c. (Continuing from question #b) Before the hotel manager could communicate her/his acceptance/turn-down decision to the group, the group coordinator calls and says that the group actually needs 99 rooms, instead of 40 rooms, and inquires how much the group should pay per room in order to book the group at the hotel. The group’s F&B revenue is to remain the same. What would be the minimum rate the hotel should charge the group? Show your calculations.

Below is the information needed from question #b:

A hotel has 155 rooms and forecasts to sell 145 transient rooms at $95 each on average on December 1st. A group wants 40 rooms at the rate of $60 for one night on December 1st and promises F&B revenue of $200. For the hotel, the variable cost of selling a room is $45 and the variable cost percentage for F&B is 65%. On average, the hotel transient customers spend $10 per customer per day on F&B during their stay at the hotel. Should the hotel accept this group request? Why or why not? Support your answer by showing your calculations.

Answer rating: 100% (QA)

c b Total relevant cost Variable cost 99 rooms Variable cost of FB Total va... View the full answer