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The Peabody Hotel Concept


             Why is revenue management an important tool for hospitality managers?  Why is RevPAR(Revenue Per Available Room) a better measure of a hotel's effectiveness than RevPOR (Revenue Per Occupied Room)? The revenue management is an important tool for hospitality managers because it is the best way to determine an increase in room revenue and profit. Revenue management is based on increasing the revenue of the hotel by controlling room sales. Revenue management gives an idea to the manager on the forecast of demand and control of availability and for the length of stay. Revenue management also shows ideal pricing on labor, food and beverages and all other expenses that are included in order to maintain in budget and still make a profit. RevPAR (Revenue Per Available Room) is better measure of a hotel's effectiveness because it is based on room rates and occupancy. When RevPAR increases it means that there is more rooms rented or room rates have risen, or both.
             B. What is wrong with capitalizing current operating expenses on your own financial statements? If you capitalize current operating expenses too early it could be considered fraud, because you may not capitalize the right assets. Capitalizing current operating expenses will show a decrease in expenses, which will show an increase of your net profit. .
             C. Why are the following concepts important to a hospitality manager? Please don't just provide definitions, explain how these tools allows a hospitality manager to be successful. When does a hospitality manager use these concepts?.
             1. Profit Flexing is what a manager uses when the revenue of a hotel for the month falls below the budget, in order to reduce the hotels expenses without passing the expense off to customer service. Before a manager decides on this plan of action, the manager should have detailed expenses of the hotel, and all reports that may help in finding issues on the financial statements.


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