Question: Overbooking hotel rooms ( Occupancy Management ) . The practice of overbooking hotel rooms - accepting reservations for more rooms than are available by forecasting
Overbooking hotel rooms Occupancy Management The practice of overbooking hotel rooms accepting reservations for more rooms than are available by forecasting the number of noshow reservations with the goal of attaining occupancy is viewed by the general public with skepticism. Hoteliers and front office managers who practice overbooking do so to meet an organizations financial objectives, ie to maximize profits. Assume you are a front office manager for a hotel with rooms, and you are responsible for administering and developing a policy on overbooking. In this hotel we will assume that all reservations are Guaranteed reservations where prospective guests have made a contract with the hotel for a room. Below are a few facts to help with the problem.
The hotel has a maximum capacity of rooms.
The hotel makes revenue of $ for each room that is occupied If a customer cancels or is denied a room the hotel does not get any money from this customer
The hotel has a policy to make exactly Guaranteed reservations each day.
Any reservation that is not honored by the hotel will cost the hotel $ The $ is the cost to pay for a nearby hotel room and provide the customer with a complementary dinner at a nearby restaurant.
Assume that the hotel has a fixed daily operating cost of $ and a variable room cleaning and maintenance cost of $ per occupied room.
Complete the table below to help you solve this problem.
Row Number who show up
Row probability
Row revenue
Row variable cost
Row fixed cost
Row profit revenue variable cost fixed cost
What is the Expected Daily Profit for this hotel. Report your answer with at least decimal place.
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