The “Terminus” Hotel, a 200-room facility, is located within the city walls of one of the most impressive medieval towns in Southern Europe. As consequence of poor management and old-fashioned interior design, the Hotel experienced slumping demand since 2001. In 2004, the Hotel was on the brink of bankruptcy.  In a sudden, these dark prospects turned into hopeful ones; the Hotel was located on a historic building and the regional authorities approached Mr. Leo D. Marcial, chair of the Chamber of Commerce, to mobilize local entrepreneurs in order to take over hotel ownership. 

This part B analyzes a particular situation related to a couple of tour operators that propose to the hotel a regular booking of rooms per day, however at a discounted cost. This possibility was refused because of a recommendation of the accounting department, together with a later proposal with similar terms, though with a lesser discount. This short case offers information on fixed and variable costs and more information to analyze why management took this position so that the student can analyze it to agree or disagree on it.