Home / Questions / The Inviting Inn has 500 available guest rooms For a certain week next month the anticipat...
The Inviting Inn has 500 available guest rooms. For a certain week next month, the anticipated transient demand for rooms is as follows:
Monday |
200 |
Tuesday |
200 |
Wednesday |
200 |
Thursday |
200 |
Friday |
100 |
Saturday |
50 |
Sunday |
50 |
The Inn also has committed the following number of rooms for group sales during the same week:
Monday |
200 |
Tuesday |
200 |
Wednesday |
300 |
Thursday |
300 |
Friday |
100 |
Saturday |
100 |
Sunday |
100 |
The Inn has the possibility of booking another group of 100 rooms for the nights of Tuesday, Wednesday, Thursday, and Friday of that week at a discounted rate of $60 per room. The Inn’s rack rate for transient guests is $80, and its marginal cost per room sold is $15.
a. Assuming the new group is booked, calculate the additional net sales revenue (gross sales revenue less marginal costs) to the Inn.
b. What factors, other than net sales revenue, might you consider before committing to this new group sale?
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