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HEC Report
HEC Report
The objective of this report is to analyse and compare three decision models aimed at optimizing the guest
mix in the hotel-casino to maximize income. These models include the base case and two alternative
scenarios proposed by the marketing department. The analysis will focus on revenue generation,
expenses, guest numbers, and floor space utilization.
The purpose of this report is to comprehensively analyse and compare different decision models aimed at
optimizing the guest mix within HEC hotel-casino environment. This report aims to evaluate various
scenarios, considering guest numbers, revenue generation, expenses, floor space utilization, and the
interplay of guest types' spending behaviours. Its objective was to provide insights into the most
profitable and strategically advantageous model for maximizing income while addressing concerns and
preferences outlined by the marketing department and senior management. Ultimately, the report aims to
recommend a guest mix strategy that aligns with the overarching goal of maximizing profitability within
the hotel-casino.
Base Case:
Guest Mix: Pokies (600), Gamers (655), Show Guests (535), High Rollers (60)
Total Profits: $679,115
Floor Space Utilized: 40000 sq. ft. out of 40000 sq. ft.
Guest Mix: Pokies (600), Gamers (800), Show Guests (390), High Rollers (60)
Total Profits: $697,530
Floor Space Utilized: 42900 sq. ft. out of 43500 sq. ft.
Guest Mix: Pokies (600), Gamers (400), Show Guests (300), High Rollers (160)
Total Profits: $1,038,900
Floor Space Utilized: 40000 sq. ft. out of 40000 sq. ft.
The Base Case demonstrates a conservative approach, maintaining guest limits for Pokies, Gamers, Show
Guests, and High Rollers. While this model efficiently utilizes floor space, it yields the lowest total profits
among the three scenarios due to restricted guest numbers, constraining revenue potential. In contrast,
Alternative 1, which involves a reduction in dining space, introduces an increase in the number of
Gamers. This adjustment results in a notable rise in total profits compared to the base case. However, the
model indicates slightly higher floor space utilization, potentially influencing the overall guest experience
within the casino.
Alternative 2 emerges as the most lucrative option, showcasing significantly higher total profits due to the
removal of guest limits for Gamers and High Rollers. This change attracts a larger number of these guest
types, notably enhancing revenue streams. Despite the increase in cleaning expenses and potential
crowding concerns, the model’s substantial profits overshadow these drawbacks. The above comparison
illustrates that Alternative 2 not only maximizes profitability but also aligns with the marketing
department’s objectives of attracting more high rollers, thereby diversifying the guest mix. This
alternative optimizes floor space while significantly boosting income, emphasizing the potential of
catering to a broader clientele without imposing strict guest limits.
Base Model vs. Alternative Models: The base model’s fixed guest limits restricted the extent of side
effects, resulting in limited changes in revenue from guest spending behaviour. In contrast, the alternative
models, particularly Alternative 2 with unrestricted gamers and high rollers, showcased a more significant
impact on revenue due to the interplay of guest types. The removal of guest limits amplified the side
effects, contributing to more noticeable changes in spending behaviour and, subsequently, revenue.
Recommendation
Based on the comprehensive analysis of the three models, Alternative 2 emerges as the recommended
strategy. Its balance between profitability, guest diversity, and efficient space utilization aligns with the
overall goal of maximizing income while meeting the preferences outlined by both the marketing
department and senior management. Implementing this alternative holds promise for substantially
increasing revenue while carefully addressing operational challenges for a thriving HEC’s hotel-casino
environment.
Pros:
Highest Profitability
Enhanced Guest Diversity
Efficient Space Utilization
Cons:
Conclusion
Alternative 2 provides the best balance between maximizing profits, meeting marketing objectives, and
utilizing available floor space efficiently. However, careful monitoring and management of potential
crowding issues and increased expenses are necessary for its successful implementation.
A model involving reduced dining space alongside the removal of guest limits for high rollers and
gamers, exhibits promising prospects for revenue generation and guest diversity within the hotel-casino as
shown below.
The revised model accommodates 600 Pokies, 400 Gamers, 300 Show Guests, and an impressive
195 High Rollers.
Revenue from high rollers and gamers significantly contributes to the substantial total profit of
$1,204,800, indicating a remarkable increase compared to previously analysed scenarios.
Revenue from high rollers and gamers, free from limitations, demonstrates substantial growth,
driving the overall profits to a significant high.
While the reduction in dining space might raise concerns, the enhanced revenue compensates for
any potential loss in food and drink income.
The model suggests efficient floor space utilization, accommodating the increased number of
high rollers and gamers without exceeding the available space.
Recommendation Rationale
This revised guest mix model holds immense potential for the hotel-casino’s profitability and guest
attraction strategy and the management could look into it.
Reference
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