Revenue Management Exam Answer Key

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Revenue Management Final Exam, 2010-11, Block C
Dr. Lily Lin, MBA, Mr. P. Griep, Dr. M. Lewison, & Dhr. F. de Vries

Student Name: __________________________________Student ID: __________________

Below is a hotel case. You are required to answer all of the questions based on your theoretical knowledge and application skils:

* Terminologies/abbreviations in the case are a part of the exam. No additional explanation will be given..

* All necessary information is included in the case. If the information is not given, there is NO mistake. You are expected to use other given data in the case to make the calculation(s) in order to derive the needed information.

* Round up to one decimal at the end of your calculation.

* For convenience, all currency values are converted into either US$ or Euro.

* Points per question are stated at the end of each question. Total points: 100

* Keep your answers to the point. Long & vague answers will not earn you any point.

* If you really have no clue, leave the question blank.

* Credit will be given for correct supportive arguments when using your own data

* Correct method of calculation but with the wrong result earns no point.

* Use the blank space below each question or the back side of your exam paper to do the calculations.

* -------------------------------------------------
Answer all questions in English. Write in “readable” print letters. Anything cannot be read will not be given credit, regardless of the actual content.

Hotel Beaux Arts is a 83 year old 580 room Hotel located on the left bank (Rive Gauche) of Paris. Hotel Beaux Arts used to be one of the most fashionable Hotels of Paris in the 1930’s attracting the rich and famous from all over the world. Hotel Beaux Arts has undergone many changes and renovations. As of the 1980’s the Hotel was not performing so great anymore and slowly became an old “run down” property.

In order to maintain occupancy the Hotel started attracting the cheaper tour groups and other leisure segments paying relatively little for hotel rooms.

In 2003, the hotel was bought by an investment group who saw great potential in this property after a total rejuvenation and renovation. The Investment group purchased the property for a total of 72 Million Euro and Invested another 31,5 million Euro on renovating the Hotel.

Due to its interesting history, the Investment group decided to create a so-called vintage-chic atmosphere whereby they created a product attracting the higher end of the market once again. The Hotel’s rack rate for 2010 was set at Euro 245,-. The Hotel now competes directly with other 5 star chain hotels in various segments including Business Transient and Group/meeting business and enjoyed an impressive 91.2% occupancy in 2009.

The following table represents data from Hotel Beaux Arts located in Paris. These data represent the figures for the year 2010 (total year). The year 2010 has 365 days.

1a. According to the data above what is the total MPI of Hotel Beaux Arts for 2010…………………………….(3 points) Total MPI is same as Total Index on Occ%; therefore 1.03

1.b What is the total ARI of Hotel Beaux Arts for 2010……………….(3 points) Total ARI is 1.01

1.c Using 2009 as a base year, what is the variance on Occupancy for the year 2010………………(3 points) Occupancy in 2009: 91.2%; 2010: 80.02; therefore variance is: -11.18; in percentage: -12.26%

1.d Is this hotel over or underperforming the market?...........(no points)
Support your answer using an equal method of comparing (Revpar)………………………..

This Hotel is overperforming as the Revpar Index is 1.04; meaning this Hotel scores 4% over its competition in Revpar
(6 points)

1.e What is the Yield for 2010? ……………………(3 points) Yield: 60.6%

1.f What was the total Rooms Revenue for the year 2010?............(3 points) Total rooms...
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