Chuck Stout is the RM for the Holiday Inn Express. His 220-room property normally sells 85 percent of its rooms on Tuesday nights at an ADR of $141.50. All variable costs related to selling his rooms are $55.00 per room. The DOSM at his Holiday Inn Express is proposing to place a bid to sell 125 rooms for a Tuesday night next month at a rate of $109.00 per room. Chuck believes that if the hotel wins this group rooms bid, the transient room sales for that day will ensure a sell-out at the rate of $141.50.
A. What would be the total amount of revenue the hotel will achieve if: It makes the group sale? _________________ It does not make the group sale? _________________
B. What would be the total amount of after-variable costs rooms’ revenue the hotel will achieve if it wins the group rooms contract? _________________
C. What would be the after-variable room’s income if the hotel does not win the contract? _________________
D. What additional factors might Chuck and the DOSM take into account before determining whether to bid on this piece of group rooms business?
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