Cases in marketing (11342)

Gianna Azzolini
Report part 1

Company description

A milk shake seller by the name of Raymond Kroc received a franchise license in
1954 from the McDonald’s owners to sell fast food specialized in burgers. The success of this
franchiser restaurant is one of the most famous of all history. In 2005 around 30’000
McDonalds opened in 122 countries. Even though their enormous success McDonalds
wanted to go even further by opening a “McDonald hotel”. They decided to open their two,
four-star hotels in Zurich, Switzerland by the name of “Golden Arch” on November 9, 2000.
Since Zurich is known as a city that brings a lot of businesspeople, McDonalds decided to
combine their hotel for families and for businesspeople. The Golden Arch was a unique hotel
with different features that other hotels did not have at that time. For example, all the
transactions could be made by credit cards to reduce human interface and saving time. Also,
they had a very modern futuristic bathroom design and sophisticated bright walls. The price
range for one night in this unusual hotel was from 120$ to 160$ with a lobby opened 24/24.
Unfortunately, the hotels were not a success and had to close in 2003.

Need/challenge/opportunity

The need of McDonald was to pursue diversification. They have done some research
and surveys in several countries to understand what they can do to diversify their company
from their competitors. They came up with a conclusion that business hotel was very popular
and in demand at that time, especially in Switzerland.

However, the result did not match the expectation of the clients, the wall’s color was
not appropriate for businesspeople, the colors were too bright and colorful. Also, the glass of
the showers in the rooms were transparent making clients uncomfortable to shower.
Moreover, they failed with the actual name of the hotel “Golden arches” which in the German
language did not sound very appropriate describing a person’s posterior. Furthermore, the
location of the hotel was very isolated from the center which “forced” the clients to eat
McDonald food during their stay. As for businesspeople the fact that the hotel was far from
the center make them difficult to reach their business meeting point.

In 2003 the golden arches closed its door due to their several failures in managing
their hotels. Due to the fact that the name of the hotel “Golden Arches” did not related
directly to McDonalds their brand image reputation did not suffer and since they mostly
advertised their hotel in Switzerland not much people were aware of the failure. They resell
the resort to Rezidor SAS Hospitality which rename the hotel by “Park Inn Brand”.

There are several reasons why McDonald’s hotel did not work. Even though their
huge company and their billion-dollar bran equity it is very hard to change from one category
(fast food) to another one (hospitality). Secondly, McDonalds failed because of their choice
of target. They made their hotel a 4-star hotel meanwhile offering McDonald food which did
not match the expectation of the clients.
Cases in marketing (11342)
Gianna Azzolini
Report part 1

References:
Michel, S. (2007). The Upside of Falling Flat. [online] Harvard Business Review.
Available at: https://hbr.org/2007/04/the-upside-of-falling-flat [Accessed 19 Feb.
2020].

Arokia Rexton (2013). McDonalds Golden Arches Hotel_ifmr : Case Study. [online]

Available at: https://es.slideshare.net/arokiarexton/mcdonalds-golden-archesifmr
[Accessed 19 Feb. 2020].

Net, H. (n.d.). McDonald’s To Open Swiss Hotels - First of Golden Arch Hotels To

Open At Zurich Airport with 211 Rooms. [online] Hospitality Net. Available at:
https://www.hospitalitynet.org/news/4006482.html [Accessed 19 Feb. 2020].
‌
swissinfo.ch, S.W.I. and Corporation, a branch of the S.B. (n.d.). First McDonalds
hotel opens in Switzerland. [online] SWI swissinfo.ch. Available at:
https://www.swissinfo.ch/eng/first-mcdonalds-hotel-opens-in-
switzerland/1941018 [Accessed 19 Feb. 2020].

Wikipedia Contributors (2019). History of McDonald’s. [online] Wikipedia.

Available at: https://en.wikipedia.org/wiki/History_of_McDonald%27s.