Bill O’Leary could see both sides of the issue. As the general manager of the 500‐unit Plazamar Hotel, he knew how important it was to remember that both members of his room revenue management team now sitting across his desk shared the same goals. 

What Elizabeth Sipes was asking for, he knew, seemed reasonable to her. As director of sales and marketing, Elizabeth had worked hard to secure a chance to bid on the annual meeting of the State Dental Association. While the normal ADR achieved by the Plazamar was $150 per night, Elizabeth wanted to bid the rooms for the dental meeting (350 rooms per night for three nights) at $99.00 per night. At that proposed rate, she was convinced the hotel would win the bid. And if only 150 rooms remained to be sold on those three nights, the hotel could eliminate all discounts on its remaining rooms and thus maximize its RevPAR. At a bid rate higher than $99.00 per night, she warned, the State Dental Association would likely elect to go to the Altoona Hotel, the Plazamar’s biggest competitor.

“Let them have the dentists,” said Tony Baltimore, the hotel’s front office manager. “The Altoona only has 400 rooms. If they sell out, we’ll take their overflow. With our normal 65% occupancy and all of their overflow, we’ll sell out anyway. And we can get $150.00 per night or more for all 500 of our rooms. That’s how you maximize RevPAR.”

1. Assume you were Bill. Whose argument makes most sense to you? Why?

2. Assume the Plazamar is a full‐service hotel. What impact would non‐rooms revenue have on Bill’s decision?

3. Based upon this scenario, assess the rooms revenue management decision‐making process in place at the Plazamar. Do you believe it is working well? Why?