Case Study 1 (12 points)

How can you be unhappy? asked Charles Lohr. Our occupancy last month was 76 percent; thats almost 5 points higher than the same month last year. And our ADR was $144.85thats about $4.00 more than last year. And our guest satisfaction scores for the month were higher than ever. We had a great month!

Charles was the front office manager at the Branchwater Hotel, a 225-room full-service property located near a busy industrial park. Charles also served as the leader of the hotels revenue management team. The teams role in the hotel was to establish room rates and manage rooms inventory based on the data generated by the hotels property management systems (PMS), as well as the information provided by the hotels sales department. He was in his own office, talking with Sara Argote, the GM of the property.

Well, Im not looking at how we did compare to last year, replied Sara, Im comparing our change to our comp sets change. Its true we were up 5 occupancy points from last year, but the comp set was up just over 10 points.

But what about their rates? asked Charles. What happened there? Did their rates go up or down, and by how much?

Well, lets take a look at that, replied Sara, and then we can assess what happened last month and see if we need to make our own rate strategy adjustments in the future.

Questions:

1. Assume the ADR of the competitive set increased significantly (e.g., more than 7 percent) last month. What would be your assessment of the Branchwaters revenue management performance compared to its comp set? (4 points)

2. Assume the ADR of the competitive set decreased very significantly last month (e.g., more than 10 percent). What would be your assessment of the Branchwaters revenue management performance compared to its comp set? (4 points)

3. Assume you were the hotels GM. What additional revenue-related information would you want to have before assessing whether your propertys revenue management team did a good job last month? (4 points)