Ch. 8 TYS Student Version Hw

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School

Florida International University *

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6466

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Business

Date

Feb 20, 2024

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xlsx

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Uploaded by mandalysha

TYS 1 RevPAR Estimate Worksheet: City Center Plaza Distribution Channel Group Rooms No Specials Previous Booked Revenue: 200 @ $249.99 $ 49,998 $ 49,998 Estimated Channel Contribution (rooms sold) 60 45 Channel ADR $ 185.00 $ 249.99 Estimated Channel Contribution (revenue) $ 11,100.00 $ 11,249.55 Total Rooms Revenue Estimate $ 61,098 $ 61,248 Total Rooms Sold 260 245 ADR $ 234.99 $ 249.99 Joel Liberman is the revenue manager at the City Center Plaza, a 300‐room franchised hotel. He is evaluating alternative options regarding the allocation of 100 unsold guest rooms for the third weekend of next month. His property's group room sales department believes (but is not positive) that it can sell 60 group rooms for that date at a rate of $185.00 per room. The hotel's FOM believes that, with no special promotion of any kind, the hotel will likely sell 45 rooms at full rack rate of $249.99. The FOM also believes that if the 100 rooms are listed on the “Deals at This Hotel” page of the franchisor‐ operated property website, with a 20 percent discount off the hotel's rack rate, 80 rooms would likely sell through the CRS. The sale would apply only to buyers willing to agree that the room would be billed to the guests at the time of purchase and could not be canceled. Uberhothotels.com, a third‐party agency model operator, requires a 25 percent commission and wants a commitment from the hotel that it would be able to buy and then resell up to 100 rooms for that weekend. It believes it can sell all 100 rooms if the hotel pays it an additional 5 percent premium commission to be listed first on its website for the next 10 days. Assume 200 rooms have already sold at rack rate and that each distribution channel produces as projected. Complete the following revenue estimate report Joel has developed and then answer the questions that follow.

Occ. % 86.7% 81.7% Rev Par $ 204.44 $ 204.99 A. Based on his best estimates of each channel’s performance: 1. Which channel would produce the highest ADR? No specialw would produce highest ADR 2. Which channel would produce the lowest ADR? OTA would produce the lowest ADR B. Based on his best estimates of each channel’s performance: 1. Which channel would generate the highest occupancy %? OTA would produce highest occu 2. Which channel would generate the lowest occupancy %? No specials would produce the low C. Based on his best estimates of each channel’s performance: 1. Which channel would generate the highest RevPAR? OTA would produce highest RevPAR 2. Which channel would generate the lowest RevPAR? Group Rooms would produce lowest Re D. If you were Joel, to which channel would you allocate the 100 rooms? Explain your answer? a 100% occupancy and high RevPAR

CRS Sale OTA $ 49,998 $ 49,998 80 100 $ 199.99 $ 174.99 $ 15,999.20 $ 17,499.30 $ 65,997 $ 67,497 280 300 $ 235.70 $ 224.99 Prepared by Joel L .

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93.3% 100.0% $ 219.20 $ 224.99 upancy west occupancy evPAR ? I would allocate to the OTA with

TYS 2 Net ADR Yield Estimate Worksheet: City Center Plaza Distribution Channel Group Rooms No Discount CRS Sale OTA Estimated channel rooms sold 60 45 80 100 Standard Rate $ 185.00 $ 249.99 $ 199.99 $ 174.99 Gross Revenue $ 11,100 $ 11,249 $ 15,999 $ 17,499 Franchise fee (8%) $ 888 $ 900 $ 1,280 $ 1,400 Franchise marketing fee (3%) $ 333 $ 337 $ 480 $ 525 $ 231 $ 202 $ 320 $ 375 IDS fee ($4.00 per room) $ - $ - $ - $ 400 Total channel costs $ 1,452 $ 1,439 $ 2,080 $ 2,700 Net total revenue $ 9,648 $ 9,810 $ 13,919 $ 14,799 Net ADR yield 86.9% 87.2% 86.9% 84.6% Prepared by Joel L . Franchisor’s CRS fee (1% + $2.00 per room)) A. Based on Joel’s calculated net ADR yields for each of the channels: 1. Which channel has the highest net ADR yield? No discount 2. Which channel has the lowest net ADR yield? OTA B. Based on Joel’s calculated net total revenue achieved under each of the sales scenarios: 1. Which channel would generate the highest net total revenue? OTA 2. Which channel would generate the lowest net total revenue? Group Rooms C. Based on this information, if you were Joel, how would you allocate the 100 rooms? Explain your answer. I would allocate to CRS with the second highest total revenue and mid ADR yield.

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TYS 3 GOPPAR Estimate Worksheet: City Center Plaza Distribution Channel Group Rooms No Discount CRS Sale OTA $ 43,998 $ 43,998 $ 43,998 $ 43,998 $ 9,648 $ 9,810 $ 13,919 $ 14,799 Total Net Revenue $ 53,646 $ 53,808 $ 57,917 $ 58,797 Total rooms sold 260 245 280 300 Rooms Cost @ $60.00 CPOR $ 15,600 $ 14,700 $ 16,800 $ 18,000 After Rooms Costs Net Revenue $ 38,046 $ 39,108 $ 41,117 $ 40,797 GOPPAR $ 561.15 $ 443.78 $ 1,215.85 $ 22,797.00 Prepared by Joel L . Previous Booked Rooms Net Total Revenue @ 88% Net ADR Yield Channel contributed net total revenue (From Question 2) A. Based on Joel’s calculated GOPPAR for each of the channels: 1. Which channel produces the highest GOPPAR? OTA 2. Which channel produces the lowest GOPPAR? No discount B. Assume you were Joel. 1. What additional customer-centric revenue optimization factors might affect your decision to utilize or not utilize the group rooms distribution option? I would consider if the group rooms would disrupt regular room sales where I could make more revenue. If I see an influx of regular room reservations, I would consider adjusting the dates for the group sales in order to accommodate everyone. 2. What additional customer-centric revenue optimization factors might affect your decision to utilize or not utilize the no discount rooms distribution option? Whether I offer discounts or no discounts would depend on the time of year, and if there are any local events happening. If I am aware there will be a lot of travelers at certain times of the year I will not offer discounts to ensure a rate that is equal for everyone. 3. What additional customer-centric revenue optimization factors might affect your decision to utilize or not utilize the CRS sale distribution option? If I were to utilize CRS I would ensure that the booking system is seamless and user friendly. I would consider a system that has a good mix between automation and customer service with actual sales reps. 4. What additional customer-centric revenue optimization factors might affect your decision to utilize or not utilize the OTA option? If utilizing OTA I would consider online marketing to attract more customers to book through the online travel agency. To not utilize OTA I would create a user-friendly mobile app and loyalty program so the customer can directly book through our site.

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