Velvet Lounge is a premier upscale nightclub located in the heart of San Francisco. It has two levels which are fully stocked with two bars on each level. Velvet Lounge is richly decorated with velvet furniture, mahogany walls, and giant chandeliers to create a very luxurious lounge.
Velvet Lounge may be entirely rented for hosting an event at a nightclub. Most of the time, the club is rented out for people to host a theme party or an after-party for concerts or other special events. People who tend to rent the entire club are mostly promoters or radio stations. Admission fees are to be determined by the host of the event and all of the admission fees go to the host. This gives the promoters an incentive to bring in a large crowd.
Velvet Lounge has private VIP rooms which may be rented for birthday parties and special occasions on a smaller scale. Depending on the size of the room that is rented the customer will be given a certain number of VIP guest passes.
Internet Use:
Velvet Lounge’s official website will enable customers to see upcoming events at the club. The website is used to provide background information about the club to the public. General information such as location and management contact information is posted on the site. Pictures of the club are also posted on the site.
Velvet Lounge’s website allows customers to subscribe to its mailing list to be notified of special events. This allows Velvet Lounge to keep in tough with its customer base. The mailing list will also be a great tool for targeted promotions.
Detailed information about VIP room rentals is available from the website. Customer may submit a request to reserve a VIP room or the entire club through the internet with their contact information. Each request will be assigned to a manager who will then check for availability and respond to the customer.
Revenue Cycle:
Velvet Lounge has two sources of income: room rentals and bar service. A customer can rent the entire club or the VIP rooms. Velvet Lounge does not distinguish between the two different customer bases. All rental reservations are initiated by the request of a customer in person or via the telephone, fax, or the internet. Once a reservation request has been received it will be directed to a manager for approval. The manager assigned to the specific reservation request will check the company database for availability and respond to the customer accordingly. If the room is available, the manager will provide a quote for the customer. When the customer confirms reservation of the room(s), all the necessary contact information of the customer will be entered into the database. Payment in full for the rental is due upon confirmation of the reservation. That is, Velvet Lounge receives one payment for every rental reservation.
Velvet Lounge also serves drinks from its bars. Velvet Lounge has full control of all the bars and retains all of its proceeds. Only staff employees will take drink orders and serve the drinks. Velvet Lounge employees serve at the bar and the VIP rooms. Similarly, all orders must be paid for in full at the time of purchase. Again, cashiers are the only employees who handle all the cash receipts from room rentals and drinks purchases.
Required:
Construct an REA diagram to depict Velvet Lounge’s revenue cycle.
