Business Case Study

 

Continuing with the hotel that you have completed forecasting, budgeting and revenue analysis for, decide how you would handle the following situation.

 

The sales manager has approached you (the Revenue Manager) about a contract she is currently working on. CN Rail wants to arrange for layover accommodations for their traveling maintenance workers. They need to have 15 rooms every night for a year. Based on information she received from the client, she feels that a rate of $65.00 would secure the business. Most workers would arrive after 8pm and be gone before 7am the next day. The rooms would also be double occupancy rooms.

 

The majority of your business is corporate and conference clientele. Most of these guests make their arrangements through a corporate travel agent or travel web site that enter the reservation through the central reservation system. The average reservation fee is $8.00 per reservation.

 

Begin by determining how your business would be affected by taking a one-year contract for CN Rail workers. Use the historical information from last year attached to this assignment (You used this information for your three-month forecast.) This file contains daily statistical information of your business. As you only have the statistical information for three months, base your analysis on April, May and June. Use the income statement (from the budget assignment and attached to this assignment) to calculate your costs. Calculate the contribution margins of various rate categories in an excel spreadsheet before answering the analysis questions. The room rates are in the attached file as well. Include what the cost of displaced business will be if you take the CN account using your Daily Revenue Analysis included with the assignment.

 

Answer the following questions in an essay formatted word document:

 

  • If you compare the contract to the displaced corporate business, based strictly on contribution margin, which business is the most profitable? Why? Explain your calculations to achieve this answer.
  • If you were to gain this contract, which rate categories would you choose to displace and why?
  • What are three advantages of accepting the CN Rail contract and displacing the other business?
  • What are three advantages of declining the CN Rail contact and protecting the other business?
  • If you made the decision, what would you do? Explain why?

 

Upload your calculations in Learn.

Print and submit your analysis to you instructor. Your analysis would be at least two pages.

ADR ROOM SOLD MARGINAL COST CONTRIBUTION MARGIN ROOM REVENUE RESERVATION FEE
 $               26.12
RACK  $     195.00 91  $                        160.88  $         17,745.00  $                   8.00
BAR  $     125.00 2184  $                          98.88  $       273,000.00  $                       –
CORPORATE  $     115.00 3031  $                          80.88  $       348,565.00  $                   8.00
PREFERRED CORPORATE  $     105.00 6099  $                          70.88  $       640,369.80  $                   8.00
TRAVELLER DISCOUNTS  $      95.00 1036  $                          63.88  $         98,420.00  $                   5.00
GOVERNMENT  $     105.00 305  $                          73.88  $         32,060.00  $                   5.00
CONFERENCE  $     115.00 7550  $                          80.88  $       868,250.00  $                   8.00
TOURS  $      85.00 290  $                          58.88  $         24,650.00  $                       –
LEISURE  $     125.00 3360  $                          90.88  $       420,030.00  $                   8.00
CN RAIL  $      65.00 1365  $                          38.88  $         53,076.00  $                       –
REVENUE FROM CN RAIL

Last Updated on February 11, 2019 by EssayPro