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Setting the Scene Repositioning Primula Beach Hotel Primula Beach Hotel, Kuala Terengganu in the east coast of Peninsular Malaysia is surrounded by a protected forest and has a stunning sea view. The peaceful surroundings at the resort make it an ideal spot for couples on their honeymoon or for getting away from the city. It has a total of 249 rooms comprising superior rooms, deluxe rooms, executive suites and Primula suites. All rooms and suites at the resort feature individually controlled air conditioning, television, telephone, hair dryer, mini bar, toiletries and coffee and tea making facilities. In 1996, the Southern Pacific Hotel Corporation took over the management of the resort. The management then drew up a marketing plan to re-position the hotel so that it stood a cut above its competitors. The objectives were to target new markets, adopt cost saving measures to increase hotel yield and to increase market share. To achieve these objectives, the resort had to decide on marketing goals and objectives and what customer segments to target. In order to increase market share, the management considered several options but mainly concentrated on Malaysian tour groups. This is because they make up 83% of room occupancy in the region. The hotel's advantages were its strategic location, good property and is a potentially attractive tourist attraction. Since its relaunch and re-positioning in 1997, there have been some reported problems. Seventy per cent of its 300 staff resigned. Nevertheless, recruitment was not found 84 | Marketing for Hospitality and Tourism to be a problem. However, recognizing that maintaining high service standards was difficult without a loyal workforce, an employee retention programme became the main agenda. Training and development were geared as the driving force to ensure staff were well versed in their standard operating procedures. A positive working environment was seen as essential to increase productivity and work satisfaction, thus creating a group of happy and motivated staff to deliver good quality service. The hotel faced further competitive threats with the launch of two new hotels in Kuala Terengganu, YT Midtown with 150 rooms and Hotel Grand Continental with 192 rooms. Both hotels were located in town. Grand Continental also introduced the 'Great Escape' package which was aimed at local city dwellers. Primula managed to meet its budgeted occupancy rate during the off-peak season through heavy discounting. Revenue from the food and beverage (F&B) department was also affected when tourists started spending less per day. This caused Primula to monitor costs and implement cost-cutting measures wherever possible. This included closing the Grill Restaurant and the Garden Wing outside the peak season. Overall, 1997 closed with gross operating losses and the situation did not improve in 1998, where the hotel posted loss in gross operating profits. However, with changes in the hotel's senior management in 1999, followed by a change in government spending policy, the hotel managed to turn itself around. Primula intends to continue efforts to gain presence in Malaysia and to penetrate competitors' target segments while maintaining high levels of customer relations with its existing clients. This could possibly be achieved through the aggressive promotions of room packages to local colleges and the leisure market of the East Coast. Case Questions 1 How should Primula Beach Hotel position itself to stand out from its competitors? 2 What should Primula's target market be for the coming years? Should it maintain the same targets during peak and off peak seasons? 3 How can Primula improve room revenue at all seasons? 4 What are Primula's key challenges to achieving its target positioning and improving room revenue