Good Night Motel Case

When making his decision, McGregor should suppose gravely the interdict consequences that his business pull up stakesinging experience if he refuses Alwards widen to fill the motel for the devil pass nights in October, at half the room rate. If McGregor refuses, during that weekend his motel testament be at his vernacular capacitor of less than get out full. With the church building building assistance pigeonholing there, suffer half the rate, it go out be as if the motel were half-full In addition, if he refuses, McGregors reputation in the familiarity exit suffer, and he will as well as lag either future business from Alwards pigeonholing and new(prenominal) church groups, at unvarying price.Consequently, Justin McGregor should try for Alwards offer but under the avocation devil conditions one, guest service will be limited so that McGregor stop lower his be two, this is a special one- while rent that will neer happen again for Alward or bothone else. The quantitative detailors involved dictate that McGregor should take on Alwards offer for accommodations for his church group, at half the room rate, for Fri daylight and Saturday, October 26 and 27.According to the circumstances of the case, pre-2008, from October 16 to May 14, the motel was rarg alone more than a quarter full at any time while post-2008, the motels occupancy rates knock down 7 to 15 percent year round. In other words, if McGregor refuses Alwards offer, during that weekend, the motel will be at its inveterate capacity of less than quarter full. However, with the church group there, paying half the rate, it will be as if the motel were half-full Half-full is bettor than less than a quarter full, so logic dictates that McGregor moldiness(prenominal) accept Alwards offer.There will be more guests occupying solely d thoroughly at half the rate than if there were continual guests paying the constant price and filling fewer than a quarter of the motels r ooms. However, this fact inwardness that service costs and maintenance cost will be higher with Alwards group than with regular customers. In other words, with the motel being at full capacity, McGregors maintenance and change staff will be a lot busier than usual, servicing a motel at full capacity.Paying for the maintenance and showying of entirely rooms at the motel will further decrease the add of money that McGregor will make from Alwards group. In other words, in strict quantitative terms, Alwards offer is a bad root word for McGregor. However, in the underage resort community where the motel is located, quantitative factors are not everything. McGregor will suffer all sorts of negative consequences from church groups and other members of the community if he refuses Alwards offer. Therefore, the prudent thing to do is to accept Alwards offer with two conditions. The opportunity costIn fact, McGregor should accept Alwards offer but under the following two conditions on e, guest service will be limited so that McGregor can lower his costs two, this is a special one-time deal that will never happen again for Alward or anyone else. Considering that McGregor and his wife sop up the motel, which is their cite of livelihood, these two conditions are reasonable. In addition, McGregor should make sure to ask Alward to impress upon his church group that the fact they are paying half the regular motel price means that the church group will win half the regular serviceThis means that the church group guests must be clean and tidy, and they must not depend on the motels maintenance people. In theory, none of this should be a problem, particularly with a group of church people, who are supposed to be kind, understanding, cooperative, and so on. In any case, the fact that the church group will stay for only two years means that they closely promising wont make huge messes, so McGregor will not countenance to pay his cleaning crew to repair. In addition, the church group guests will probably miss most of their time during the day at the church and go to the motel mostly to sleep.All these facts are only fair to McGregor, whose livelihood depends on that motel, at a time of a weak national economy. Being a total spell (p. 3), Alward must surely understand all these facts. As a result, if I were McGregor, I would seefully explain all these facts to Alward, appeal to his sense of fairness, and ask for his cooperation. The qualitative factors that McGregor should turn have to do with Grand Bend, which is a small resort community. Refusing to intromit a church group would bring negative publicity to the advanced darkness Motel.As a result, McGregor will lose all future business (at regular prices) from Alwards church group and most likely from other church groups, besides. In fact, besides being a good man, Alward is well respected in the community (p. 3). This fact means that McGregor should do all he can to pose a good work ing relationship with Alward, who will bring more church groups in the future. If Alward asks for the half-price rate again in the future, McGregor will be in a much better place to refuse.The community people will not be as critical then (in the future, if Alward asks for the half-price deal again) as if they will be if McGregor refuses Alwards first request. In other words, the resort community is too small for McGregor to decide solely based on the numbers. Reputation is very important in such(prenominal) communities, especially when church people are concerned. They tend to travel and spread the news active which businesses are customer-centered and which are money-centered, to put the matter simply.In general, when making a decision, managers need to consider the opportunity cost, which correspond to our textual matter is the sacrifice of the best alternative for a given action. An (accounting) expense is a cost incurred to experience a revenue (p. 24). Since this is a sm all town, and the church group will stay for only two long time, the opportunity cost will bring more customers for the future. In addition, managers must consider the marginal cost, which jibe to our textbook is the cost of producing one more unit (p.28).In terms of cleaning the pool, it will not have an consummation since most of the time people will spend in the church, and the only time they will spend in the Good Night Motel is night time only for sleeping purposes. As a result, the only additional cost to accommodate the guess is the cleaning service of the rooms. In addition, McGregor must consider his fixed cost, which is a cost that does not change with an increase or decrease in the amount of goods or services produced.In the final analysis, the fact that Alward is a good man who enjoys the communitys respect and the fact that he works with churches (a central institution in small communities) mean that McGregor cant give way to refuse to work with Alward. Even if McG regor breaks even, he should still accommodate the church group. If he doesnt accommodate it, he will suffer all sorts of negative consequences loss of future business from church groups at regular price, bad publicity in a small resort community, and so on. In other words, the big picture (quantitative factors) is more important in this case.Good Night Motel CaseWhen making his decision, McGregor should consider seriously the negative consequences that his business will experience if he refuses Alwards offer to fill the motel for the two weekend nights in October, at half the room rate. If McGregor refuses, during that weekend his motel will be at his usual capacity of less than quarter full. With the church group there, paying half the rate, it will be as if the motel were half-full In addition, if he refuses, McGregors reputation in the community will suffer, and he will also lose all future business from Alwards group and other church groups, at regular price.Consequently, Justi n McGregor should accept Alwards offer but under the following two conditions one, guest service will be limited so that McGregor can lower his costs two, this is a special one-time deal that will never happen again for Alward or anyone else. The quantitative factors involved dictate that McGregor should accept Alwards offer for accommodations for his church group, at half the room rate, for Friday and Saturday, October 26 and 27.According to the facts of the case, pre-2008, from October 16 to May 14, the motel was rarely more than a quarter full at any time while post-2008, the motels occupancy rates fell 7 to 15 percent year round. In other words, if McGregor refuses Alwards offer, during that weekend, the motel will be at its usual capacity of less than quarter full. However, with the church group there, paying half the rate, it will be as if the motel were half-full Half-full is better than less than a quarter full, so logic dictates that McGregor must accept Alwards offer.There will be more guests occupying all rooms at half the rate than if there were regular guests paying the regular price and filling fewer than a quarter of the motels rooms. However, this fact means that service costs and maintenance cost will be higher with Alwards group than with regular customers. In other words, with the motel being at full capacity, McGregors maintenance and cleaning staff will be a lot busier than usual, servicing a motel at full capacity.Paying for the maintenance and cleaning of all rooms at the motel will further decrease the amount of money that McGregor will make from Alwards group. In other words, in strict quantitative terms, Alwards offer is a bad idea for McGregor. However, in the small resort community where the motel is located, quantitative factors are not everything. McGregor will suffer all sorts of negative consequences from church groups and other members of the community if he refuses Alwards offer. Therefore, the prudent thing to do is to accept Alwards offer with two conditions. The opportunity costIn fact, McGregor should accept Alwards offer but under the following two conditions one, guest service will be limited so that McGregor can lower his costs two, this is a special one-time deal that will never happen again for Alward or anyone else. Considering that McGregor and his wife run the motel, which is their source of livelihood, these two conditions are reasonable. In addition, McGregor should make sure to ask Alward to impress upon his church group that the fact they are paying half the regular motel price means that the church group will receive half the regular serviceThis means that the church group guests must be clean and tidy, and they must not depend on the motels maintenance people. In theory, none of this should be a problem, especially with a group of church people, who are supposed to be kind, understanding, cooperative, and so on. In any case, the fact that the church group will stay for only two days mea ns that they most likely wont make huge messes, so McGregor will not have to pay his cleaning crew to repair. In addition, the church group guests will probably spend most of their time during the day at the church and go to the motel mostly to sleep.All these facts are only fair to McGregor, whose livelihood depends on that motel, at a time of a weak national economy. Being a good man (p. 3), Alward must surely understand all these facts. As a result, if I were McGregor, I would respectfully explain all these facts to Alward, appeal to his sense of fairness, and ask for his cooperation. The qualitative factors that McGregor should consider have to do with Grand Bend, which is a small resort community. Refusing to accommodate a church group would bring negative publicity to the Good Night Motel.As a result, McGregor will lose all future business (at regular prices) from Alwards church group and most likely from other church groups, too. In fact, besides being a good man, Alward is w ell respected in the community (p. 3). This fact means that McGregor should do all he can to develop a good working relationship with Alward, who will bring more church groups in the future. If Alward asks for the half-price rate again in the future, McGregor will be in a much better position to refuse.The community people will not be as critical then (in the future, if Alward asks for the half-price deal again) as if they will be if McGregor refuses Alwards first request. In other words, the resort community is too small for McGregor to decide solely based on the numbers. Reputation is very important in such communities, especially when church people are concerned. They tend to travel and spread the news about which businesses are customer-centered and which are money-centered, to put the matter simply.In general, when making a decision, managers need to consider the opportunity cost, which according to our textbook is the sacrifice of the best alternative for a given action. An (a ccounting) expense is a cost incurred to generate a revenue (p. 24). Since this is a small town, and the church group will stay for only two days, the opportunity cost will bring more customers for the future. In addition, managers must consider the marginal cost, which according to our textbook is the cost of producing one more unit (p.28).In terms of cleaning the pool, it will not have an effect since most of the time people will spend in the church, and the only time they will spend in the Good Night Motel is night time only for sleeping purposes. As a result, the only additional cost to accommodate the guess is the cleaning service of the rooms. In addition, McGregor must consider his fixed cost, which is a cost that does not change with an increase or decrease in the amount of goods or services produced.In the final analysis, the fact that Alward is a good man who enjoys the communitys respect and the fact that he works with churches (a central institution in small communities) mean that McGregor cant afford to refuse to work with Alward. Even if McGregor breaks even, he should still accommodate the church group. If he doesnt accommodate it, he will suffer all sorts of negative consequences loss of future business from church groups at regular price, bad publicity in a small resort community, and so on. In other words, the big picture (quantitative factors) is more important in this case.Addendum (Computations) 30 rooms 25% occupancy 8 rooms at $80$640 The rest 22 room at $40 per room22 rooms at $ 40$880 Total Revenue$1520 Additional cleaning Expense ( student Help)2 days 10 hour at $10/hour $200.00Cleaning and laundry tag on $12,070.00 Maintenance supply and expense $11,890.00 Utility including Internet $74,850.00 Total Variable cost per year $98,810.00 Per day $270.71 For two days $541.42 $541.42 Total additional variable cost $741.42The revenue from the church guests is $880, and additional variable costs associated with accommodations is an peculiar (a) $741.42.