Reference no: EM132659867

Joel Liberman is the RM 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 80 group rooms for that date at a rate of $185.00 per room. The hotel's FOM believes that if the 100 rooms are listed on the "Deals at This Hotel" page of the franchisor operated property web site, with a 25 percent discount off the hotel's normal $229.99 rack rate, 90 rooms might 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 merchant model operator, is willing to pay the hotel $160.00 for each room it purchases but wants a commitment from the hotel that it would be able to buy and then resell up to 100 rooms. It believes it can do so if it lists the rooms as open to all buyers and at a rate of $172.99 per night.

Question A. Based on his best estimates of each channel's performance:

1. Which channel would produce the highest ADR?
2. Which channel would produce the lowest ADR?

Question B. Based on his best estimates of each channel's performance:

1. Which channel would generate the highest occupancy %?
2. Which channel would generate the lowest occupancy %?

Question C. Based on his best estimates of each channel's performance:

1. Which channel would generate the highest RevPAR?
2. Which channel would generate the lowest RevPAR?

Question D. If you were Joel, to which channel would you allocate the 100 rooms? Why?