In order to put into practice lessons we had with the module of Strategic analysis, We had to manage a hotel in a domestic market and in an international market. Our mission was to choose the best strategy and implement it with all the variables available in the software in order to compete the best in our universe.
As we didn’t know this software before and we didn’t choose our team, we already had some difficulties from the start. Our objectives were to understand as fast as we can this software in order to be efficient from the beginning. A practice round was available for us in way of being at ease with all the variables. Our next step was the choice of our strategy. ...view middle of the document...
In contrast, we thought of Sofitel, Hilton or Le Méridien as international well-known hotels. These major hotel chains clearly position themselves on a high quality and luxury scale.
Our long-term vision is to establish at a domestic level an affordable price for our hotel to build a strong customer relationship. Thanks to the high quality of our facilities, we would be able to attract a lot of them but mostly to make them come back. We would be able to have a high occupation rate that would ensure us enough revenue to pay our expenses.
On the international market, we want to build a strong brand with our luxury hotel. Our very high quality level of the facilities combined with a permanent staff that is fully trained enables us to have a hotel that is almost fully booked each period (we have an average of 86,9% of occupancy rate on our international facilities).
How did we implement our Strategy?
Throughout the practice round, we really wanted to try out for a very low-cost pricing of our rooms. As we started only with rooms in our country, we couldn’t have a tryout on the international market. We thus decided to set our rooms at the rate of 65€ which gave us an average of 84.07€ due to the previously booked room. We thus obtained an occupancy rate of 58,8%. This might not be high compared to the following rounds but we were the team with the highest rate. The big downside having set very low prices directly from the first round was the pricing war that occurred during the whole game. Indeed, if we take a look at the average room rate, it never exceeds 103.12€ which for some other universe is the lowest available room rate.
The graph shows here the round n°8, which was the turn with the lowest average price (86.58€)
Even though we wanted to stay on the low-cost market, we came up with the fact that it would not be possible to achieve high net profit if we fixed our room rate too low. What we decided to do afterwards was to set a price for our walk-in customer and to then sell our rooms in advance at the lowest price possible without selling them under the walk-in price we had set. However, we could not have the exact same rate for the walk-in customers as for the pre-sales since we had to adjust our price with the market outlook and the expected number of customers for the incoming season. What we were able to do was to ensure a quite high minimum of revenue since we always tried to maximize our “booked ahead” rooms.
For the international market, we decided to build only a small amount of rooms. Indeed, we really wanted to focus on the quality of our compound and not the quantity. We built only 10 rooms, which gave us an available 1800 rooms per season. Then, we decided to take the maximum advantage of our low number of rooms and the fact that one of the team had decided not to invest on the international market. We could thus set very high prices for our room and maximize our revenue with selling a certain amount of rooms at a high...