KEY CONCEPT CASE STUDY Thanks for taking the time out to be here." continued, and servers that are friendly. said Damario, the revenue manager at the knowledgeable and efficient. That's the Barcena Resort. Damarlo was addressing secret to good food." the members of the resort's newly formed Strategic Pricing and Revenue Management "agree. Service delivery is every bit as critical Advisory Committee. As you know, Sofia has as our product quality, so staff training really asked me to chair this committee, "continued is important," said Damario as he looked in Damario. "I'm looking forward to hearing your the direction of Shing Rakuni, the resort's thoughts on lots of the topics that will directly human resource director. affect the revenue optimization and strategic "Shing," said Damario, "Have all of our pricing decisions we will make in the coming departments implemented a regularly scheduled months. training plan for each of their staff positions? "Well, I can already tell you what I think." said Shingi looked down uncomfortably at the Mark Chaplin, the hotel's Controller. "With papers she had spread in front of her as our owner's expectations and the financial she said. "Maybe you should ask each pressures on the property, we should be department head. They would be more up to targeting customers who seek a premium speed in their own areas than I would." product and are willing to pay a premium price. I'm talking about the top 15 percent of "When we first opened, we really stressed the resort-going public. That's the customer staff training," said Adrian quickly, but who won't haggle with us on rates. And that when the budgets tightened up. I think most approach would allow us to increase our of us had to make cut backs." The other prices to the level we need to support our cost department heads nodded in agreement. structure." Damario quickly considered the other "Those are savvy consumers, Mark, and their resort properties competing against the Barcena. Some were newer and had some tandards are pretty high. I don't know if the modern guests features the Barcena did duct we can deliver will consistently match not have. Some were older properties that e expectations they have," replied Pam, the were showing their age, but they were all property's DOSM. pretty well maintained and they typically "I would match our rooms against any of our priced their rooms lower than the Barcena. competitors. protested Adrian, the resort's On the whole, he thought, some of our rooms manager. "Guests don't have a competitors are newer and some are older. problem paying a premium price if the product We have some service features they don't we deliver is outstanding." have and some of them have some features we don't have. For a five-year-old property, "In my area, that means an exceptionally well he felt the product offered could hold trained staff providing service that is as good its own in this market. But that assumed as the food we make," said Sam, the resort's its service levels were where they needed F&B director. "No over-cooked steaks," he to be. "That's right," quickly added Amanda, the front office manager. "It's hard to implement training when you only have enough payroll budgeted to schedule the exact number of desk agents we need to handle our check-ins and departures." "Amanda's spot on," said Bev, the resort's executive housekeeper, and when we are short staffed, it's all we can do to get the rooms turned on time. I'd love to increase the training of my room attendants if I had the money. We would have better room quality and our room inspections could be speeded up." "That's exactly why we need to go after the premium market," said Mark. "That's the way we will get the revenue we need to increase training budgets and fix some of these problems." All of the department heads except Pam seemed to nod their concurrence. "Higher prices? Now? In this economy?" she said aloud. "There're good, but I'm not sure my team can sell that," she concluded, as she gave Damario a troubled look. chapter. What would be the likely impact on that formula if the resort immediately implemented Mark's suggested pricing strategy? 2. In this meeting, Damario leared about two reasons (lack of money and lack of time) typically given for not having formal staff training in a hospitality organization. Assume that Damario's ultimate goal is in fact the ability to charge a premium selling price relative to the resort's competitors. Do you think it is likely that such a goal could be achieved with the lower than average levels of guest service and product delivery that typically result when employee training programs are deficient? Explain your answer. 3. Assume the Barcena is currently competing for a 400-room-night contract against a newer resort whose total bid is nearly identical to that of the Barcena. What would Mark advise Pam to bid? If you were the customer in this scenario, what would be your likely reaction be to such a bid? Support your position with information you learned in this chapter. 4. Mark's pricing strategy assumes imme- diately increasing the resort's prices will generate the revenue needed to improve its products and services. Do you believe such an assumption is reasonable? Explain your answer using the buyer's view of value formula. For Your Consideration 1. Assume that in a recently completed competitive site survey, Damario found the physical quality of the rooms sold and food served at the Barcena to be in the mid-range of its competitors with regard to quality. Now consider the "buyer's view of value formula you learned about in this