Case study : Accra Beach Hotel!

Case study : Accra Beach Hotel!

!! 1. What Factors lead to variations in demand for rooms at a hotel such as the Accra Beach?"! !! 2. Identify the various market segments currently served by the hotel. What are the pros and cons of seeking to serve customers from several segments?! !! 3. What are the key considerations facing the hotel as it reviews the booking requests from the West Indies Cricket Board?! !! 4. What action should Cherita Howard take and why? !

1. What Factors lead to variations in demand for rooms at a hotel such as the Accra Beach?!

!! Seasonal cycles! !! Economic cycles! !! Days of the week!

2. Identify the various market segments currently served by the hotel. What are the pros and cons of seeking to serve customers from several segments?# !! Individual business travelers! !! Business conference participants! !! Individual vacationers! !! Tour group participants! !! Guest's home location (Barbadian, other Carrabean, North America, and Europe)!

2. Identify the various market segments currently served by the hotel. What are the pros and cons of seeking to serve customers from several segments?# !! Pros of serving several segments!
!! Segments are often counter-cyclical! !! Filling alla available capacity with a single segment may be impossible much of the time, so attracting a mix of segments may be essential to success!

!! Cons of serving Several Segments!

!! Different segments behave in different ways and their needs and expectations may clash. ! !! Tension between segments and hostile glances may lead to a stressful atmosphere!

3. What are the key considerations facing the hotel as it reviews the booking requests from the West Indies Cricket Board?# !! Financial impact !
!! Will the hotel lose money on the WICB deal?!

!! Marketing impact!
!! How valuable is the publicity that the WICB booking will generate for the hotel?! !! Will it be positive for the hotel's image, neutral or negative?! !! In addition to the impact on room sales, will it help/hinder the hotel in obtaining local patronage for meals, bar, and conferences/group events for customers from the Bridgeport area who don't need rooms.!

3. What are the key considerations facing the hotel as it reviews the booking requests from the West Indies Cricket Board?# !! Guest experience impact !
!! Will the presence in the hotel of a large group of sportsmen enhance or detract from the experience of (a) vacationers, and (b) businesspeople staying at ABH?!

!! Guest relations' impact!

!! Will loyel guests be upset if they cannot reserve a room at the hotel during the periods when the cricket home series is playing?! !! Will this weaken their bonds with the hotel?!

3. What are the key considerations facing the hotel as it reviews the booking requests from the West Indies Cricket Board?# !! Financial impact !
!! Will the hotel lose money on the WICB deal?!

!! Marketing impact!
!! How valuable is the publicity that the WICB booking will generate for the hotel?! !! Will it be positive for the hotel's image, neutral or negative?! !! In addition to the impact on room sales, will it help/hinder the hotel in obtaining local patronage for meals, bar, and conferences/group events for customers from the Bridgeport area who don't need rooms.!

4. What action should Cherita Howard take and why? #

!! Financial analysis!
!! The revenues received from the WICB booking! !! The direct costs associated with that booking (in this case simply as breakfast and laundry)! !! The revenues lost due to turning away guests who would have stayed if the hotel were not full due to the presence of the WICB group.!

4. What action should Cherita Howard take and why? #

!! Financial analysis!
!! The revenues received from the WICB booking! !! 50*28 = 1,400 room-nights at $130 less VAT and less cost of breakfast, both of which are included in the price# !! Breakfast costs are calculated at 95% percent of the theoretical maximum because not all will eat in.!

4. What action should Cherita Howard take and why? # !! Financial analysis!
!! The revenues received from the WICB booking (room & diner revenues)! !! 50*28 = 1,400 room-nights at $130 less VAT and less cost of breakfast, both of which are included in the price =! !! No revenues from breakfast (already included in the room rate) ! !! Gross room revenues = 182 000 $# Net room revenues = 182 000 * 100/107,5 = 169 303 $! !! Diner revenues (10% expected to have dinner at the restaurant)! !! $25*(100/115)*1 400*0,1= 3 044 $! !! Total revenues = 172 346 $ !

4. What action should Cherita Howard take and why? #

!! Financial analysis!
!! Breakfast costs are calculates at 95% percent of the theoretical maximum because not all will eat in.! !! Cost of breakfast = 8*0,25*(100/115)*0,7*50*28= 1 704 $! !! Dinner costs on the 10% sportsmen having dinner! !! Cost of dinner = 25$ * (100/115) * 0,7* 1,400* 0,1 = 2 132 $! !! Cost of laundry (in house) = $20*28 = 560 $ (optimistic scenario)! !! Total direct costs = 4 396 $!

112 551 $ of forgone room revenues

4. What action should Cherita Howard take and why? #

!! Financial analysis!
!! Room revenues forgone = 112 551 $! !! Lost meal revenues from 928 room nights turned away ! !! Breakfast: 80% of regular guests eat breakfast! !! Margin is 30%, markdown by 15% to account for VAT! !! Lost of breakfast margin : 928*0,8*8$*100/115*0,3 = 1 549 $! !! Lost of dinner revenues! !! Margin is 30% and 30% or regular guests eat dinner = 278 dinner! !! Lost dinner margin = 278*$25*(100/115)*0,3 = 1 813 $ !

4. What action should Cherita Howard take and why? #

!! Financial analysis!
!! The revenues received from the WICB booking = + 172 346 $ ! !! The direct costs associated with that booking (in this case simply as breakfast and laundry) = - 4 396 $ ! !! The revenues lost due to turning away guests who would have stayed if the hotel were not full due to the presence of the WICB group. = - 115 913 $! !! Net nancial impact = + 52 037 $ !

4. What action should Cherita Howard take and why? # !! Other considerations! !! Cons:! !! If regular guests are turned away, what is the risk that they will nd another hotel and not return to the ABH? In that case, there would-be a long term revenue loss for ABH, not just a one-time loss.! !! It the cricket group is noisy and boisterous, it may spoil the experience of other guests. This may lead to bad word-of-mouth.! !! Large groups run counter to the hotel's shift in positioning toward a hotel for business people.!

4. What action should Cherita Howard take and why? # !! Other considerations! !! Pros:! !! This will be a great publicity for the hotel, especially throughout cricket loving nations in the Englishspeaking Caribbean and perhaps in the UK! !! Many guests and staff will be excited! !! April and May are not the busiest times of the year (occupancy rate range from 74,7 to 82% over the past two years)! !! Incremental prot are a good thing!

4. What action should Cherita Howard take and why? # !! To avoid the risk for loyal guests to be turned away during the periods of the cricket games, you may consider those options!
!! Compile a list of frequent guests and advise them by e-mail that they should book early! !! Block ten to twenty rooms for nights when it is predicted the hotel will be overbooked and only release them to frequent guests.! !! Raise the rates for busy days to discourage price sensitive vacationers! !! Decline block bookings from tour operators during these periods!