Assignment Instructions

Lance Wilkins is a retired account manager who used to work in the sales department of a television broadcaster. For decades, he made his living selling television advertising spots. He’d had a successful career, and, looking back at it, he considered himself lucky. During the last few years before retiring, he had witnessed a gradual shift in the viewing habits of the population.

Lance Wilkins is a retired account manager who used to work in the sales department of a television broadcaster. For decades, he made his living selling television advertising spots. He’d had a successful career, and, looking back at it, he considered himself lucky. During the last few years before retiring, he had witnessed a gradual shift in the viewing habits of the population. People started to watch less TV and spend more time online. TV program ratings took a hit, and advertisers did the logical thing: they cut their ad budgets for TV and increased them for online advertising. That meant that Lance’s job got harder and harder.
Lance retired the day he reached the minimum retirement age. He decided to move on to a new phase of his life: instead of riding quietly into the sunset, he took his retirement savings and invested in something he had been considering for years—he bought a small motel on the Florida coast. Lance was convinced he could easily manage a simple business like a motel without a restaurant, and fancied becoming an owner of a resort motel where he could oversee a business and feel like he was on a perpetual vacation at the same time. The reality proved to be somewhat different from that happy dream, however.
The property that Lance purchased was a 65-room motel called The Windjammer. Lance decided to make no personnel changes and to keep all 20 of the motel’s staff members, who all seemed to be decent, hard-working, reliable individuals. Lance himself had never worked in a hotel or motel before, so he studied the reports and financial statements of The Windjammer carefully in order to develop an understanding of the business.
Lance noticed that on most nights the motel had a large number of unsold rooms. It intrigued him that 25 to 30 units frequently stayed vacant while the other rooms were sold successfully. Why couldn’t all or almost all of the rooms be sold? He decided to do something to address that question, and, being a former salesman, he understood the importance of motivation. He talked to Barbara, who was in charge of the front office. It was Wednesday of the first week in March. He offered her an incentive in the form of a performance bonus for each sold-out night for the rest of the month.
“I think it’s possible to fill the motel, provided I have the flexibility to use different price points,” suggested Barbara. Lance told her he wanted to sell out on as many nights as possible and authorized Barbara to use whatever tactics she saw fit—after all, she was the one with the industry experience. They agreed to discuss the March results early in April.
One day in the first week of April, Lance and Barbara reviewed the motel’s reports for March over cups of coffee in the back office behind the front desk. The Windjammer’s occupancy rate showed a record high for the whole month. The motel had produced a monthly occupancy of 86 percent! Lance could hardly contain his satisfaction. Fourteen sold-out nights! They came really close to a full house on a number of other nights as well. Lance congratulated Barbara on a job well done and handed her an envelope with a check. The performance bonus was well deserved, he thought.
Lance kept studying the monthly reports after Barbara returned to her post at the front desk. He was pleased with himself and couldn’t stop smiling—until he saw the report on room rates. He cleaned his glasses and took a closer look at the printout, because he didn’t believe his eyes at first. The motel’s posted room rate was $75 in March. After all group discounts, senior discounts, and agency commissions were factored in, Lance expected the average net rate for March to be at least in the high $50 range. Anything over $56 would have been fine with him. However, The Windjammer’s net rate was only $32.18. Lance couldn’t believe it. Clearly, Barbara had discounted frequently and heavily to sell out.
After some time for reflection and more coffee, Lance realized that March’s incentive for Barbara had involved only one key variable, which could account for the problem. He wanted to be a shrewd hotelier, and, after a chat with Barbara, she accepted the new challenge for the new month. Lance would pay her a performance bonus for April if the motel’s ADR reached $60 or more.
April was a month of softer demand, but as far as Lance was concerned the motel had a good chance to keep its rates up. A competitor motel in the area started an extensive renovation project and closed down half of its rooms as well as its outdoor pool. Also, the new highway sign for The Windjammer was finally put up, and Lance had high hopes for that as well.
April was not as busy as March had been. Anyone could see that by simply looking at the number of cars in the motel’s parking lot, which Lance had a habit of doing each night. He also noticed that the vehicle models were somewhat different in April: he saw old, beat-up cars less frequently than he had in March and noted more new-looking SUVs and import autos. He prepared for the end-of-the-month meeting with Barbara with eager anticipation.
At the meeting, Lance was impressed by the increased ADR for April. He congratulated Barbara for reaching a record ADR of $67.48, and handed her another bonus. Clearly, Barbara had stopped the practice of indiscriminate heavy discounting; this change had resulted in a dramatic ADR turnaround. In fact, she had not made any rooms available to OTAs, so the ADR was also the net rate.
Unfortunately, it was not only the ADR that changed dramatically in April. The motel’s monthly occupancy took a nose dive, dropping to 41 percent—less than half of the occupancy in March!
Lance scratched his head. He was learning the lodging business the hard way, he thought ruefully. He considered reading up on room statistics and hotel data analytics. He had recently heard about a key performance indicator called RevPAR that he needed to investigate further, and he also had read about the importance of monitoring variable costs. He knew it cost him, on average, $16 to clean one guestroom. He decided he’d better run some financial reports and look them over before discussing the next performance bonus with Barbara.

Discussion Questions
Question 1

  1. Which RevPAR is better for a hotel owner and/or a hotel manager: the one in March or the one in April? Is there a meaningful difference?
  2. Take the March hotel data (rate, occupancy, variable cost per room) and calculate it: what occupancy would be required in April with the new increased ADR to generate identical net room revenue?
  3. Take the April hotel data (rate, occupancy, variable cost per room) and calculate it: what occupancy would be required to generate identical net room revenue with the lower ADR of March?
  4. What did Lance learn after he developed the first and second performance incentives for Barbara?

Lance Wilkins is a retired account manager who used to work in the sales department of a television broadcaster. For decades, he made his living selling television advertising spots. He’d had a successful career, and, looking back at it, he considered himself lucky. During the last few years before retiring, he had witnessed a gradual shift in the viewing habits of the population

Calculate Price


Price (USD)
$

Why Choose Us For Your Assignment?

Privacy

We value all our customers' privacy. For that reason, all information stays private and confidential and will never be shared with third parties.

Punctuality

With our service you will never miss a deadline. We use strict follow-ups with our writers to ensure that all papers are submitted on time.

Authenticity

We have no tolerance for plagiarism. All papers go through thorough checking to ensure that no assignments contain plagiarism.

Money Back

You feel unsatisfied with your results? No worries. We offer refunds to our customers if any paper is not written according to the instructions.

Clients Love Us

Client #121678
Client #121678
Read More
This is by far the best I have ever scored in a custom essay. I am surprised the writer handled this assignment so well despite the short notice. I will definitely use your service next time.
Client #21702
Client #21702
Read More
When I was recommended to you by my friends, I wasn't sure you could deliver excellent results for Masters research papers until I submitted my first order. I am all yours now.
Client #20730
Client #20730
Read More
Excellent Services! You are the only assignment helper I can rely on. I have worked with many before and your services are exceptional. I have recommended you to my friends and the results are similar.
Client #20387
Client #20387
Read More
I rarely write reviews online but your services are worth promoting. My paper was so urgent I was sure I was gonna miss the deadline but you turned things around. You are awesome!
Client #20189
Client #20189
Read More
I am a satisfied customer. I know I should have given a 5 star because you deserve it but I will give 4.6 because I almost missed a deadline because of a revision. Luckily it was minor and the writer acted promptly.
Client #20187
Client #20187
Read More
Great paper but there is still some room for improvement. I am impressed by your fast responses and how you tacked my concerns professionally. Thank you for being among the few genuine essay writing service providers.
Client #19783
Client #19783
Read More
I can't thank you enough for being a great part of my college life. I recommended you to two more of my friends. I am sure they will be making their orders soon. I love the fact that you offer free pages for referrals. I will be referring a few more and maybe I won't have to pay for my next two paper, LOL.
Previous
Next