"Hello. Adrian? Have you read the paper today?" asked Damario, the revenue manager at the 480-room Barcena Resort as he spoke into his cell phone. It was 9:00 A.M., andDamario had just placed a call to Adrian's office. "You've got to be kidding me!" replied Adrian, the Barcena Resort's rooms manager. "Who'sgot time to read the local paper? I can barely get my e-mails!" "Well, there's an article in the Business section that I think we need to talk about," said Damario. "I know I'm pretty new here, but I think this will really affect us." "What is it?" asked Adrian. "I have a hard time believing that anything happening locally will affect us. Our guests all flyin." 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 fl ights to our island by 20 percent, starting in the third quarter of this fiscal year." Damario paused and let Adrian consider what he had just said. "That could be really bad," said Adrian, as he recognized the importance of the information. "I bet InterContinental currently has 20 to 30 every weekend." "Most of the InterContinental flights are scheduled to arrive Thursday and Friday, right?" asked Damario. "Right," replied Adrian. "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 Damario.
"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,Adrian. "Let's get together to talk about this," said Damario. "I'm on my way," said Adrian, as he hung up the phone. As he walked to Damario'soffice, Adrian 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! For Your Consideration
1. What impact will the reduction of the number of flights to the Barcena's island likely have on the previous demand forecasts that have been created by the resort's revenue management team?
2. What specifichistorical data be helpful to them as the RM team evaluates the potential impact of the airline's decision?
3. What specific would current data be helpful to them as the RM team evaluates the potential impact of the airline's decision?
4. In this scenario, the number of potential guests delivered to this destination by this air carrier will likely be reduced. If that is so, what impact would significantlyreduce room prices in an effort to stimulate demand likely have on the resort's thirdand fourth-quarter RevPAR performance? Explain your answer.