The Christopher Hotel is a 180-room economy/business property of a national chain located in a booming suburb of a major city. Tony, the regional director of operations, is orienting the property's new general manager, Janice.

Generally, the hotel is close to meeting most of its budgeted targets. However, when Tony compares the hotel's activity with competing hotels in the area, the picture changes dramatically. Other hotels are enjoying much higher occupancy levels than the Christopher and they are selling rooms at higher rates. The Christopher's market penetration is only 84 percent, when its baseline goal should be to achieve at least 100 percent of its fair share of the market. Tony calculates penetration rate by dividing the hotel's actual market share by its fair share (based on the proportion of rooms available in the local market).

Tony and Janice also review the Christopher's group business. year-to-date, the hotel sold 4,796 group room nights short of the budgeted target of 6,500 group room nights. The average room rate (ADR) for group business is down $4 from the budget.

Tony tells Janice, "While I'm here I want to investigate these problems with you and help come up with an action plan to address them. How can we increase the Christopher's penetration rate, Janice?"

"I'd start by examining what kind of new business group and otherwise is being generated," says Janice. "What is the mix of corporate, leisure, government, or educational groups looking for rooms? I bet that new college is putting together a sports program; visiting teams will need someplace to stay."

"You could be right," says Tony. "The school is so new that you might be too early on that idea, but it couldn't hurt to get a start with the sports program developer. Let's see what the hotel has historically done with groups." He pulls out some reports. "They've got corporate groups contributing 3,000 room nights and other groups contributing the rest of their total 4,796."

"'Other groups'? Is that how it's listed 'other groups'? Aren't there classifications within that 'other' category?" asks Janice.

Tony responds, "That's how it's listed."

Janice shakes her head and asks, "Do we have a group rooms control log to look at so we can see how individual group segments are performing? How about a pace report so we can see how group bookings kept up with budgeted amounts?"

Tony shuffles some of the papers and replies, "The previous GM did keep a GRC log and a pace report. He may not have used them to fullest advantage. He also could have kept better track of what the property's competitors were doing. That information is crucial to success, especially in this local area. In the next few months, I would like you to keep up to date on what our competitors are doing and how they're doing it."

"How good a networker was the previous director of sales?" asks Janice. "Did he have relationships with area churches, mosques, and synagogues for wedding and other special ceremony business? Was he in touch with the manager of the local convention center? How about city officials?"

"He focused more on officials of agencies serving the whole metropolitan area than on officials of this suburb," Tony replies. "Maybe he was hoping to land some of the business for conventions held downtown. He was using the right technique but on the wrong people. Our competitors here keep in touch with the city Department of Parks and Recreation. As far as wedding and ceremony groups, there's been no sales effort specifically targeting them, though some large bookings have come from that segment. I'd encourage you to pursue that option with the staff. And don't be shy about using the yellow pages of the phone book. So many salespeople use that as a last resort. Just think about all the kinds of business represented there."

"It does sound like this is a very competitive area," Janice offers. "I wonder if our sales contacts with those buyers for groups are everything they should be. How experienced are our salespeople?"

"I'm not sure, but that's another good area to look at. now how about this problem of the group ADR?" asks Tony.

Janice picks up a management binder labeled Rate Guidelines from the GM office bookshelf. "It's great that they had some of these, though having guidelines and making sure staff know and use them are two different things. Hmm, it doesn't have a date listed; do you know when it was last updated?"

"No, I don't," replies Tony.

"That could be important; I'll check on it. Maybe we also need to change our rooms inventory management guidelines to make sure we sell out on every night when there's potential to do so," Janice responds.

Tony closes with, "I think you've got a good handle on the most pressing issues facing the Christopher Hotel, Janice. Why don't you draft an action plan in the next couple of days and we'll refine it together."

Question 1 . What factors should Janice consider when planning to increase the hotel's market penetration rate?

 Question  2. What factors should Janice consider in relation to increasing group business?

 Question  3. What initial steps should Janice take to evaluate the low average room rate for groups?

 Question  4. How can Janice find out what the competition is doing and how they're doing it?

Answer rating: 100% (QA)

Question 1 Janice should consider the mix of corporate leisure government and educational groups Exp... View the full answer