Dear guest,
The management and staff of the property at which you have chosen to spend a vacation join me in extending to you and your family members a warm welcome and we wish to thank you most sincerely for selecting us.
Our company has been welcoming thousands of guests over the last several decades. While we are proud of our past, we are looking at the next several decades ahead and are most excited about them. We are looking to the future for the unique reason of anticipating your future expectations and attempting to exceed them. Thus, we are formulating plans, big plans, to act upon this objective. And before “action”, we wish to consult with the “experts”.
To that aim, rather than rely on external opinions, we have decided to ask “YOU” the expert, “YOU”, our most important asset, “YOU”, our reason of being, several questions that will help us prepare our future products and services to your specifications.
Therefore, we would be extremely grateful if you could spend a few minutes to fill in the enclosed questionnaire and deposit it in the clearly marked deposit box at the reception desk of the resort you’re staying at.
To express our gratitude, we are pleased to inform you that your name (if you elect to mention it in the survey) will be included in a draw on October 1, 2003 to earn a free 7-day stay for two “all in-house paid room and food & beverage expenses” at the property where you are submitting your questionnaire, for the 2004 season at your date selection .
Our most cordial “Thank You!” and wishing you many happy returns!
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GUEST MARKET RESEARCH SURVEY
(CAMP SITES)
Date: Property name:
Country of residence:
Have you visited Rovinj or Vrsar before? If yes, how many times?
Yes No 1 2 3 4 5+
Have you stayed at this property before? If yes, how many times?
Yes No 1 2 3 4 5+
What are the 5 most important reasons why you chose this destination?
Location Price Recreation Entertainment Culture/History
Natural beauty New experience Visiting family and friends
Proximity from country of origin
How did you hear about this property?
Personal recommendation Internet Travel agent Brochure Tour operator
Media Travel fair Other, please specify:_____________________
How did you make your reservation?
Contacted hotel directly Internet Travel agent Walk-in
Tour operator Special interest group (i.e. school, company, etc.)
Other, please specify:_____________________
How did you arrive at this property?
Car Bus Plane Boat Combined travel
Please state your opinion on the following:
Public Areas
Physical appearance of property:
Very good Good Average Poor NA
Parking availability:
Very good Good Average Poor NA
Cleanliness of property:
Very good Good Average Poor NA
Safety and security of property:
Very good Good Average Poor NA
Reception
Courtesy and friendliness of reception staff:
Very good Good Average Poor NA
Provision of information?
Very good Good Average Poor NA
Food and Beverage
Courtesy and friendliness of restaurant / bar / lounge staff:
Very good Good Average Poor NA
Food quality:
Very good Good Average Poor NA
Food variety:
Very good Good Average Poor NA
Furnishing and decoration of our restaurant(s):
Very good Good Average Poor NA
Recreation
Courtesy and friendliness of recreational program staff:
Very good Good Average Poor NA
Recreational activities (i.e. animation program and trips):
Very good Good Average Poor NA
Recreational facilities (i.e. swimming pool, sauna, etc.):
Very good Good Average Poor NA
Children’s services and activities:
Very good Good Average Poor NA
What other recreational facilities / entertainment would you like to have in this property?
Other
How would you describe the relationship between value and price of your stay?
Very good Good Average Poor NA
Would you like to return to this property in the future?
Yes No Maybe
How would you describe your actual experience in the accommodation with your expectations before arrival?
Very good Good Average Poor
How was your overall stay?
Very good Good Average Poor
Would you recommend us to someone else?
Yes No Maybe
Did any particular employee(s) make your stay more enjoyable? If yes, what is his/her name?
Is there anything we could do to make your stay more enjoyable?
Administrative
Gender: Marital Status:
Male Female Single
Married / Co-habiting (with children)
Married / Co-habiting (without children)
Divorced
Widowed
Empty nester
Age:
Under 25 26-35 36-45 46-55 56-65 65+
What is your annual household income (€)?
Less than 20,000 20,000 – 30,000 31,000 – 40,000 41,000 – 50,000
51,000 – 60,000 61,000 – 70,000 70,000 – 80,000 80,000 +
What is your field of occupation?
Government Health Consultant Electronic/Computer
Agriculture Education Industrial Finance/Accounting
Military Retail Law enforcement Other:
What is your highest education level completed:
Primary Secondary Apprenticeship College Post graduate
Any additional comments?
Optional Guest Information
May we contact you? If yes, please fill out the following:
Yes No
Last name: First name:
Street: Apartment number:
Post code (Zip code): City:
e-mail address: Phone:
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La Posada Inn
Type of Hotel / Level of Service
La Posada Inn is an economy, limited service, 250-room hotel located in downtown Syracuse, New York. La Posada Inn will focus on delivering clean rooms to its guests with limited service. The business mix in the market La Posada operates in is 60% business, 25% leisure, and 15% group. To achieve this market mix, La Posada Inn will analyze historical data to make recommendations to when to open and close off certain rates to generate a revenue of more than $70, 000 per week. Moreover, this report will discuss the characteristics of different segments, and offer strategies and tactics that can result in the effective and profitable operation of La Posada Inn.
As mentioned earlier, the hotel offers limited service; thus, it will not offer complimentary newspapers, bellstand service, or valet parking. Public transportation in downtown Syracuse is sufficient for guests to travel around the local vicinity. Bearing in mind the specific needs of different customer segments, the hotel will offer specific features and amenities to attract different segments (more of expense setting strategy is discussed later in this report).
The report is divided into the following major topics: guest analysis, a proposed expense setting strategy, a proposed revenue management strategy, and financial performance. This report will go into detail in each of the aforementioned topics and make specific recommendations for La Posada Inn to run more efficiently.
Guest Analysis
The business mix in the market La Posada operates in is 60% business, 25% leisure, and 15% group (Figure 1). However, after having taken over the hotel and run it for a period of four weeks, the actual market mix of La Posada Inn is 45% business, 34% leisure, and 21% group (Figure 2).
Market Segments
Each market segment behaves differently and has its own unique characteristics, behaviors, and booking patterns. A description of the three segments; business, leisure, and group segments will be discussed. Having knowledge about how each segment behaves differently can be advantageous for hotels that want to generate more revenue and set expenses more efficiently.
Business
Business travelers are “have tos,” so they are willing to pay the higher rates. Business travelers book the latest, usually 3-1 days before their arrival. As the overall ADR of business travelers indicate, the business travelers pay the highest ADR of $78.59 (appendix B). Most business travelers also tend to stay during Mondays thru Thursdays (Figure 3).
Leisure
Leisure guests are “want tos,”so they normally book about a week or two weeks before the intended date of arrival. Since leisure guests are paying for the room out of their own pocket, they are more price sensitive than business travelers. Leisure guests tend to stay during the weekends, and sometimes their stay crosses over to weekdays (Figure 3).
Group
Group guests can be a mix of “have tos” and “want tos.” However groups usually get the lower rates because they book well in advance. Groups book throughout the week and become helpful in raising the occupancy percentage and revenue during the weekends. Conversely, groups can work against you if their day of arrival is on a weekend and their stay crosses over to weekdays; then the hotel will not be able to offer many rooms as it can to business travelers who can pay the higher rates.
Market Share Indices
Knowing that business travelers pay higher rates than leisure or group segments, La Posada Inn can generate the most revenue by selling rooms to business travelers. However, the reality is not every hotel in the market will be fortunate to have a business mix that is all from business travelers. La Posada Inn’s share of the business travelers is lower than that of the total market mix. On the other hand, La Posada Inn has a higher percentage of group guests and leisure guests than the market’s share.
Having a larger percentage of group and leisure guests allowed La Posada Inn to generate revenue during weekends and maintain an occupancy level on weekends that is higher than had it not taken any group or leisure guests. Therefore, La Posada was able to have an average occupancy rate of 79%, 103% of the market share, which means La Posada Inn got 3% more than its fare share of the market (Figure 4), and sustained ADR of $75.56 (Figure 5), generating a RevPar of $60.48 or 100% of RevPar index (Figure 6).
Figure 4: Occupancy Index Figure 5: ADR Index Figure 6: RevPar Index
La Posada Inn 79% La Posada Inn $ 76.56 La Posada Inn $ 60.48
Howard’s Hotel 77% Howard’s Hotel $ 75.06 Howard’s Hotel $ 57.80
Belmont 79% Belmont $ 81.05 Belmont $ 64.03
Check Inn 72% Check Inn $ 81.36 Check Inn $ 58.58
The Esquire 77% The Esquire $ 81.58 The Esquire $ 62.80
OCC% Index 103% ADR Index 99% RevPar Index 100%
After analyzing the occupancy index, ADR index, and the RevPar index, La Posada Inn may not be a stellar performer; however, if one looks at the department income that La Posada Inn generated compared to its competitors in the market, La Posada Inn earned $74,186 more than the average of the market (Figure 7). La Posada Inn was able to generate more revenue with lower percentage of business travelers because it sold rooms to group and leisure guests throughout the week, including weekends.
Expense Setting Strategy
This section of the report will discuss the expense setting strategy of the following expenses: maintenance, entertainment, compensation, staffing, amenities, laundry, rooms per attendant (RPA), commissions, and advertisement. Setting the right amount of expenses for a hotel can save great amount of money. Moreover, by setting the hotel’s expenses more efficiently, La Posada Inn’s total expense will be less than 20% of the ADR, which is close to the optimal level for profit-maximization.
Maintenance
Spending more on maintenance today can save the hotel additional maintenance costs tomorrow. The maintenance expense was raised to $3.50 from a meager $2.00. One of La Posada Inn’s goals is to run an efficient, clean hotel. So the hotel should spend an adequate amount on maintaining the property.
Entertainment
The entertainment expense was set at $75 from Monday thru Wednesday, and $125 for Thursday thru Sunday, initially. However, after running the hotel for 5 weeks, the different segments showed specific characteristics; thus, allowing the management team to strategically set different amount of entertainment expenses on specific days. The management team realized that the week can be divided into three sections, in terms of setting entertainment expenses. The three sections, Monday-Wednesday, Thursday-Friday, and Saturday-Sunday are discussed below:
Monday-Wednesday
The entertainment expense for Monday thru Wednesday has been eliminated. During Mondays thru Wednesdays, business travelers mainly occupy the hotel. Business travelers are not staying at the hotel to be entertained; their main reason for being at La Posada Inn is to do business. Therefore, setting a high, or even any entertainment expense on those days would not be a smart decision. Instead, it would be more expense savvy to spend the money that was used for entertainment in the past to use it for rooms per attendant (RPA) for the business travelers (more on RPA is discussed later).
Thursday-Friday
Business travelers mostly occupy Thursdays and Fridays; however, the occupancy percentage of business travelers starts to decline and the occupancy percentage of leisure guests begin to increase. Thus, the hotel should begin offering entertainment on those days to attract leisure. This may also give group guests an incentive to come and stay during Thursdays and Fridays. Hence, the entertainment expense for Thursday and Friday was raised from $125 to $150.
Saturday-Sunday
The $125 entertainment expense for the two days was raised to $250, in hopes to encourage guests to stay on Saturdays and Sundays. Since the occupancy level of the hotel begins to sharply decline on Saturdays and eventually declining to the lowest occupancy percentage day of the week, Sunday, the hotel is increasing its entertainment expenses as a way to retain and attract guests to stay on Sundays.
Amenities
Supplies expense was set the same throughout the week. Even though La Posada Inn offers limited service, it will deliver consistent service at all times. Amenities for business travelers were spent the most, $5.00, because they pay the highest ADR, and business travelers seek items that are of higher quality. The hotel will spend $4.00 each for leisure and group guests.
Laundry
In attempts to deliver consistent service throughout the week, the hotel will have a set price for all laundry service for all three segments, that is – the hotel will spend $2.00 for each segment, which has not been changed from the previous weeks of running the hotel.
Rooms per Attendant
To keep up with the enormous demand for rooms during Monday thru Wednesday from the business travelers, La Posada Inn will schedule more RPA during that period. Setting the RPA expense was similar to that of entertainment. The RPA was set at 16 rooms per attendant in a shift for $6.50 an hour. However, La Posada Inn will spend more on business guests to ensure quality of the cleaning of rooms. Therefore, 16 RPA were scheduled for the business travelers’ rooms on Mondays thru Wednesdays and 18 RPA for business, leisure and group guests’ rooms on all other days.
Commissions
Since group segments make reservations directly to the hotel, the travel agent’s group commission was eliminated. In addition, the management will cut the commissions of leisure and group segments down to 5% each. Spending 8% on each segment in the past was wasteful. After analyzing La Posada Inn’s historical data, 8% commission on each segment was too much. Additionally, cutting the commission costs will contribute to the management’s objective of spending less than 20% of the ADR on costs per occupied room.
Advertisement
Since different segments behave differently in terms of booking, the advertising expense was set to meet the needs of each segment. Again, since mostly business travelers occupy the hotel during the weekdays, more advertisement should be spent on advertising to business travelers during the weekdays. When the occupancy percentage of the business travelers begin to decline on Fridays, the hotel should begin advertising to the leisure guests to keep the occupancy level up. After all, La Posada Inn was able to generate more department income than its competitors because it took in more group reservations than the total market share.
Therefore, advertising for business travelers for Monday thru Wednesday remains the same at $500. Advertising for leisure guest, however, was decreased to $200. Taking into consideration of other changes of expenses such as entertainment, and better utilizing La Posada’s historical data, the hotel should sustain a constant positive flow of guests even with less advertising to leisure guests.
The following chart shows how much department contribution the hotel was able to generate after resetting the expense on the fourth week’s rooms contribution statement; it shows the rooms department contribution before the resetting of the expenses and the week after the change:
Figure 8: Additional savings after expense changes
Dept. contribution before expense changes: $ 72,341
Dept.contribution after expense changes: $ 79,625
Additional Savings: $ 7,284
Revenue Management Strategy
This section of the report will discuss what La Posada Inn must do in conjunction with the new expense setting strategies to result in more than $70,000 per week in department income. The strategy of closing rate categories will also be discussed. The payoff matrix will show how many reservations can overbook to gain financial leverage in overbooking guests, while spending the least amount of money to walk them.
Opening and Closing Rates
From analyzing the data that was collected from running the hotel for five weeks, the consultant team has come to a conclusion that on certain days the hotel can close off different rates, depending on the rooms available and the market demand pattern, to generate more revenue, while increasing the occupancy level. The management team has divided the week into three sections in which the yield management strategy can be applied to cater to the different booking behaviors of the customers throughout the week. The three sections that are discussed below are Monday thru Wednesday, Thursday thru Friday, and Saturday thru Sunday.
Monday – Wednesday
Close rates A ($60) and B ($70) on Mondays, Tuesdays, and Wednesdays. Since business travelers usually book 3-1 days prior to arrival, the hotel is likely to experience a high demand for rooms during Mondays through Wednesday. Therefore, on Mondays thru Wednesday, the hotel should sell rate C until approximately 100 rooms are still available; then rate C should be closed and the hotel should continue to sell rooms at D rate until 25 rooms are left. Then the hotel should sell at the D rate until 25 rooms are left. The hotel should keep selling the rooms now at the E rate until all the rooms are completely sold out.
Thursday – Friday
Close rate A ($60) on Thursdays and all other rates should be open on Fridays. Business guests still book for Thursdays, but the business the hotel gets from them declines starting on Thursdays. So the hotel should be more flexible on Thursdays to avoid turning down leisure and group guests; accepting leisure and group guests can help the hotel to better make use of the unrealized revenue.
Even though many rooms were sold on Fridays, most of the guests on Fridays were either group or leisure, so they booked in advance. This is illustrated on figure 9, the ADR on Fridays were the lowest of the weekdays. In addition, leisure guests are “want tos,” so they are more price sensitive.
The hotel never sold out on Thursdays and Fridays. However, the closest the hotel got to selling out on a Thursday with 98% occupancy, was on the fifth week when it accepted a group guest of 80. For this reason, the hotel should keep all rates open on Thursdays, except for rate A, and leave all rates open for Fridays.
Saturday – Sunday
Keep all the rates open on Saturdays and Sundays. Saturdays and Sundays have the lowest ADR and the lowest occupancy percentage (figures: 9 and 10), so the hotel should offer its rooms at low rates to attract more guests. However, combining the expense setting strategy of entertainment that was mentioned earlier with inexpensive rates for Saturdays and Sundays should attract more leisure guests.
Accepting and Rejecting Groups
Groups can generate much revenue for the hotel; however, knowing when to accept and reject groups can play a major role in whether the hotel can take advantage of the opportunity cost of booking the group before the revenue is foregone. The most efficient way to determine whether to accept or reject a group involves some calculations and comparisons. The sales manager must calculate the revenue that the transients will generate and compare it to the revenue the group will generate.
After analyzing the historical data of La Posada Inn, the management team has come up with a strategy to accept or reject groups. If La Posada Inn follows the guideline that is mentioned below, La Posada Inn will gain some unrealized revenue and in the process increase its occupancy percentage.
Keep in mind that the following is only a guideline; the sales manager must do the transient displacement calculations to make sure if he or she wants to accept or reject the group. The following chart will demonstrate the guideline of the consultant’s strategy:
# of Night Stays Decision
1 Accept if group is seeking stays during Thursdays thru Sundays
2 Accept the group. However the group can not stay on Mondays thru Wednesdays
3 Accept, but must be careful with groups beginning their stay on a Monday!
Try to limit the groups to 50 rooms or fewer.
4 Accept, but again must be careful with groups beginning their stay on Monday or Tuesday.
Here are some examples that La Posada Inn rejected originally. The calculations and comparisons of the transient stays and group stays support our findings.
Group Talk Tours
Day of Week Sat Sun
Total Rooms 250 250
Ressies on book 213 173
Rooms available 37 77
Group wants 75 75
Displacement 38 0
Revenue from group: $9000. Revenue from transients: $2660. Take the group!
Group Ford Conf.
Day of Week Sun Mon Tue
Total Rooms 250 250 250
Ressies on book 113 161 143
Rooms available 137 89 107
Group wants 60 60 60
Displacement 0 0 0
180 x $60 = $10,800 (Revenue foregone!)
Group Viscial
Day of Week Tue Wed Thu Fri
Total Rooms 250 250 250 250
Ressies on book 248 213 209 246
Rooms available 2 37 41 4
Group wants 30 30 30 30
Displacement 28 0 0 26
Revenue from transient: $4300. Revenue from group: $7200. Take the group!
The three transient displacement examples were originally rejected. However, after doing the transient displacement calculation, the groups should have been accepted.
Payoff Matrix
According to the overbooking matrix (figure: 15), La Posada Inn can overbook by 3 to minimize expenses in walking guests. Meaning, if the hotel overbooks by three guests and the hotel has to send the three guests elsewhere, it would cost La Posada Inn $263.
# of No-shows # of Times Probability Overbook
1 2 3 4 5 6
0 5 0.250 0 250 500 750 1000 1250
1 0 0.000 125 0 250 500 750 1000
2 8 0.400 250 125 0 250 500 750
3 1 0.050 375 250 125 0 250 500
4 3 0.150 500 375 250 125 0 250
5 1 0.050 625 500 375 250 125 0
6 1 0.050 750 625 500 375 250 125
7 0 0.000 875 750 625 500 375 250
8 0 0.000 1000 875 750 625 500 375
9 0 0.000 1125 1000 875 750 625 500
10 1 0.050 1250 1125 1000 875 750 625
20 $ 325 $ 294 $ 263 $ 381 $ 519 $ 713
Financial Performance
La Posada Inn can generate department revenue of more than $70,000 per week if it follows the recommendations of this report. Keep in mind that La Posada Inn was able to generate $74,186 more in department contribution than the average of its competitors because it booked more groups than its market did.
La Posada Inn should accept more group guests. According to appendix B, the weeks that the hotel made more department income were on the weeks when the hotel accepted more group guests. The market mix that La Posada Inn operates in is 60% business, 25% leisure, and 15% group. However, as previously stated, La Posada Inn’s actual market mix is 45% business, 34% leisure, and 21% group. This means that the hotel is making more money from group and leisure guests than its competitors. Thus, the hotel should continue making more department income from group and leisure segments.
