Problem and Key Issues
This case introduces the Regal Carnation Hotel in Guam. The perspective is from Steve McKenzie and how he details his experience with the Regal Carnation Hotel. In his depiction of the events that ensued, the fundamental issue consisted of the fact that the hotel followed a fundamentally unsound approach which is termed, “me too”. This decision by the management of the hotel proceeded to be a strong reason why he, as a customer, received poor service, and also why he was a victim of the hotel’s false representation. The “me too” approach coupled with poor timing on a global tourism scale in the territory of Guam, resulted in a pricing plan that did not match the ...view middle of the document...
With the right aesthetic pictures (misrepresented) and technically correct list of amenities, it still does not suffice as reason enough to choose a hotel in an area unknown to the consumer.
Since Regal Carnation got on the scene late, with the excess room inventory in the hotel industry, paired with the decline in the general tourism of Guam, the result ended up being a disaster. A “Me-too” approach to hotel operations in such conditions can have limited success. It’s implied that the hotel tried very hard to reap the benefits of the excess demand for hotels in Guam but couldn’t meet some of the basic needs required for fulfilling the service.
Root Cause Questions and Effects
Steve McKenzie clearly observed and often commented on the issues he saw, like the unkempt meeting room and aged furniture. Because the hotel was late to market and followed suit of other hotels and piggybacked off of others’ successes, it placed a much smaller priority on reinvestment. Could the Regal Carnation gain an advantage by altering its focus? Maybe Regal Carnation could try to market to more Japanese customers, or attempt to provide an extremely family friendly environment. Utilizing intuition when making decisions can have a positive effect. In stark disparity, the McKenzie’s failed to follow their intuition when they decided on the Regal Carnation Hotel.
When analyzing the start up research that the McKenzie’s did, there are certain indications that there might be a problem with the hotel. These issues can be named “red flags”. One red flag that stood out was related to the time delay with attempting to find price and availability; these things should be specified, even on the Internet. Secondly, the hotel received multiple poor reviews and this could also be deemed a serious red flag. At this point it definitely should’ve been an easy decision to search away from this hotel and realize why it was priced so cheaply. The final red flag can be flown high when the disclaimer showcased a required 100% non-refundable reservation fee. This is an easy notification that they shouldn’t do business with them, especially with a reservation that is geographically so remote.
When analyzing the operations side of the Regal Carnation Hotel, we thought specific questions could clarify the situation. The first question we posed was “Why would the hotel offer such a low price to customers if they are trying to compete with higher end hotels on their website?” When a hotel wants all the money up front with no possibility of a refund, they’re sending a discrete yet emblematic message to the prospective consumer that would seem to be a prototypical bait-and-switch operation. Because of the remote location, customers wouldn’t be able to verify and match the value of the hotel to the perceived market. Customers commit to the hotel as soon as they set their reservations, and almost undoubtedly they are disappointed and become a subject of a unique case study.