Case Study #4: Amber Inn & Suites
Amber Inn & Suites, Inc., formed in 1979, operates 200 Amber Inn properties and 50 Amber Inn & Suites properties located in 10 states throughout the Rocky Mountain and western states. On Average, each location has approximately 120 individual guest and suite-style rooms. Under a new president and CEO, the goal is for Amber Inn & Suites to reach profitability within two years after five consecutive years of unprofitability. This company is positioned as a limited-service hotel which does not have the amenities such as a restaurant, lounge, or meeting rooms. This type of hotel is classified under a midscale hotel with ...view middle of the document...
This shows that all of its locations are at a convenient location with easy access to and from their sites. Even though profitability has not been able to be reached, the company has still been able to produce three consecutive years of growing revenues. The average occupancy rate is higher than the industry average for the respective class the hotel is in, and Amber has a significant standing amongst business travelers.
The glaring fact of being unprofitable for five consecutive years is definitely the major weakness of this organization. Lodging revenues are rising, but the expenses correlated with these revenues are increasing at a much faster rate. Other weaknesses are the lack of amenities that Amber Inn & Suites offers travelers, which creates a lack thereof to differentiate from other hotels with the same presence. Another item that could be a weakness is a lack of differentiation between the Amber Inn and Amber Inn & Suites.
By having noticeable differences between the two, this could allow for different price structures and allow Amber Inn to enter a new target market giving the organization the ability to expand its chain. Also, with a dominant business traveler occupancy rate, Amber Inn & Suites could start forming frequent visitor relationships with organizations, so those companies refer their business travelers to stay in these sites.
With having so many consecutive years of unprofitability, the thought of bankruptcy or closing of the organization is always a present factor. A company can only go so long of losing money year after year before it is required to throw in the towel. Government regulations on requirements of hotels could also be an imposing factor, because certain regulations could raise general expenses that are required to keep the hotel up to code and to the industry standards.
With the new CEO wanting to produce profitability within two years, the current problem is how to re-position the organization’s strategy and define which customer base to focus on. By starting with which type of customer to target, the organization can be more focused on its tactics.
1. Do nothing. There is not much of a pro to this solution, because by doing no sort of action will either result in the business failing and closing down, or that could cost the marketing senior vice president her position.
2. Reward Program for businesses. By instituting a reward program with businesses, it will allow business travelers to stay at the hotel for a discounted price for Sunday through Thursday lodging through his or her place of employment. Instead of attempting to find the best rate. The company knows that when an employee goes to this city, he or she will stay at the Amber Inn and the company books it for the employee. This will increase the business traveler base, which is already predominant. However, this will decrease the overall revenues for the...