Question

The manager of a hotel is negotiating with a client the room rate that will be charged to the attendees of an assembly to be held at the hotel. In this type of activity, the organizers are responsible for obtaining a rate for the rooms that is competitive for the attendees and for a minimum number of people to stay during the activity. The cost of the rooms is paid by the attendees and is NOT included in the cost of registration paid to attend the Assembly. The organizers are responsible for paying for the food during the activities (breakfast, lunch and snack, this includes the service and other activities to support the assembly), in exchange for this they can use the conference rooms for free. The cost of the dinner is not covered in the cost of the rooms or by the organizers. The cost of the room DOES NOT include breakfast, lunch or dinner. It also does not include the cost of washing or ironing clothes. The hotel provides free internet, but does not include long distance calls as part of the room rate. The client estimates that the meeting will be attended by 200 people and that at least 10% of them will stay at the hotel because they come from abroad. The activity will take place during the hotel's off-season, so the manager understands that he will have enough rooms available to fulfill the agreement.

1. What costs do you think the hotel manager should take into account when calculating the total cost per room per night that will be charged to regular clients (assume that all rooms are the same)? DO NOT use monetary amounts, neither real nor hypothetical. Provide a list of 10 costs in the following format. It must include some costs that are specifically for the room and others of the hotel in general

2. What costs do you think the hotel manager should take into account when calculating the total cost per room per night that will be granted to those attending the meeting? Using the same list above, add a column to indicate if it is relevant or not.

3 Assembly attendees always have the option of staying at the Assembly hotel or in another nearby hotel. In addition to the costs, what other considerations or variables can the hotel manager take into account when promoting their rooms and the hotel between the registration of the Assembly? Provide a list

Answer 1

Sr. No.	Cost description	Relevant/Not
1	Cost of beddings, toiletries, Minibar	Relevant
2	Cost of room specific overheads like electricity use, cleaning cost during room service	Relevant
3	Cost of hotel specific overheads like cost of usual utilities	Not relevant
4	Cost of free internet	Relevant
5	Salary cost of cooks, janitors, cleaning staff, laundry staff	Not relevant
6	Depreciation cost of hotel assets	Not relevant
7	Cost of various activities provided by hotel like conference rooms	Relevant
8	Cost of receptionist, hotel manager	Not relevant
9	Cost of laundry for beddings, towels, etc. for rooms	Relevant
10	Cost of maintenance of hotel rooms when occupied, i.e. wear and tear to hotel property when hotel room occupied	Relevant

Hotel can promote its facilities as compared to assembly facilities. It is also providing free conference rooms for this meeting.