Erma is the front of?ce manager at the 200-room Lang hotel. Tonight, she has 100

Question

Erma is the front of?ce manager at the 200-room Lang hotel. Tonight, she has 100 stay-over rooms and 100 arrivals. Based on her own forecasts, she anticipates 10 no-shows tonight. The average rate to be paid by each arriving guest is $200. Erma has a signed agreement with the local Hyatt hotel that states each property is willing (subject to blackout dates) to accept the other’s walks at the rate of $99 per night.

Tonight, the Hyatt has available rooms and has agreed to take up to ten walked guests. The cost of transporting guests to the Hyatt and back, as well as other walk-related costs incurred by the Lang, average $15.00 per room. Assume Erma decides to overbook by ten rooms.

How much extra room revenue will be gained from overbooking if Tonya indeed experiences ten no-shows but overbooks by ten rooms and thus achieves a 100 percent occupancy?

How much extra cost will the hotel incur if it sells out, but ultimately walks:

1 guest?

5 guests?

10 guests?

Explanation / Answer

Ans-(a) $199.00 x 10 = 1,990

Ans-(b) 1 guest= 99 + 15 = 114

5 guests= (99 + 15) x 5 = 570

10 guests= (99 + 15) x 10 = 1,440

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