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The director of sales at the St. Clair hotel. A convention and business-Travel property, is attempting to develop a special two-night package that would help the hotel capitalize on the upcoming city wide spring fling festival and help boost business during a typically low occupancy weekend. So far, she knows that she wants to require a minimum two night stay and double occupancy. In addition, she would like to include breakfast , dinner and free parking, along with some small spring fling logo items. Rack rate is $110 per night
What factors should management consider when making the decision to implement this package?
Expert Answer
Rack rate is the price that hotel rooms are advertised.
In this decision the director of sales is required to take care of the following factors, as follows:
- Cost benefit analysis – The sales director is required to do a cost benefit analysis in terms of the cost of operating (fixed and variable) and the benefits. This will help him to decide the occupancy rate as well as other measures.
- Occupancy rate: The director of sales is also required to analyze the proposal in terms of the desired occupancy rate.
- Competitors’ analysis: Analyzing the market and considering the competitors pricing is also a main factor before deciding the decision.
