Grand Hotel: Revenue Management Analysis and Strategic Project

This report analyzes revenue management strategies for the Grand Hotel, comparing two scenarios to maximize profits. Scenario 1 (Part A) shows higher overall profit, particularly in the hotel division, while Scenario 2 (Part B), which involves discounting, benefits the breakfast division but reduces overall profitability. The analysis includes segment-wise profit calculations for ultra-luxury penthouses, executive luxury suites, luxury suites, and boutique suites. The report concludes that the hotel should implement Part A strategy to increase revenue. The document is available on Desklib, a platform offering various study tools and solved assignments for students.

REVENUE MANAGEMENT ANALYSIS STARTEGIC PROJECT
Purpose
The report has been written to analyse the difference of profits made under 4 segments of the hotel unit under two different scenario proposed.
The analysis includes computation of revenue under the aforesaid two scenario along with revenue earned. The analysis further involves
computation of segment wise profits and the overall profit of the company under both the scenario. In conclusion, a comparison of profits has
been to draw conclusion regarding proposed scenario.
Comparison of Margin Analysis
The table of comparison has been highlighted here-in-below detailing the profits earned by the rooms under two scenario, revenue earned from
breakfast under two scenario and total profits under the proposed two scenario:
Comparison
Sl No Particulars Ultra Luxury Pent House Executive Luxury Suits Luxury Suits Boutique Suits Total
HOTEL
1 Profit Under Part A 3620039.2 4140864 10290000 6087123 24138026
2 Profit Under Part B 4349916.72 3913641.9 8301535.2 5274133.2 21839227
BREAKFAST
1 Profit Under Part A 51537.6 122860.8 529200 873633.6 1577232
2 Profit Under Part B 65473.92 129768.48 569030.4 977184 1741457
TOTAL
1 Profit Under Part A 3671576.8 4263724.8 10819200 6960756.6 25715258
2 Profit Under Part B 4415390.64 4043410.38 8870565.6 6251317.2 23580684
On perusal of the above table, it shall be seen that profit under PART A of the company has been higher compared to PART B. Thus, Part A
shall be preferable. Further, going deeper it can be inferred that the profit of the company has been higher under PART for hotel division
compared to PART B. It may also be seen that profit for breakfast division has been in favour of PART B compared to PART A.

Going further in-depth, under PART B of the analysis, it shall be seen that revenue has increased for Ultra Luxury Pent House, while the same
has declined for other 3 compared to PART A. On comparing the hotel division, similar views can be held as only the Ultra Luxury Pent House
has been benefitted under Scenario 2.
On comparing the breakfast division, it shall be understood that all the 4 types of rooms have been benefitted and the net profit of all the rooms
have increased in respect of breakfast division,
Impact of Discounting
The discounting model under scenario 2 has not been so beneficial for the company as the overall net profit of the company has decreased
compared to Part A. Further, the revenue from hotel division has also decreased compared to Part –A. Only breakfast division has been
benefitted but that benefit has been offset by the reduced profits under the hotel division.
Conclusion
The company should go for PART –A
Discounting Works
Discounting has been one of the significant tools in marketing too lure customer and has always been an effective tool. Providing discount to
occupants during the lean period to increase the revenue has always been a customary practice in hotel business. The said tool helps business to
able to recover its fixed cost and earn slight profit. Further, the hotel charged premium price during peak periods to earn significant profits. Thus,
providing discount in tariffs has always been a custom under the hotel business.
Further, from the view point of customer, the same appears cheap and they generally prefer to go for the same.