The Role of Function Space Function space provides a significant revenue stream for most hotels. Function space demand consists of both groups who both rent space and guest rooms (typically conferences and meetings) and groups who rent only space (usually social events). Generally, function space is managed by the Sales and marketing department and is broken into four or more groups, including weddings, conventions/exhibitions, meetings and social, each with its own director and team of sales managers. PROBLEM FOR CASE STUDY The Director of Marketing of a large convention hotel was looking at the financial aspects and noticed that the revenue from social catering had dropped from $5,116,174 (2018) to $5,021,195 (2019). Occupancy was slightly up (2019, 59.64%; 2018, 59.57%) but the average rate (2019, $0.597 per square foot, 2018, $0.609 per square foot) and the revenue per available square foot (2019, $0.356; 2018, $0.363) were down. What was even more surprising was that the average guest room rate had increased by 8 per cent and RevPAR had increased by 12 per cent. How could they be making less money when there were more weddings this year? What was going on? Currently the sales managers are given a set of dates to book weddings (some dates are not available because other events require the use of the ballroom). The sales managers can book one large wedding in the whole ballroom or have two smaller weddings in each half. The whole ballroom can fit 500 covers while each half can fit only 220 covers. Sales managers have two sets of menus with a low budget option and a high budget option. The sales manager is expected to get $21,000 in revenue for Saturday nights for the ballroom or $12,500 for half the ballroom. The sales manager can discount all other time periods. Demand varies by month with most weddings occurring May through October. Saturday nights are the most popular time to hold a wedding followed by Saturday afternoons. Upon careful study, the Director of Marketing found that many clients were having difficulty in meeting minimum revenue requirements and that sales managers were offering expensive (but unprofitable) upgrades such as ice carvings and sweets tables in an attempt to qualify the client and meet their monthly revenue quota. In addition, sales managers were booking the weddings far out. About half of all weddings were booked more than a year before the event. The staff has been noticing that they have been turning away many unexpected short-term weddings. In fact, turndown and lost revenue far exceeds the amount of revenue booked. A turndown is counted when there is no space to offer the guest or hen the guest does not meet the hotel's criteria. Lost business refers to when the client chooses not to book the hotel. In addition, groups which wanted to use guest rooms have been turned down when the ballroom was needed but was already booked for a wedding. The reasons for turndown and lost business vary, with some clients simply 'shopping and others not meeting the hotel's criteria. The Director of Marketing has asked you to analyze the current situation and develop a revenue management strategy for weddings. Be specific on how she can take your recommendations and implement the suggested policies in her hotel. Specifically: 1) What is causing this problem? 2) What pricing and duration control management strategies do you suggest? 3) What implementation issues will she face? How should she handle them? How will she be able to measure her success with her revenue management program