You are the RM at Purple Resorts. Jenny is the propertys DOSM and Danny is the FOM.
Question:
You are the RM at Purple Resorts. Jenny is the property’s DOSM and Danny is the FOM. All three serve on the hotel’s RM boards committee headed by the DOSM. The hotel has 125 rooms that it can serve provide to customer per night stay. Last year records show that the hotel usually has 92% occupancy for the New year holiday season from 28th December till 2nd January every year. The rooms are to sell at a rack rate of $129.99 per night.
Danny has been approached by the Australian Cricket Association to block 100 rooms (80% Occupancy every day from 28th December till 2nd January for $109.99 per room. Purple Resorts Australia RM Committee are planning to find out whether Danny’s offer would be beneficial or should they open for business as usual to operate with the forecasted 92% occupancy. The RM committee requires you to differentiate explain which of their costs are fixed and variable and any recommendations to change from the variable to fixed costs or would that be better to stay as variable costs according to the cost behaviour and driver.
Required:
The DOSM, head of the RM committee has asked you to prepare the following and submit a report to the RM committee with the following requirements below to decide
- The Forecasted total cost and revenue for Danny’s Proposal and normal occupancy (4 marks)
- The Break-even units in rooms and dollars ( 4 marks)
- Comparison of Danny’s proposal with the normal occupancy and which would be yielding more? (4 marks)
Matching Supply with Demand An Introduction to Operations Management
ISBN: 978-0073525204
3rd edition
Authors: Gerard Cachon, Christian Terwiesch