Revenue Management Scenario Evaluation Essay

Introduction

Inventory allocation decisions are critical in hotel management, especially in driving marketing moves. Different performance matrices such as average daily rate (ADR), occupancy (Occ), and on-the-books (OTB) are used to determine the performance of the business. The data collected on the client segmentation, trends in bookings, seasonality, and setting rate makes it possible for the hotel managers to integrate and analyze these datasets to forecast their services’ demands¹. The following observations on the Parmelia Hilton Perth data are essential to make recommendations for the Perth Royal Show expected within the city.

Observations

Based on the hotel data and calculations done, the current occupancy rate is 53.57% compared to the same time last year when it was 51.61%. This reveals that the current bookings are higher than it was over the same period. However, the data also reveal that the hotel could actualize a 78.12% bookings rate at the end of the year. Based on the trend in the same period, it indicates that the current business operation is better than the previous year.

Analysis

The hotel has a total of 1,988 rooms, which is a constant value that the hotel operates. As of the current statistics, 1,065 rooms have been booked compared to 1,026 booked at the same time the previous year. The current bookings generated total revenue of $275,865 compared to $279,895 generated at the same time a year ago. Consequently, this resulted in the last year’s ADR of $272.8 compared to this year’s $259.03. This trend is inconsistent as a higher rate booking rate experienced in the current period should result in more revenues. This indicates that the sales in the pricing of the rooms were lower in the current period.

Recommendations

Based on the trend and analysis conducted, the hotel should consider the following recommendations:

1. Increase marketing to reach the maximum possible number of clients possible. This is critical because the customers are increasing and showing great interest in the hotel.
2. The hotel should increase its booking prices since the number of customers is likely to increase due to the event

Reference

Bai, Yunmei, and Chun-Hung Tang. “Determining the optimal group rate in the hotel industry.” Journal of Revenue and Pricing Management (2020): 1-11.

Appendix

_{Calculation Result}

_{* Total Available Room: 284rooms * 7 days = 1,988 rooms}

_{The process I calculated}

• _{Current OTB:}
  • _{OCC: 1,065(room sold) / 1,988 (Total available room) = 53.57%}
  • _{ADR: $275,865(Revenue) / 1,065 (Room sold) = $259.03}

• _{Same Time Last Year:}
  • _{OCC: 1,026 / 1,988 = 51.61%}
  • _{ADR: $279,895(Revenue) / 1,026(Room sold) = $272.80}

• _{Last Year Actuals:}
  • _{OCC: 1,553 / 1,988 = 78.12%}
  • _{ADR: $480,636(Revenue) / 1,553(Room sold) = $309.49}

Footnotes

1. Bai, Yunmei, and Chun-Hung Tang. “Determining the optimal group rate in the hotel industry.” Journal of Revenue and Pricing Management (2020): 1-11.