Eureka Case 20 min MBA

What Do We Do with the Offer?

You're the Revenue Manager at Hotel Turiscool (200 rooms). It's Thursday and you're looking at next Sunday: you're at 70% occupancy, with an ADR of €150, selling on your website at a rack rate (PVP) of €180. Someone proposes a last-minute play: drop the rate from €180 to €100 to fill the hotel. It sounds good —more beds filled— but your job isn't to fill beds: it's to maximize revenue.

The situation

Today you sell 140 rooms (70% of 200) at an ADR of €150. That's a starting production of €21,000. You have two paths for Sunday:

Item Today Hold Offer
Occupancy70%74%77%
Rack rate180 €180 €100 €
New bookings—+8 (4 p.p.)+18 (9 p.p.)
Cancellations—0−4 (2 p.p.)

Hold (no offer): natural demand lifts occupancy by 4 percentage points (to 74%): 8 more rooms, sold at the current €180 rate. Offer: you reach 77%, selling 9 p.p. (18 rooms) at €100, but 2 p.p. (4 rooms) of old bookings cancel at the €150 ADR you had.

Rack rate is not ADR. The rack rate (PVP) is the price you're selling at right now on the web (€180); the ADR is the average rate across all bookings already on the books (€150). One percentage point = 1% of 200 rooms = 2 rooms. Your job in this case: decide whether to launch the offer —and see why the metric that goes up (occupancy) isn't the one that matters.

The decision

Do you launch the offer?

  • A · Hold the price (don't launch the offer)
  • B · Launch the €100 offer
  • C · Fenced, targeted discount

The rest of the case is locked

The data, the calculations, the decision itself and what happens next open with your institution's access code.

Have an access code?

No code yet?

Instructors can request access for a course. Tell us who you are and which course it is for, and we will send your institution a code.

Run it live in class: every student decides and justifies, and the whole class sees how it splits. How Eureka Case works →