CASE STUDY- ACCRA BEACH HOTEL GROUP 3 QUESTIONS Q1. What factors lead to variations in demand for rooms at a hotel such as Accra Beach? Ans…. 1. Seasonal Rotations: At a certain season usually July to October, the weather is better in relations to the hurricane season in the West Indies. The weather in other countries become cold and humid compared to that of Barbados which is sunnier to call for vacation visits. 2. Economic Rotations: Low customer retention will result to this rotation when there is less business travels. Making the hotel to lose shares. 3. Days of the week: Most vacationers check in during the weekends while the business check in on weekdays to close deals or transact businesses. Refer to Exhibit 1 Q2. Identify the various market segments currently served by the hotel. What are the Pros and Cons of seeking to serve customers from several segments? Ans… 1. Individual business travellers 2. Business conference participants 3. Individual vacationers 4. Tour group participants PROS…. Let’s consider Accra beach hotel in this case. There is a counter cyclical trend in visiting of different segments. Different segments visit the hotel in different parts of the year. Mostly vacationers seek times of the year including holidays and also suitable weather conditions. On the other hand business customers are found during official working days when there may not be many holidaymakers. Serving both the segments mean the hotel is never idle throughout the year and resources are utilized. CONS…. The Cons of serving customers from several segments can be summarized along the following points Different market segments may have different demands and it may be difficult to efficiently serve each segment. The fact of serving different market segment may require some extra training of the staffs of certain segments the failure of which may result to poor service. Different market segments have different expectations from their stay at the hotel. Some seek solace, some seek adventure and thrill while some are more concerned about business. These varying expectation require different environments. Trying to serve all the segments under the same environment may see clashes between customers expectation. Q3....What are the main considerations facing the hotel as it reviews the booking requests from West Indies Cricket Board? Ans… Key Considerations Hypothesis: H1: Will ABH lose market share over the deal? H2: Will the WCIB deal have any impact on the brand imagery of ABH? H3: Will the technical experience of the deal have any impact on the regular loyal customers? Financial Consideration: Accra beach hotel always has been recording a comparatively high occupancy rate, due to loyal customer responses. In case WICB’s request has been accepted they would have had to give away the opportunity to maintain the consistency of revenue generation since WICB was willing to pay lesser than their general customers. Also the revenue from food servings would be expected to lower down since most athletes were supposed to dine out. Hence a financial setback will result in this scenario that is when WICB’s request is accepted. Promotional Consideration: In return of low hotel charges WICB promised to promote ABH in their live match broadcasts as hotel partner which was indeed an enormous opportunity for them to promote their hotel in the international arena. Know-how consideration: In case the proposal was accepted, Accra beach hotel would have had to turn down a big portion of their general customers due to accommodation constraint. This could hamper relation with regular customers. Also the presence of a large group of sportsmen would attract a huge number of fanatics and media attentions which might spoil vacationers seeking peaceful environment, and business people having to worry about privacy being exposed. Also these sportsmen being highly regarded celebrities more focus of the hotel staff would have had to be put on them than the general customers which could create negative brand equity. Q4…. What are the areas where Cherita can negotiate with WICB? Ans… The following calculation shows the revenue generated by 50 rooms in case of general customers for 28 days of the certain months of April through June considering the previous year RevPAR as standard. Revelation A: Total number of nights (50 rooms times 28 days) = 1400 nights 1. The Average revenue per room calculated from RevPAR of previous year is $107.74. Considering it as standard of comparison, revenue form 50 rooms (1400 times $107.74)= $150836 Revelation B: Revenue from Food 2. Considering 80% of 50 customers having breakfast, revenue (40 customers times $8 per serving)= $320 3. Considering 30% of customers dining in hotel, revenue ( 15 customers times $25 per serving)= $375 Revelation C: Total Revenue from vacationers and businessmen= $151531 A. The following calculation shows revenue generated by 50 rooms in case WICB’s proposal is accepted. If average revenue per room is $130 the revenue from 50 rooms (1400 times $130)= $182000 Revelation D: Now since food cost and VAT cost were to be included, the Total revenue stands $182000 Again laundry costs in case Cherita decides for in house laundry (28 days times $20 per day)= $560 Deducting laundry cost Total Revenue = $181440 Thus, the net financial impact of accepting the WICB business is ($181440-$151531) = $29909. Hence we can see it would be profitable to accept the booking. Conclusion: On another consideration, the promised promotion as “hotel partner of WICB for the upcoming international cricket series holds a great prospect of promotion. Also since the hotel was moving from vacation oriented customers to more business oriented customers the damage done by turning down vacationers is most likely to be made up by increasing focus on business customers who are lesser likely to not consider a second visit due to temporary inconvenience. Considering these, I think Cherita Howard should accept the proposal.
