Business Simulation Role-Play

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Event XX

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-92

Event XX

Business Simulation Role-play

INSTRUCTIONAL AREA

Economics

1

-92

Event XX

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Financial Services

2011

FINANCIAL SERVICES EVENT

PARTICIPANT INSTRUCTIONS

PROCEDURES

1.The event will be presented to you through your reading of these instructions, including the Performance Indicators and Event Situation. You will have up to 30 minutes to review this information to determine how you will handle the role-play situation and demonstrate the performance indicators of this event. During the preparation period, you may make notes to use during the role-play situation.

2.You will have up to 15 minutes to role-play your situation with a judge (you may have more than one judge).

3.You will be evaluated on how well you meet the performance indicators of this event.

4.Turn in all your notes and event materials when you have completed the role-play.

PERFORMANCE INDICATORS

1. Calculate gross revenue.

1. Describe the concept of price.

1. Explain the principle of supply and demand.

1. Describe the concept of economies of scale.

1. Make capital expenditure decisions.

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Financial Services

2011

EVENT SITUATION

You are to assume the role of revenue manager for the New Breeze Hotel, an independently owned 350-room hotel. The president of the hotel (judge)has asked you to develop suggested rates for rooms undergoing remodeling.

New Breeze Hotel is located near a business district in a mid size city. The president (judge) is considering remodeling 20 rooms. The remodeled rooms will include the features identified in a recently completed marketing research survey of business travelers. The survey showed that business travelers would like a computer with Internet access including a printer in their rooms, a smart phone with caller ID, and e-mail capabilities.

The president (judge) would like to renovate a block of 20 rooms to accommodate the needs of business travelers and test the impact on room revenue. The estimated cost for renovating each room is $3,000. The renovations will be financed by the hotel’s bank; the hotel will pay a $30,000 down payment and will then pay the balance in one lump payment at the end of one year at an 8% interest rate.

Your customer surveys and comparison shopping lead you to the following conclusions.

1. Occupancy at the current rate ($100) is 60%.

1. Business travelers are 20% more likely to book a room with the upgrades being planned. Therefore the occupancy rate for the upgraded rooms without increasing the rate is 72%.

1. Eighty percent of business travelers seem willing to pay slightly more ($10 per night) for a room that has the upgrades. Room occupancy would likely fall to 56%.

The president (judge) wants a feasibility plan that will show whether the New Breeze Hotel is justified in believing that the renovations will be profitable for the hotel. Your plan should include:

• Cost of the renovations including the interest
• Revenue for the 20 rooms for the year before renovation
• Estimated revenue for the 20 rooms for the year after renovation without increasing rates
• Estimated revenue for the 20 rooms for the year after renovation with a $10 per night increase in rates
• Your recommendations concerning the feasibility of the plan

You will present your feasibility plan to the president (judge) in a role-play to take place in the president’s (judge’s) office. The president (judge) will begin the role-play by greeting you and asking to hear your report.

After you have presented your information and have answered the president’s (judge’s) questions, the president (judge) will conclude the role-play by thanking you for your work.

JUDGE’S INSTRUCTIONS

DIRECTIONS, PROCEDURES AND JUDGE’S ROLE

In preparation for this event, you should review the following information with your event manager and other judges:

1. Procedures

1. Performance Indicators

1. Event Situation

1. Judge Role-play Characterization

Participants may conduct a slightly different type of meeting and/or discussion with you each time; however, it is important that the information you provide and the questions you ask be uniform for every participant.

1. Judge’s Evaluation Instructions

1. Judge’s Evaluation Form

Please use a critical and consistent eye in rating each participant.

JUDGE ROLE-PLAY CHARACTERIZATION

You are to assume the role of president of New Breeze Hotel, an independently owned 350-room hotel. You have asked your revenue manager (participant) to develop suggested rates for rooms undergoing remodeling.

The New Breeze Hotelis located near a business district in a mid size city. You are considering remodeling 20 rooms. The remodeled rooms will include the features identified in a recently completed marketing research survey of business travelers. The survey showed that business travelers would like a computer with Internet access including a printer in their rooms, a smart phone with caller ID, and e-mail capabilities.

You (judge) would like to renovate a block of 20 rooms to accommodate the needs of business travelers and test the impact on room revenue. The estimated cost for renovating each room is $3,000. The renovations will be financed by the hotel’s bank; the hotel will pay a $30,000 down payment and will then pay the balance in one lump payment at the end of one year at an 8% interest rate.

The customer surveys and comparison shopping lead you to the following conclusions.

1. Occupancy at the current rates ($100) is 60%.

1. Business travelers are 20% more likely to book a room with the upgrades being planned. Therefore the occupancy rate for the upgraded rooms without increasing the rate is 72%.

1. Eighty percent of business travelers seem willing to pay slightly ($10 per night) more for a room that has the upgrades. Room occupancy would like fall to 56%.

You want a feasibility plan that will show that the New Breeze Hotel is justified in believing that the renovations will be profitable for the hotel. The plan should include:

(Answers are included for all questions requiring a calculation. Please evaluate the participants on both the correct answer and their understanding of the principles involved.)

• Cost of the renovations including the interest.

Answer: 20 (rooms) X $3,000 + $2,400 (8% of $30,000) = $62,400.00

• Current revenue for the 20 rooms for the year before renovation.

Answer: 20 (rooms) X 365 days X 60% (occupancy) X $100 = $438,000.00

• Estimated revenue for the 20 rooms after renovation without increasing rates for the year.

Answer: 20 (rooms) X 365 days X 72% (occupancy) X $100 = $525,600.00

• Estimated revenue for the 20 rooms after renovation with a $10 per night increase in rates for the year.

Answer: 20 (rooms) X 365 days X 56% (occupancy) X $110 = $449,680.00

• Recommendations concerning the feasibility of the plan

Varies based on participant’s rationale.

The revenue manager (participant) will present his/her information to you in a role-play to take place in your office. You will begin the meeting by greeting the revenue manager (participant) and asking to hear his/her report.

During the course of the role-play you are to ask the following questions of each participant:

1. How is it possible that we achieve more revenue by keeping our rates the same?

1. Should we restrict these rooms to just business travelers to reduce access to other guests?

1. If the revenue is positive, should we expand our renovation to more rooms each year?

Once the revenue manager (participant) has presented the information and has answered your questions, you will conclude the role-play by thanking him/her for the work.

You are not to make any comments after the event is over except to thank the participant.

1

Financial Services

2011

JUDGE’S EVALUATION INSTRUCTIONS

Evaluation Form Information

The participants are to be evaluated on their ability to perform the specific performance indicators stated on the cover sheet of this event and restated on the Judge’s Evaluation Form. Although you may see other performance indicators being demonstrated by the participants, those listed in the Performance Indicators section are the critical ones you are measuring for this particular event. Please note that an overall score of 70% indicates a minimum level of acceptable performance.

Evaluation Form Interpretation

The evaluation levels listed below and the evaluation rating procedures should be discussed thoroughly with your event chairperson and the other judges to ensure complete and common understanding for judging consistency.

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Financial Services

2011

JUDGE’S EVALUATION FORM

Financial Services

2011

DID THE PARTICIPANT:

Judge’s Initials TOTAL SCORE

Tiebreaker: 5, 1, 3, 2, 4, 6

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