Case Study

Hotel Mount View is a four-star hotel with 200 rooms, a bar-cum-dining room facility and a conference hall for 250 guests with courtyard dining facility for conference delegates.

OTB demand for the Easter weekend in 2018 as on 15 March 2018 is as follows:

On the Books
Friday, 30 March 2018	Saturday, 31 March 2018	Sunday, 1 April 2018
120	160	150

The rooms are booked by the transient market segment at a rack rate of $180 per room night on each of the three Easter weekend nights. Forecasted transient demand (as of 15 March 2018) is for 100% rooms occupancy on each of those three nights at rack rate. The revenue manager has received a proposal from the local Rotary club for booking the remaining 40 rooms on Saturday at a contracted rate of $ 120 on single occupancy basis. The rate includes breakfast vouchers worth $20 per room (food cost is 35%). The Rotary Club also wants to book the conference hall (and the audio-visual facilities) on Saturday for a rate of $1000 and also organize a courtyard dinner for 100 delegates at $40 per delegate for food only at cost of sales of 35%.

Based on historical data, each transient-occupied room usually spends $40 on average for food (breakfast, lunch and dinner) at an average cost of sales of 35% and beverages worth $25 with a beverage cost of sales of 20%. Approximately 70% of transient bookings are made on the hotel website which has a channel cost of $5 per room. The remaining 30% of transient bookings are made via the OTA channel attracting a commission of 20%.

Room cleaning and variable wage costs are $30 per occupied room.

The revenue manager is debating whether to displace the transients in favour of accepting the group. Write a displacement to advise the RM.