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Sheraton Case Essay

1267 words - 6 pages

SHERATON MONTREAL (Braithwaite) “I will give you my decision in about a week,” said Georges Villedary, directeur general of the Le Centre Sheraton, Montreal, as he put down the phone and looked pensively at the letter before him. The letter, dated March 15, 1994, was from Alitalia requesting a one-year contract for 40 room at $42 per night. In addition, the hotel would have to provide a crew allowance of $25,000 per day. Bills are to be paid within seven days of receipt of statement on a weekly basis. The problem facing Georges was a simple one: does he take Alitalia and fill the 40 rooms for 365 days at $42 or does he refuse the business and hope that he can sell the rooms at the full rack ...view middle of the document...

Other features of the hotel included a five-storey glassed-in atrium, a glass-enclosed year-round pool and a health club with gymnasium, sauna, whirlpool, and masseuse. There was indoor parking for 500 cars and boutiques and specialty shops on the promenade level. Other services included a multilingual staff, and audio-visual services. All meeting rooms had cable-TV outlets, audio-visual facilities, and telephone jacks.

SheratonHotelCase

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Competition For airline crews, all hotels in the Montreal area were Sheraton’s competitors because airlines choose hotels based on price. Nevertheless, for Alitalia, the criteria for selecting a hotel were slightly different. They preferred four-star hotels located near shopping and entertainment facilities. Hence, the competition was limited to about 10 hotels located in the downtown area. Since all 10 hotels met the Alitalia criteria, the decision would be made on the basis of price and service. Georges was well aware that a number of his competitors had expressed interest in the Alitalia business. He was also aware that if he took the contract and satisfied the Alitalia crew, then he would have more negotiating power when the contract came up for renewal next year (i.e., the room rate could be increased). In the hotel business, it was always easier to renew existing room contracts than to solicit new ones. The Proposal Sheraton’s target market included all forms of corporate groups, professional associations, and conventions. The Alitalia proposal appeared to be a good opportunity for the Le Centre Sheraton because it guaranteed 40 rooms per night for the entire year plus potential clients from their flights. The contract, if accepted, would require the hotel to have clean rooms immediately upon checkin; to have on hand $25,000 every day as an allowance for crews and to distribute the allowance as instructed; and to control the crew’s wake-up calls. These services were standard tasks for the Sheraton Centre; however, because of the late departure of aircraft to Europe, check-out time for Alitalia would be between 04:00 p.m. and 06:00 p.m. while the other crews would be arriving sometime between 09:00 p.m. and 10:00 p.m. the same night. This meant the hotel had to keep extra maids on duty to have these rooms ready within two to four hours. In addition, when flight schedules were changed, there would be changes in wake-up calls and in the distribution of the allowances. This extra service to the crews would be at the expense of the other guests who were paying the full rack rate. Experience with...

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