Question

Revenue Management and Hotel Analytics * THM 5336

Case Study
"Hello. Charles? Have you read the paper today?" asked Edward, the revenue manager at the 480-room Polynesian Resort as he spoke into his cell phone. It was 9:00 a.m., and Edward had just placed a call to Charles’s office. "You’ve got to be kidding me!" replied Charles, the Polynesian Resort’s rooms manager. "Who’s got time to read the local paper? I can barely get through my e-mails!"
"Well, there’s an article in the Business section that I think we need to talk about," said Edward. "I know I’m pretty new here, but I think this will really affect us."
"What is it?" asked Charles. "I have a hard time believing that anything happening locally will affect us. Our guests all fly in." As a resort located on a Caribbean Island, most of the hotel’s guests were vacationing Americans, Canadians, South Americans, or Europeans, coming either in charter groups or as individual travelers.
"That’s just it. The article is about InterContinental Airlines. It says that due to higher fuel costs and slackening demand, it will be reducing the number of flights to our island by 20 percent, starting in the third quarter of this fiscal year." Edward paused and let Charles consider what he had just said.
"That could be really bad," said Charles, as he recognized the importance of the information. "I bet InterContinental currently has 20 to 30 arrivals every weekend."
"Most of the InterContinental flights are scheduled to arrive Thursday and Friday, right?" asked Edward.
"Right," replied Charles. "Their arrivals are mostly couples, mostly two to three night stays, mostly requests for King-bedded rooms. We already have tons of reservations for the third quarter. Some of those must be on InterContinental Airlines flights. What will happen to those?
"The article says flyers with previous reservations will be contacted to be rescheduled on different flights or to get a refund. How many rooms do you think will be affected?" asked Edward.
"Well, we certainly do more with charter flights than transient-oriented flights like InterContinental’s, but if their flights are reduced by 20 percent for half the year? A lot!" said Charles.
"Let’s get together to talk about this," said Edward. "I’m on my way," said Charles, as he hung up the phone.
As he walked to Edward’s office, Charles tried to assess the impact of InterContinental’s decision. It would affect the number of rooms sold to the type of clients arriving on
InterContinental, that was for sure. And also the room types requested. And the start of the third quarter was only 30 days away. No doubt, this was big news!
Below are four questions to analyze and respond. In your response, please provide details – including examples from the readings, presentations and in-class discussions. While there is no required length, ideally each response should be 2-3 paragraphs.
What impact will the reduction of the number of flights to the Polynesian’s island likely have on the previous demand forecasts that have been created by the resort’s revenue management team?

Answer 1

The reduction in the number of flights by InterContinental Airlines will harm the Polynesian Resort's demand forecasts, decreasing projected occupancies and prompting the revenue management team to urgently reevaluate their strategy for the upcoming third fiscal quarter.

Step-by-step explanation:

The reduction of the number of flights to the Polynesian's island by InterContinental Airlines will likely have a significant impact on the previous demand forecasts that have been created by the resort's revenue management team. since the airline represents a source of incoming guests who tend to stay for two to three nights and often request king-bedded rooms, a 20% reduction in flights will likely lead to a direct decrease in projected room bookings, particularly regarding the type of room that is high in demand among these guests. the revenue management team will need to adjust their forecasts to anticipate lower occupancy rates and possibly formulate strategies to attract alternative guest segments or optimize yield from the remaining incoming flights.

Given that the start of the third fiscal quarter is only 30 days away, these adjustments to the demand forecasts will need to be made promptly to mitigate revenue losses. potential strategies could include promotional activities, targeting other airlines for partnerships, or adjusting pricing strategies according to the new demand patterns, all of which would aid in managing occupancy and revenue levels in light of the new situation imposed by InterContinental Airlines' decision to reduce flights.