Reference no: EM133262453
Directions:
Answer and analyze the given case study below
The Diamond Star Hotel
Dwight Robinson owris The Diamond Star, a large hotel in a popular vacation area. Robinson tres to maintain a reputation of casual elegance for his hotel and is known among local hotelers for his dignified advertising and for sticking to the "rack rate He feels that to do otherwise is not fair to guests paying full price. Robinson is happy about all aspects of his hotel operation except his average nightly occupancy rate of 68 percent. The average for his geographic area is 78 percent in an attempt to improve his results. Robinson has hired a consultant who, after studying the situation, has presented the following recommendations.
Mr Robinson, your rooms are not yielding the income that they might because you establish one price for your rooms and then sit back hoping people will stay with you. In today's market that strategy won't work, you have to manage your situation to improve your yield per room You need to use a available means to lure travelers into your hotel. When you see at a certain time in the evening that your hotel is not going to be full you have to cut prices until you sell out. You may not able to sell every room every night, but don't be satisfied until your occupancy rate is over 95 percent Follow this principle: Don't go to sleep yourself until you get people to sleep in all your rooms. Your debt relative to your property value is low, you don't have high interest charges to cover So you can offer lower room prices than your competitors and still make a profit.
Put a big flashing sign outside your hotel if people are not checking in and you foresee vacancies, start that sign flashing at $59.95 if you cannot fill up at that figure drop it to $39.95 or even $29.95. Anything is better than nothing.
First thing every morning, check the previous night's record. If the Diamond Star was not sold out, ask your night manager why! She will soon get the message
Sure your average daily room rate will drop, but so what? That's just a prestige number to brag out when you get together with other local hotel owners. By managing the yield on each unit, you will maximize your profits and is not that why you are in business?
Questions
Should Dwight Robinson take the consultant advice?
If you will be the owner of the hotel, what will be your best decision to gain more profit? Analyze at least 2 strengths, weaknesses, opportunities and threats by explaining for at least 3 sentences each