Marketing Strategy Case Study
A: Specific Case Questions
1. How would you characterize the U.S. hotel industry in early 2005
At the end of 2004, the total amount of revenue in U.S. hotel industry was $113.7 billion and earned the pretax profit of $16.7 billion with 4.4 million hotel rooms.(Roger & Robert, 2013) About two-thirds of entire U.S. motel rooms were linked with a brand while the others were severally possessed by individuals and not label associated. The characteristics of U.S. hotel industry at that time was serious divided without brand or company control a dominant of inn rooms. In 2003, all hotels fragments have obviously changed performance into three most tracked conducting statistics:
average daily rate;
revenue per ready room.
Later year, the average occupancy among wholly motel rooms has taken possession by 61.3%, the average daily rate was $86, and the average revenue per room was $53. (Roger & Robert, 2013)
From the historical data and projection of U.S hotel operating statistics (2013, p.342), there was a considerable improvement of the five hotel fragment. During 2003-2004, the revenue per room increased from $113 to $158 with the growth rate of 39.8% , and also there occupancy raised 3.5% from 64.6% to 68.1%. The purpose of guest lived in hotels for leisure or vacation occupied over a half among all other purposes, and the purpose of business also another major reasons for living in hotel. The representative tenant for commercial purpose was employed by male adult in the age between 35 to 54, who often in a senior or specific position with earned an average annual income of $81,000. The representative adult aged between 35 to 54 often reserved leisure room with income of $72,600. In the year of 2004, nearly 50% of leisure guest stayed one night in a motel, but only 7% among all travelers lived over four nights.
Hotel segmentation caused forceful competition inside U.S. hotel industry because a large number of tenants depend on price or offering to make their final decision. The hotel segment was comprises by full-service hotels and limited-service hotels. The main differences between these hotels are the offerings that they provide. Full-service motels which recorded at least 1.6 million hotel rooms in 2004. These full-service hotel derived from luxury motels, superior upscale motels, upscale motels, and medium size hotels. The characteristics of full services hotels include
supplied food and drinks with the function as restaurant;
available for feast, conference, and facilities;
baggage service and room service.
Limited-service hotels supplied seldom devices in comparison with full-service hotels, which emphasized on renting out a inn room. It frequently included mid-scale that with no services for supplying food and drinks. Moreover, limited-service motels had 1.4 million hotel rooms in 2004.
The forecast of 2005 shown that there would be a greater requirements for hotel rooms in both full-service or limited as well chances to sold these rooms. It merely relied on season, promotional activities and bid prices that hotels would like to supply to consumers. As for the hotels, it was essential for them to understand the attributes of profits.