Hanson Production

GROUP 7

Objectives
Choose a theatre
Make a final pricing decision which will help her

recoup investment in minimum possible time

Variables affecting the revenue

Prices vary in multiples of 5% of initial

Ticket prices

average price
Price range = 90% to 120% of initial

average price

Occupancy levels vary in multiples of

Occupancy
levels

10%
Occupancy level range = 50% to 100% of
total capacity

Assumptions
Ticket prices for Rear Mezz is the weighted

average based on the capacity

Balcony initial average price- $55 (Weekdays),

$65 (Weekends); Same across groups

Box initial average price $90 (Weekdays), $140

(Weekends); Same across groups

No of break even weeks- Longacre Theatre

Price
(Proportion of
initial average
price)

0.9

0.95

1.05

1.1

1.15

1.2

Occupancy
(in %)

No of weeks

No of weeks

No of weeks

100

66

93

78

58

51

46

42

90

94

149

115

79

68

60

54

80

160

368

223

125

102

87

75

70

674

np

np

296

202

154

125

60

np

np

np

np

np

1228

368

50

np

np

np

np

np

np

np

No of weeks No of weeks No of weeks

No of
weeks

Revenue (in $)- Longacre Theatre

Price
(Proportion of
initial average
price)

Occupancy
(in %)
Average revenue

0.9

0.95

1.05

1.1

1.15

1.2

Average
revenue

Average
revenue

Average
revenue

Average
revenue

Average
revenue

Average
revenue

100

931370

838233

884801

977939

1024507

1071076

1117644

90

838233

754410

796321

880145

922056

963968

1005880

80

745096

670586

707841

782351

819606

856860

894115

70

651959

586763

619361

684557

717155

749753

782351

No of break even weeks- St James Theatre

Price
(Proportion of
initial average
price)

0.9

0.95

1.05

1.1

1.15

1.2

Occupancy
(in %)

No of weeks

No of weeks

No of weeks

100

38

48

42

34

31

28

26

90

48

64

55

43

39

35

32

80

67

97

79

58

51

46

41

70

109

197

141

89

76

66

58

60

299

np

880

197

146

117

97

50

np

np

np

np

np

634

298

No of weeks No of weeks No of weeks

No of
weeks

Revenue (in $)- St James Theatre

Price (Proportion
of initial average
price)

0.9

0.95

1.05

Occupancy (in
%)

No of weeks

No of weeks

No of weeks

No of weeks

No of weeks No of weeks

100

1222784.98

1100506.482

1161645.731

1283924.229

1345063.478 1406202.727

90

1100506.482

990455.8338

1045481.158

1155531.806

1210557.13 1265582.454

80

978227.984

880405.1856

929316.5848

1027139.383

1076050.782 1124962.182

70

855949.486

770354.5374

813152.0117

898746.9603

941544.4346 984341.9089

1.1

1.15

No of break even weeks- Hilton Theatre

Price
(Proportion of
initial average
price)

0.9

0.95

1.05

1.1

1.15

1.2

Occupancy
(in %)

No of weeks

No of weeks

No of weeks

100

28

34

31

25

23

22

20

90

34

44

38

31

28

26

24

80

45

59

51

40

36

33

30

70

65

65

94

77

56

44

40

60

115

218

151

94

79

68

59

50

662

np

np

281

190

143

115

No of weeks No of weeks No of weeks

No of
weeks

Revenue (in $)- Hilton Theatre

Price
(Proportion of
initial average
price)

0.9

0.95

1.05

1.1

1.15

1.2

Occupancy
(in %)

No of weeks

No of weeks

No of weeks

100

1433554

1290199

1361877

90

1200199

1161179.348

1225689.311

80

1146843

1032159

1089501

1204185

1261528

1318870

1376212

70

1200199

903139

953313

1053662

1103837

1154011

1204186

No of weeks No of weeks No of weeks

1505232

1576910

1648587

No of
weeks

1720265

1354709.239 1419219.203 1483729.166 1548239.13

Final Decision
Number of weeks required to recoup the investment

is minimum for Hilton Theatre

Hence, Shen needs to choose Hilton Theatre

Average ticket price = 120% of $79.10 = $94.92