The Revenue Manager Of The Grange Hotel Was Reviewing The Financial Information: Revenue Management And Distribution Case Study, CIT, Ireland

The Revenue Manager of The Grange Hotel (a large conference & wedding hotel) was reviewing the financial information on the hotel’s social catering business and noticed that the revenue had dropped from €3,216,000 to €3,011,000.

Occupancy for the function space was slightly up to 60.64% in 2019 from 59.57% in 2018, but the average rate was down from €0.619 per square foot in 2018 to €0.595 in 2019, and the revenue per available square foot was down from €0.463 in 2018 to €0.456 in 2019.  What was even more surprising was that the average guest room rate for the hotel had increased by 7.5% and the RevPAR had increased by 12.5%.  “How could the hotel be making less money, when there were more weddings this year?” the RM asked.

Currently, Event Managers are given a set of dates to book weddings – some dates are closed out as other events require the use of the Ballroom.  They have the choice of booking one large wedding in the entire Ballroom or two smaller weddings in each half.  The capacity for the entire Ballroom is 400 covers, while a half can only fit 195 covers.

Event Managers have two sets of menus, with a low budget option and a high budget option.  The Event Manager is expected to get €19,000 in revenue for Saturday nights in the Ballroom, or €10,500 for half the Ballroom.  The manager can discount on all other periods.  Demand varies by month with most weddings occurring May through October (see Fig. 3.2).  Saturday nights are the most popular time to hold a wedding.

Upon investigation, the Revenue Manager found that many clients are having difficulty meeting minimum revenue requirements and that the Event Managers are offering expensive (but unprofitable) upgrades such as ice carvings, photo booths, entertainment, and sweet trolleys in an attempt to qualify the clients and meet their monthly revenue quota.  In addition, they are booking weddings very far in advance.

The staff has noticed that they are turning away many unexpected short-term weddings (less than 1 year).  Turndown and lost revenue far exceed the amount of revenue booked.  A turndown is counted when there is no space to offer the guest or when the guest does not meet the hotel’s criteria.  Lost business refers to when the client chooses not to book the hotel.  In addition, conference groups that wanted to use the guest rooms at the hotel have been turned away when the ballroom was needed but was already booked for a wedding.  The reasons for turndown and lost business vary with some clients simply ‘shopping around’ and others not meeting the hotels’ criteria.

You have been asked by the General Manager to analyze the current situation about weddings and to develop a revenue management strategy going forward for the wedding business.  You should answer the following questions based on the information given in the case study:

1. About the Grange Hotel, what issues are causing the problem where less money is being made on weddings?
2. What control management strategies do you suggest for both pricing and duration
3. What issues may you face in the implementation of these strategies and how can you resolve these in terms of policies/actions?
4. How can you measure the success of the proposed strategies?
5. Discuss some strategies that the Grange Hotel can utilize to ensure that their wedding offering stands out from their competitive set when potential customers view their website.
6. How could the Grange Hotel use technology to better serve their wedding inquiries?