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Degree Title: BA (Hons) International Hospitality and

Tourism Management – Level 5

Level:

Module Title: Financial Planning and Revenue

Management for Hospitality and Tourism
Module Code: 215LON

Seminar Lecturer: Seth Lewis

Assignment Title: Case-Study Report

Word Count: 2,000

I, [type your student ID], confirm that this submission is

my own work and I accept all responsibility for any
copyright infringement that may occur as a result of
this submission.
Date of Submission:

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CASE STUDY Part 1

The Chase Hotel in the City of London is a 300 room 4-star full service
hotel with a steak house, sports bar and function rooms. The hotel is
currently independently operated by the Siwel family which began
developing the property 5 years ago and opened the hotel in 2016.

The hotel’s current organization structure is shown below

Alice Boone
General Manager

Mike Stanton
Director of Sales
& Marketing

David Robertson Zoe Britton Bruce Cashman

Director of Director of Food Director of
Rooms & Beverage Finance

Historically the Executive Committee above have collaborated in the

setting of room rates, but Alice is now considering bringing in a revenue
manager.

There is ongoing concern over the ADR and REVPAR that the property
is achieving next to its competitor set. Though guest satisfaction has
remained high, employee retention is 60% year on year less than
competitors in the neighbourhood which are mostly branded hotels.

Chase Comp Chase Comp Chase

2016 Set 2017 Set 2017 2018
2016 Budget
Room 74% 77.5% 85% 81% 84%
occupancy
ADR £205 £229 £214 £237 £229
Double 18% 20% 20%
occupancy

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Fixed costs per room are £15 per available room. Variable cost per
customer is £25.

Question1
Using index formulas, discuss how The Chase has performed next to
the comp set and what steps the revenue management team should take
next. Assess the importance of a competitive set on revenue
management activities (200 words)

Question 2
As Alice is planning to recruit a revenue manager, evaluate the skill set
required for this position and justify who the revenue manager should
report to in the business. (400 words)

Question 3
In 2018, the hotel saw significant demand on the weekend of the Royal
Wedding. Assess the ethical aspects of revenue management when it
comes to pricing. (300 words)

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Question 4
In the second we of August corporate business tends to slow down
considerably. There are 150 rooms on the books for now every night at
a rate of £210 and the hotel would like to sell at least 100 more rooms.
Evaluate the options from the different channels.

The OTA named Bayou will buy 85 rooms at £195 which they will resell
at £210 fully pre-paid with no cancellation options. Historically rooms
booked through Bayou arrive late in the afternoon and leave early the
next morning without breakfast but do frequent the bar late at night
before closing. We can estimate a net income (profit) of £5 per Bayou
customer. Bayou bookings tend to run 30% double occupancy

Mike the Director of Sales and Marketing is hopeful that groups can
bring in 90 rooms per night at £270 including breakfast. All rooms
would be double occupancy.

Evaluate which channel would be the best to pursue for these additional
rooms
Explain the benefits and challenges of working with OTA’s
(250 words)

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Business through Group
OTA’s Series

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Question 5

Having assessed the situation, the owner of The Chase is considering

different brands that the property could join as a franchisee. Despite the
number of soft brand options available, there seems to be the best
opportunity in joining a brand that will require a Profit Improvement
Programme (PIP) and an investment of £2,500,000.

Capital investment £2,500,000

Profit required after tax 15%
Tax rate 20%
The interest payable on the loan taken to pay for the work will be
£500,000
Other non-operating expenses will be £250,000
Fixed costs will be £1,650,000
Variable costs per occupied room will be £50 per room
Operating income from F&B is expected to be £300,000 and from no-
rooms departments £100,000

What will the additional room rate that we need to charge do we need to
charge to achieve the required return on investment for a year with
occupancy of 75%? Use the Hubbart room rate formula and show
calculations. What if occupancy were 90%?
Explain why the Hubbart formula works well here.
(150 words)

Question 6
Assess the benefits and challenges of working with a hotel brand from a
revenue management perspective.
(400 words)

Question 7
It is now end 2019 and a revenue manager has been in place for a year.
The owners are wondering how much more revenue management can
be applied to parts of the business such as restaurants and events.
Explain for them how revenue management can work for restaurants
and events.
(300 words)

END OF QUESTIONS

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