Youtube Video

Summary published at 10/18/2024

πŸ‘‹ Branson Man here! You can reach me at bransonman.com for any questions.

🏨 We're discussing revenue management using a fictitious hotel, the Wagon Wheel Inn, which has 100 rooms.

πŸ’΅ The basic cost to sell a room is $20, covering electricity, cleaning, and breakfast.

πŸ“… Analyzing a specific week, we look at Wednesday, Thursday, and Friday:

  • πŸ—“οΈ Wednesday: ADR = $60, Occupancy = 90% (90 rooms sold)
  • πŸ—“οΈ Thursday: ADR = $80, Occupancy = 70% (70 rooms sold)
  • πŸ—“οΈ Friday: ADR = $110, Occupancy = 50% (50 rooms sold)

πŸ“Š Revenue is the total money brought in, but it’s crucial to differentiate it from profit.

πŸ’° Revenue calculations:

  • Wednesday: $60 x 90 = $5,400
  • Thursday: $80 x 70 = $5,600
  • Friday: $110 x 50 = $5,500

🧾 Costs:

  • Wednesday: 90 rooms x $20 = $1,800
  • Thursday: 70 rooms x $20 = $1,400
  • Friday: 50 rooms x $20 = $1,000

πŸ“ˆ Profit calculations:

  • Wednesday: $5,400 - $1,800 = $3,600
  • Thursday: $5,600 - $1,400 = $4,200
  • Friday: $5,500 - $1,000 = $4,500

πŸ† The clear winner for profit is Friday with $4,500.

πŸ”‘ Understanding revenue management is essential; high occupancy doesn't always mean high profit.

πŸ™Œ Thank you for listening! Visit me at bransonman.com for more insights.

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