MARKETING MANAGEMENT BUS506
Case Study Analysis:
Nina Kustura, Nadja Cekic, Selma Catovic
International Burch University, Sarajevo
MARKETING PROBLEM DEFINITION
The problem is the fiscal 2005 was projected to be the fifth consecutive unprofitable year for Amber Inn & Suites Inc. There are
three present issues in Amber Inn & Inc. The first issue is the allocation of media advertising dollars between the pleasure/vacation
traveler and business traveler market. The second issue is the frontier strategy that was implemented in fiscal 2005, whether it
should be carried forward through 2006. The third issue is whether or not to being offering weekend specials rather than free night
stay. After years of continuous loss, the company must find a strategy that will lead the Ebidta (Earnings Before Interest, Taxes,
Depreciation and Amortization), to grow 7% in 2 years.
COMPANY OVERVIEW
Amber Inn & Suites, Inc is a 250-property hotel chain with various location in 10 western and Rocky Mountain States. The company
started in 1979, and now owns 200 Amber Inn properties and 50 Amber Inn & Suites properties. Each property contains 120 room or
suite units, totaling 30,000 rooms for all properties. The company projected revenues of $422,6 million and net loss of $15,7
million. The Company’s mission is to provide primarily business travelers with clean comfortable guest accommodations at a
reasonable price. The hotel is a limited service hotel between economy and full service hotels. The company locates proprieties on
premium sites on major highway close to suburban industrial and office complexes, airport and large regional shopping centers
INDUSTRY OVERVIEW
The US hotel industry recorded revenue of $113.7 billion and grossed $16.7 billion in pretax profit in 2004. In 2004 there were 4.4
million rooms in the United States. Two thirds of all US hotels rooms were affiliated with a brand. The remaining one third were
independently owned and not brand affiliated. The US hotel industry is highly fragmented which means that there is no one
company or brand controlling a majority of hotel groups.
CONSUMER ANALYSIS
Amber Inn customers are business travelers (79.8%) that stay in the hotel for 2.6 nights and
COMPETITION POSITIONING
Hotels compete on the basis of facilities, price and service. Price is often a function of service level offered. Full- service hotel offer
food and beverage outlets, such as: restaurants and lounges; meeting, banquet and convention facilities; and concierge, luggage
service, and room service. They range from luxury hotel, upscale hotels and midscale hotels with food and beverage. Limited-service
hotels do not offer many of these facilities. Their main focus is room renting. They range from midscale without food and beverage
to economy hotels. Amber Inn & Inc.’s competitors include all midscale and economy hotels that do not serve food and beverage.
Exhibit 1: 10 Largest Hotels in United States 2004
Company
Rooms
Properties
Cendant Corporation
439,279
5,622
Marriott International Inc
380,218
2,236
Hilton Hotels Corporation
357,332
2,184
Inter-Continental Hotel
Group
337,643
2,523
Choice Hotels
International, Inc.
313,982
3,982
Brands
Amerihost Inn, Dazs Inn. Days Serviced Apartments,
Howard Johnson, Howard Johnson Express, Knights Inn,
Ramada, Ramada Limited, Super 8, Thriftlodge,
Travelodge and Wingate Inn.
Courtyard by Marriott, Fairfield Inn by Marriot, Marriott
Conference Centers, Marriott Executive Apartments,
Marriott Hotels and Resorts, Ramada Inn
Conrad, Doubletree, Doubletree Club, Embassy Suites,
Embassy Vacation Resort, Hampton Inn, Hampton Inn &
Suites, Hilton, Hilton Gaming, Hilton Garden Inn, and
Homewood Suites.
Candlewood, Centra, Crowne Plaza, Forum Hotel,
Holiday Inn, Holiday Inn Express, Holiday Inn Garden
Court, Holiday Inn Select, Inter Continental, Parkroyal,
Posthouse, Staybridge Suites by Holiday Inn and
Sunspress Resorts.
Clarion, Comfort Inn Hotel & Suites, Econo Lodge,
MainStay Suites, Quality Inn, Hotel & Suites, Rodeway
1
Best Western
International
Accor North America
186,422
2,181
134,803
1,252
Starwood
Hotels
&
Resorts Worldwide, Inc.
Carlson
Hospitality
Worldwide
La Quinta
123,747
355
82,739
566
65,384
592
Inn and Sleep Inn
Best Western
Coralia, Hotel Novotel, Hotel Sofitel, Mercure Hotel,
Motel 6, Red Roof Inn and Studio 6
Fourpoints Hotel by Sheration, Sheration, St.
Regis/luxury Collecetion, W Hotels and Westin
Country Inns & Suites byy Carlson, Park Inns & Suites,
Park Plaza Suites, Radisson and Regent Hotels
La Quinta Inns, La Quinta Inn & Suites, Baymount Inn &
Suites and Woodfield Suites
SWOT ANALYSIS
EXTERNAL
FACTORS
INTERNAL FACTORS
POSITIVE
NEGATIVE
STRENGTHS
 Location (premium sites: close to
airports, office complexes, shopping
centers)
 Good Promotions
 Good Service to Customers
 Good Price

WEAKNESSES
 Pure business guests hotels
 Underperforming properties in the last few
years
 Bad financials performance
 No correct ad politics
 No hotels in downtown location
OPPORTUNITIES
 Increase the amount of leisure travelers
during weekend
 Become a full service hotel
 Attract new first-time guests
 Increase the length of stay per visit
THREATS
 Competition from other hotel chains
 Decrease of travel frequency
 Lower price strategy
AVAILABLE ACTIONS
There are three available actions for Amber Inn & Inc.
1. Focus on business travelers rather than vacation/pleasure travelers. End frontier strategy and promote weekend specials.
2. Focus on the vacation/pleasure travelers.
3. Do not change anything.
POSSIBLE OUTCOMES (costs and benefits)
1. Business travelers are not price sensitive, therefore focusing on the mission and improving the quality of stay for customers.
Present location of hotels fit business travelers.
2. Pleasure travelers are price sensitive, an increase in dollars change force a different choice in hotels. The benefit is an
increase in occupancy in all rooms throughout the week.
3. The benefit of not changing anything, gives time to see if the Frontier Strategy can be successful. Business travelers are
complaining of pleasure travelers.
SOLUTION
The locations of the properties of Amber Inn & Inc. Business travelers are less price-sensitive and are willing to pay more for staying.
Their needs can be easily met through superior service. At the same time, they should increase promotions and internet-sales. The
Internet can be key factor in increasing sales. Therefore more promotions on the company website are required. Then, the frontier
strategy should not be continued because it focuses the increase in length of stay per visit. That should not be applied to business
travelers since their stays are very short. The promotion of weekend specials on company website and e-mail notifications that
would cut additional advertising costs and help increase the weekend occupancy of rooms.
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