friday shall be 70;
(d) Potential revenue shall be 100% as the official occupancy rate details has not been
provided;
(e) CMRw represents the margin earned for selling food expenses i.e. contribution;
(f) Marginal cost is room wise and not on head count wise and it is variable. Thus, only the
room accommodated shall bear the same;
(g) There has been two contradictory lines in the case study whereby it has been stated that
Fraternity Group has booked the hotel for a week. Under the second line, it has been
stated that the said booking has been for four days. The second view has been held for
doing the question;
(h) Yield Statistic has been computed on the basis of total revenue of the hotel and potential
revenue of the hotel;
(i) Revenue from hospitality suites have not been provided.
On the basis of above, it can be seen that the highest revenue maker for the hotel group in
terms of room shall be option-1 i.e. Religious Group or Revival Group. Further, on deeper
analysis considering Non- Food Revenue, the views shall not change as Corporate Group
shall require an additional expenditure of $76,000 to match contribution of Social Group.
Thus, it shall be beneficial for the Hotel group to switch for option -1 as it maximises profit
of the group.
Answer 3
The other variables that shall be considered by the company while making decision regarding
options shall encompass the following:
(a) Long term Relation;
(b) Other contracts that can be obtained through the said contract;
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(c) Possible Image of the company;
(d) Brand Image of the corporate and Religious Group;
(e) Soft Dollars if any;
(f) Other opportunities, if any.
Answer 4
The denial of the Corporate Group shall be made by stating that the Hotel has been booked
for the said week. Further, an incentive or discount may be offered to make a prior week
booking to maintain relationship and transact business. Further, a letter of apology shall also
be made so as to not offend the corporate group.
In addition, efforts shall be made to retain the relation.
Answer 5
Ellen Zurpava, director of sales on the advice of Mr. Bill McAddlepot, General Manager
shall accept the proposal as he in the top of the board. Accordingly, the said decision shall be
taken by them.
The acceptance shall be made for religious group/ revival activity as the contribution is
maximised under the said model.
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