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total quality management
Revenue Management For The Hospitality Industry 1st Edition David K Hayes, Allisha Miller - Solutions
This chapter included the key sentence:Effective RMs measure what matters.Revenue generation matters. List three specifi c dangers faced by a foodservice operation that does not carefully scrutinize the sales-related effi ciency demonstrated by each of its revenue generation centers.
In a foodservice operation the control of costs is important, but so is an analysis of revenue optimization efforts. How would a RevPASH calculation help Damario better explain the apparent impact of this new promotion to Sam?
What do you think will be the net effect of this hot dog promotion on the operation’s revenue generation? On its net operating income?
Many foodservice professionals (like Sam)equate increased check average with increased profi tability. For the typical foodservice operation, do you feel it makes more sense to grow profi ts via the maximization of check average or the optimization of seat utilization? What are the potential
José López married María Famosa. Their son Juan López Famosa graduated from hospitality school and assumed the management of the family-owned Havana House restaurant. The operation features Cuban foods and is open for lunch and dinner. The restaurant normally seats 100, but during portions of
Gene Monteagudo is a district manager for the Pizza Time chain of pizzerias. His promotion to regional manager means he must select one of his current unit managers to fi ll his district manager’s (now vacant) position. Gene will choose from among the managers in the six units that make up his
Jack Sparrow is the owner of Captain Jack’s Seafood. It is open seven days a week. Jack monitors three revenue sources in his operation. These three sources are the dining room, the bar, and his carryout operation. Jack fi nished tallying his February 2013 sales. He wishes to compare his revenue
Bonita Reya is the RM for the Mayfair hotel. She is comparing this February’s food and beverage (F&B) sales to the F&B sales achieved at the hotel this past January. Sales were up in all of Bonita’s revenue centers! The hotel has one dining room, a lounge, and accounts separately for banquet
Phillipi Chow is the owner of the Shanghi House Chinese restaurant. The Shanghi House consists of two distinct dining areas. Cheng’s (dining room) provides an upscale dining experience designed to rival the fi nest of Hong Kong eateries. Lohr’s (dining room) is a casual dining area that
The sous chef in this case said, “We’re keeping up easily.” Do you think that means the operation is being effi cient at labor-related revenue optimization on this night? If you were the RM, how would you seek to solve this restaurant’s guestservice related problems?
What do you think is the cause of a consistently long line of waiting diners when there are a large number of vacant, cluttered, but unbussed tables in the dining room?
Do you think the restaurant’s servers are likely doing their best to provide good service to the restaurant’s guests? If so, then why was the guest in this scenario unhappy?
What could Emesta do in her scheduled meetings to help resolve this confusion?
Do you think the misunderstanding Darryl is experiencing is a common one? Explain your answer.
Describe the reason Darryl is having diffi culty understanding the 6.1 percent sales increase announced by Emesta.
Assume you were Sofi a and that you supported trying out Damario’s idea.What would you say to Sam? What specifi c measure(s) or operating statistics would you want to see after the plan’s implementation that would help convince you (and Sam) of its effectiveness?
Damario appears to believe that optimization of food and beverage revenue is based primarily on menu mix and capacity maximization. Sam’s position appears to be that profi t optimization is a matter of maintaining proper product cost ratios(and thus the hesitancy to reduce prices on the hot
Pricing decisions are often viewed in internal operational terms. Ultimately, however, external guests’ reactions to pricing and revenue optimization strategies are of most importance. How do you think the resort’s guests would respond to Damario’s plan? Do you believe the plan is consistent
In this scenario, Damario presents a potentially controversial proposal to his boss prior to introducing it to the entire Strategic Pricing and Revenue Management committee. Why do you think Damario chose to do this? How important would Sofi a’s support likely be to Damario’s success in gaining
Dino’s Bar B Q serves only three dinner plates. These are Bar B Q chicken, beef brisket, and smoked sausage links. Dino’s served 1,000 guests each day on Monday, Tuesday, and Wednesday of last week. Scott Larsen, the restaurant’s manager tracked the percent of guests who chose each item on
Assume you are the RM for a newly opened theme park in a major southwestern city.Your guests will consist primarily of families visiting the park, as well as schoolchildren on fi eld trips and church youth groups. Yours is the only such park within 150 miles.Identify at least fi ve noncost factors
The menu at Lara’s Salads and Subs consists of only four items. These are salads, subs, drinks, and chips. Lara’s menu and the historical sales data she has collected over the past three months are presented as follows. Lara is considering the potential impact on revenues of creating a value
Fawzia Mohamed is the GM and RM of a popular 300-seat family-style Italian restaurant open only for dinner. Nightly, she calculates a variety of statistics that help her better understand the revenue-generation abilities of her operation. Complete the revenue generation report she has developed
David Berger is the F&B director at the private membership Fox Ridge Country Club.He is implementing a new dining room menu and has calculated menu prices for the six new entrée items the menu will include. Review the worksheet below and then answer the questions that follow.A. Which of David’s
Can the distribution method RMs use to advertise a specifi c price affect the profi le of guests who respond to it? Do you see similarities between price distribution strategies in the foodservice industry and the various distribution channels managed by lodging industry RMs?
Do you agree with Braylon that all foodservice guests seek bargains when dining out?
Do you think the guests who would be attracted to Braylon’s pricing strategy are the same type of guests as those that would be attracted to Lynette’s pricing strategy? Why?
Do you think Henri’s new menu price was a direct result of Mark’s cost-based pricing philosophy? How would you have advised Henri to respond to the increase in red snapper cost?
Assume you were a regular customer at Chez Paul’s, and that the snapper was your favorite item. How would you likely respond to the new menu price? If you bought it, would you consider the item to have delivered an extra $9.00 of value to your dining experience?
Assume you were a server at Chez Paul’s on the night this new menu price was initiated. How would you respond to a returning guest who questioned the signifi cant price increase on the snapper item?
Assume you were in favor of increasing the RevPAR target next year by 8 percent. Would you be in favor of increasing rack rates, reducing discounts offered, or increasing the number of discounted rooms available for sale? What specifi c additional data would you want to see before making your
Assume you were on Damario’s RM team. Since the property’s room rates are below the competitive set’s, what specific additional data would be required to convince you that it would be a good time to raise your rack rates?
What evidence in the conversation between Sofi a and Damario would lead him to believe the property was ready to seek signifi cant rate increases?
Watson Walbert is on the corporate RM team for the Sunbird Hotel Corporation. Sunbird is the franchisor for Red Robin and Falcon hotels. Part of Watson’s job is evaluating revenue and Net ADR Yields for the distribution channels used by the company franchisees. Sunbird charges its franchised
Jerielle Pelley is the front offi ce manager at the 125-room limited-service Best Stay Inn.She also serves as her property’s RM. Jerielle has just taken a call from Lawrence, a friend and the RM at a hotel within her comp set. Because of an internal oversight, Lawrence’s hotel is overbooked by
Jamie Lynn is the RM at a 250-room full-service hotel property. Her comp set includes fi ve full- and limited-service properties:A. Assume there were no changes in the number of rooms offered by the comp set or by Jayme Lynn, during the period January to May. What was Jayme Lynn’s proportion of
Paige Vincent is the RM at the City Center Novotel. For over 12 months, she has been working hard to improve the performance of her hotel. Paige just received the following performance data. Help her understand the revenue optimization trends for her property by completing the chart and then
Antonio is the RM at the 180-room Hawthorne Suites. Disappointed in his occupancy rate last year, he decided to reduce his room rates this year by 10 percent to help increase sales and improve his RevPAR. This action resulted in an upswing in occupancy, from 75 percent last year, to 85 percent this
What actions would you advise Ja Lin to take to learn more about her hotel’s relative placement within her competitive set and the customer value her hotel delivers?
Do you think the current strategy is in the long-term best interests of the hotel’s owners? Explain.
What do you think has been the rationale behind Mark’s revenue management strategy?
If you were the RM at this property, would you advise Elijah to take the group? Why or why not?
What additional factors would you advise Elijah to consider before he decides whether to accept the reservation for the rooms requested by the Lion King’s booking agent?
If he takes the group, would Elijah achieve the RevPAR needed to be granted the performance bonuses offered to him and his assistant?
The job of an RM is to use data and insight to optimize the property’s revenue.
Adrian’s concern relates to the hotel’s ability to convert low-priced buyers to higherpriced buyers in the future. Amanda’s concern relates to the impact on other guests of room sales made through BidCarib.com.Do you believe their concerns are valid?Explain your answers.
Pam’s position appears to be that the use of opaque web sites allows signifi cant discounting without harming the resort’s image. Do you agree? Explain your answer.
Increasingly, information about hotels is distributed via Web 2.0 sites. Unfortunately, some of the information posted on such sites is not accurate or fair to hotels. Assume that you are the RM for a property that has just received an extremely negative customer review. The review was written by
Carrie Thorton is the RM at the 400-room Sheraton Bay City, the highest-priced hotel in a popular summer vacation area that is home to 15 other hotel properties. Carrie has been approached by her local CVB to participate in a rooms bid for Bay City to host the organizers, participants, and
Joel estimates that the net ADR yield on the 200 rooms he has already sold will average 88 percent. He also knows that at his hotel it costs $55.00 to prepare, sell, and clean (prepare for resale) each room sold. To help him make the very best revenue optimization decision possible, complete the
Joel knows that under his franchise agreement, he pays an 8 percent franchise fee and 3 percent marketing fee on all revenue generated from room sales. Additional fees for using the hotel’s CRS are 1 percent of booked revenue plus $2.00 per each room reserved. Internet service provider (IDS)
Joel Liberman is the RM at the City Center Plaza, a 300-room franchised hotel. He is evaluating alternative options regarding the allocation of 100 unsold guest rooms for the third weekend of next month. His property’s group room sales department believes(but is not positive) that it can sell 80
If you were the GM of the hotel, what other factors would you want your RM team to consider before making the fi nal decision on this issue?
In addition to the actual costs associated with the two alternatives, what net ADR yield considerations should be part of this decision-making process?
Assuming similar costs and revenue generation from these two channels, what customer-related factors would likely infl uence Lucir’s decision?
What are the dangers to the future success of this revenue management team if Amanda is not brought “on board” with the decision made by Damario and Pam?Whose job is it to see that Amanda and her entire front offi ce team actively support the fi nal decision?
Assume the tactic proposed by Damario is implemented. What will be the likely outcome if Pam’s bid is rejected by the Author’s group?
Why do you believe Amanda is concerned about the elimination of discount rates during the period of this convention?
Josiah Prentiss is the VP of RM for the ten-unit Mahler’s Hotel Management Company. Mahler’s has contracts with various hotel owners to operate the hotels. The properties are fl agged with brand managed by three different franchisors (Marriott, Hilton, and Choice). Josiah has been approached by
Due to a weak local economy, business is slow at the Haymen House, a 300-room property owned by the Haymen family. Last month’s ADR was $159.00. Occupancy was 58.5 percent—down from the prior year’s same month occupancy of 65 percent.Bill Zollars, RM for the Haymen House, and Rebecca Mornay,
Tonya Stephani is the front offi ce manager/RM at the 200-room Hilton Garden hotel.Tonight, she has 100 stay-over rooms and 100 arrivals. Based on her own forecasts, she anticipates 10 no-shows tonight. The average rate to be paid by each arriving guest is$199.99. Tonya has a signed agreement with
Poco Miller is the RM at the Hampton Inn. Mark is the property’s FOM and Latisha is the DOSM. All three serve on the hotel’s RM committee. The hotel has 175 rooms. Next month the hotel will serve as the host hotel for the Retired Firefi ghters Association. The Association originally blocked 90
Sherri Lamar is the RM at the 200-room Kingston Harbor Inn. The Inn has fi ve different room types, each with a rack rate that refl ects its guests’ view of each room type’s value. Sherri knows she cannot upsell guests who stay in her highest rated rooms; however, she feels there is good
Assume these were your grandparents and the wedding they wished to attend were your own. Would you share details of this incident with those you know? Would you use the Internet to share the details with them? How would your comments refl ect on the Lakeside Plaza?
If the RM at the Lakeside Plaza intentionally overbooked on the night of the Barneses arrival, was his or her action ethical in your opinion?
What did the Lakeside do wrong in the case of Mr. and Mrs. Barnes?
Assume you were Josephine. How important would data management be to your decision to increase or to maintain at present levels the size of this group’s room block? How important would insight be to the process? Would you favor adding rooms to the group’s block at the discounted rate?
Mathematically, it should be easy for Erick to prove the superior short-term RevPAR impact of his position. What, if any, impact would those same mathematical results have on the likelihood of future sales to Elizabeth’s group?
What are some possible reasons you believe would motivate Elizabeth to support granting her group’s request?
In this scenario, the number of potential guests delivered to this destination by this air carrier will likely be reduced. If that is so, what impact would signifi cantly reducing room prices in an effort to stimulate demand likely have on the resort’s thirdand fourth-quarter RevPAR
What specifi c historical data would be helpful to them as the RM team evaluates the potential impact of the airline’s decision?
A 400-room hotel located near Boston’s Logan International airport (BOS) normally discounts very heavily (sometimes as much as 50 percent off the rack rate) on Sunday nights because, historically, it has sold an average of 100 rooms on that night. Historical data taken from the PMS indicates that
Nigar Patel prepares a daily Rooms Forecast Report that is shared with the housekeeping, food and beverage, and front desk managers of the 200-room Comfort Inn she both owns and manages. Today is Monday. Help Nigar complete Tuesday’s Rooms Forecast Report using the following information she has
Wendy Parker works in the sales and marketing department at the Hawthorne Suites. As part of her duties, Wendy updates the hotel’s group room sales pace reports. These reports record the number of rooms that have been sold, by month, for all upcoming years in which groups have reserved rooms.
Amanda Sipe is the RM at the 500-room Doubletree Hotel. She also heads her property’s RM committee. Amanda is preparing for the committee’s weekly meeting and wants to present them with an updated occupancy forecast for the fi rst two weeks of May. Unfortunately, some of the information on the
Lea Ray is the revenue manager at the 200-room Hilton Garden Inn. She tracks her occupancy and ADR on a daily basis. The following data represent her hotel’s Thursdaynight performance for the past seven weeksUsing that historical data, calculate her Occupancy %, ADR, and RevPAR for these trailing
What meetings or conference business has been denied, and why?
What meetings business has recently been lost, and why?
What is the most profi table confi guration (set-up) of those rooms?
What is the best utilization of each meeting room?
What is the role of price in converting a prospect to a customer?
Who are our key buyers of conferences?5.What is their lead time for reserving space?
How could Basil and Sandy ensure that all desk agents at their hotel were aware of all special future sale dates? How could they themselves stay abreast of the future dates they should be carefully monitoring?
Given what you know about differential pricing, why would they eliminate discounts on the rooms sold during the weekend of the Annual Sailboat Show?
As experienced RM, why do you think Basil and Sandy would require a threenight minimum stay for guests reserving rooms during the Annual Sailboat Show?
Part of an RM’s responsibility must include ensuring that guests get what they pay for.Assume you were this hotel’s GM. What would you expect from your RM team in a future and similar circumstance?
Assume Randy had known about the 600 extra guests two days prior to their arrival.What steps might he have taken to ensure the guests received a quality breakfast experience on the day of their departure?
Consider your answers to question 3.What, if any, role should the government play in infl uencing the decisions made by pricing managers? Is it reasonable to assume that politicians without a background in business will understand the challenges of hard and soft constraint pricing? Who within the
Is it ever fair and ethical for a revenue manager who is responsible for the pricing of hard (or soft) constraint products to increase prices by 10 percent in response to increased consumer demand? 50 percent? 100 percent or more? Who within a hospitality business should be responsible for
Consider your answer to the previous question. Do you think that guests of the Barcena Resort, if they overheard your conversation with Sam, would think your explanation to him refl ects a fair and ethical pricing philosophy on the part of the resort?
Assume you were Damario. How would you explain to Sam the differences inherent in pricing hard supply constraint products, soft constraint products, and those with no supply constraints?
John Flowers owns Keneally’s Irish Pub. On the upcoming St. Patrick’s Day, John expects a capacity crowd. John normally operates with four servers. Because of seating limitations, John can only add a total of four more servers to his staff for St.Patrick’s Day. Each server costs John $12.00
Gene Monte is president of the fi ve-unit El Ray Taqueria chain of restaurants. His quick-service operations offer both dine-in and carry-out (drive through) service.Gene is considering keeping his operations open one additional hour per night. Based on his revenue estimates, the following data
Chuck Stout is the RM for the Holiday Inn Express. His 220-room property normally sells 85 percent of its rooms on Tuesday nights at an ADR of $141.50. All variable costs related to selling his rooms are $55.00 per room. The DOSM at his Holiday Inn Express is proposing to place a bid to sell 125
This chapter introduced the concept of congestion pricing for airlines. Assume you were the president of a major air carrier and that during a televised national news program, you were asked your opinion about the fairness of it. How would you respond? What applications would your answer have
How would Tara know if there are state or local laws that could directly affect the room rate decision she is about to make?
Are there ethical issues in play in this scenario? Explain your answer.
If you were Tara, would you increase the room rates at your hotel above the normal“rack” rate? How much?
If they do vary from traditional pricing approaches, a seller’s pricing offer must be easily explained and understood. Deviations from traditional pricing approaches must be presented carefully and fully to consumers who must then perceive them to be fair.
Lower prices (when offered) should be available to all buyers willing to meet the low price criteria or fences established for them. When lower prices are offered to all, potential buyers can decide for themselves whether they wish to meet the qualifying criteria.
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