U.S. Hotel Industry in Early 2005
In the early 2005, the total amount of revenue collected from the U.S hotel industry was $113.7 billion; in addition, there was a pretax that amounted to $ 16.7 billion. From the financial statements that were derived on 31st of December, 2004, it was found out that there was a cumulative total of 4.4 million hotel rooms that were present in the United States. This means that the hotel business had taken route in the early 2005 since most of the regions in the United States had expanded and majority of the businesses were also venturing into the same industry. There was a massive use of the brands in various hotel suites in the United States.
A sample statistic shows that two-thirds of the hotels were associated with a particular brand and the remaining a third was individually owned. Therefore, the characterization and description of the United States hotel industry is that it is highly fragmented with no single company acting as a monopoly. The infiltration by various key players in the industry provides adverse competition with an aim of being the majority control firm. In this particular characterization, the discussion will be broken down into key points that would efficiently bring out the picture of the hotel industry back to 2005.
Hotel Segmentation
Competition in the hotel industry relies upon the presence of various factors that the hotels offer. These may take the form of amenities, services or prices. It also forms a basis upon which various research firms categorize the different hotels. For instance, a research firm known as Smith Travel uses the service levels and the price to segment the hotels. The price of the various commodities offered in a hotel is representing a function of the service level and the corresponding amenities offered. The hotels that are characterized as being full service are known to offer beverage and food outlets and this consisted of a collection of beverage and food outlets like lounges and restaurants. The package consisted of room service, luggage service while at the same time focusing on amenities such as meeting rooms, banquet, and concierge and convention facilities.
There was also an existence of a class marked with different ranges of hotels from luxury hotels to upper upscale hotels. The available divisions get up to upscale hotels and midscale, which consisted of beverage and food hotels. These types of hotels fell under the category of full-service hotels and they had amerced 1.6 million rooms in the year 2004. In addition, another category of hotels that existed was referred to as Limited Service Hotels. These particular types of hotels were limited in terms of the facilities they offered as compared to the full service hotels. Amenities such as banquet rooms, lounges and restaurants were facilities that this type of restaurant could not accord the customers who frequented them (Ryan & Jones, 2009, p 166).
Astor lodges and Suites Inc current competitive positioning
The current positioning of the company, according to the executives, is that it is viewed as a limited-service hotel. This type of hotel tops as being with part of the features of a full-service hotel and an economy hotel. Therefore, neither Astor Lodge & Suites nor Astor Lode has meeting rooms, concierge, luggage and room service, lounge or a restaurant on this particular type of property. This particular type of positioning does place Astor Lodge & Suites on a boundary between economy hotels such Motel 6 and Red Roof Inn and a midscale hotel with beverage and food, such as Ramada Inn and Holiday Inn. The various executives of this particular hotel company view the company as being positioned against such hotels as Fairfield Inn constituted by Hampton Inn & Suites, Hampton Inn by Hilton, Fairfield Inn by Marriott together with La Quinta Inn and Suites. This analysis comes despite the fact that Astor Lodge and Suites does not compete and is not in the same categories with the stated hotels.
Previewing the companys positioning and service mission, they all point to the fact that Astor longue and Suites Inc. there are various selection decisions considered by the company. The properties of the company are located on premium sites found along major highways, which are relatively close to office complexes and suburban areas, large regional centers for shopping and airports for the most part. There has been a marked avoidance to areas such as downtown urban locations.
Another notable feature is that Astor Lodge & Suites Inc. comprises of 250 hotel property chains, which are located in ten different Rocky Mountain and Western states. The company incorporation dates back to the year 1979 and boosts its market share through the operation of an accumulated amount of Astor Lodge and Suites properties totaling to 50 and 200 Astor Lodge Properties. There is an average of about 120 individual suites units and guest rooms. There was a projection by the company of the net revenues and net losses amounting to $422.6 million and $15.7 million respectively.
The company also operates on a service mission of being a provider of comfortable and clean guest accommodations at reasonable prices and at convenient locations. Boosting the various facilities offered in the hotel, Astor stands at a pivotal point in ensuring that top services are being offered. The inclusion of iron and iron board, hair dryer, coffee maker, upholstered recliner chair, upholstered wooden seat are contributing to the hotels service level.
Operational and financial performance of Astor lodges & Suites, Inc.
In the fiscal year of 2005, as the closure of the respective financial year was approaching, the senior executives observed that the company was performing well regarding the various defined criteria. It had set out a record that saw its revenues increase in a steady rate over the last three financial years. This was marked after a recovery from 2001 and 2002 when the company recorded a significant drop in its trading capacity and capabilities. Growth revenue of 7.4 percent recorded from revenues generated from lodgings and this particular type of measure increased to 7.6 percent, which on average is higher than the limited-service segment. This data points to an accumulated growth rate of 5.8 percent. In the operational analysis, Astor Lodge and Suites posted on the financial scales a consecutive net annual loss, which was contrary to the hotel industry through its restaurant, which boosted profitable margins that were marked with numerous gains in the market.
With the significant loses made by the company, numerous hotels had to be closed to maintain the high profit margins that were being achieved by the other business entities. It also become very important that the company focuses on investments with high returns rather than on those that consumed the companys resources and did not yield anything in return. According to the lodging statistics that were projected, the company had its occupancy estimated at 67.1 percent yielding a daily occupancy rate of 67.1 percent, which in result was converted to an average daily rate amount of $57.52. Revenue per room on a daily basis rated at $38.68. There was an improvement from Astor Lodge and Astor Lodge and Suites, since they showed a significant increase in the number of people who came to occupy the various rooms that were available. This was directly proportional to the amount of revenue received by the hotel. In the fiscal year 2005, the overall turn out of the people who came to seek accommodation in the hotel appeared lower than that which was in the financial year 2004. This particular descrease in the revenues as registered by the company was due to the discount night offers administered in the year 2005 as a marketing strategy. In most cases, such offers area majorly a way to attract various customers. It is often beneficial to various companies as marketing strategies in order to acquire a broader market base than its equivalent competitors.
A potential question may arise on whether the overall amount of money discounted will be inclusive of the marketing expenditure. In this particular scenario, when balancing the books of accounts, concerned parties presume it as part of the discounted expenses of the company. When looked at from a general perspective, it can relate to a specific type of expense incurred for the purpose of boosting sales. This directly points to the marketing department. There is a strong interlink between the sales and marketing department. Companies such as Astor Lounge have decided to treat these departments as two separate entities. Some companies usually consolidate these departments into one solid department, since the influence of one department directly affects the other department. It is also evident that the two departments find it difficult to operate independently. Therefore, there is need for strict distinction of the amount of money spent, allocated, and received from these departments. It becomes imperative, since it is applicable as a performance scale or index when determining the amount of profit being made in relation to the activities focused on promoting that particular type of product.
Sales and marketing initiatives, expenditures, and outcomes for fiscal 2004 and 2005
The sales and marketing department was under the supervision of the senior vice president of the Lodging Operations. From the information provided the department comprises of various key roles or activities that guarantees that the company reaps maximum profits. Various initiatives for instance marketing research, promotions, advertising and sales were some of the important initiatives that guided the specific department.
According to the financial information of prior fiscal years in comparison to 2005, there were more sales in terms of occupancy of the rooms. It is however notable that the discounts offered seemed to be an attractive bargain for the customers. However, this particular strategy did not yield the amount of revenue that the company had expected since the financial records indicated a slight decline in revenue accumulated at the end of the financial year. With the expansion and availability of many units and hotel rooms, it was necessary for the hotel to come up with norms that were different from their routine chores. The main purpose of this approach is to ensure satisfaction of customer needs. For instance, the availability of room service shows out rightly that the customers are valued and that the hotel is only interested in their stay and other things can come as a comprehensive and cumulative package of the hotel.
In the implementation of any particular marketing strategy, it becomes every important for the policy makers to analyses how much they are investing in it and what are the short term and the long-term goals of that particular type of venture. The ability of the hotel to support and promote various occasion where different services are show cased becomes very important as a strategy. The bottom line of any successful marketing strategy therefore becomes dependent on the number of people who buy their ideas, are able and willing to spend to see that the company achieves its goals and targets. The hotel industry is under the service industry and is highly dependent on quality and not quantity. Quality in this perspective can guarantee quantity either through recommendation or through the various advertisements and promotions that are projected and show caused by the sales and marketing teams. The identification of the correct personnel to be given a task to lead this particular operation will also be another key step in ensuring that the message about the superiority of a particular product reaches consumers far and wide.
The years 2004 and 20065 were marked with various technological advances. Therefore, it becomes important to note that the use of technology was also key in the sales and marketing of the suites and lounges. The guarantee that consumers were able to check in after the implementation of the sales and marketing strategies therefore shows that positive investment was done. The vice presidents 17 years of experience in that particular type of department also gave him a big edge owing to various tactics that have been acquired over time.
Kelly Elizabeths proposal for her fiscal year 2006
In the formulation of the sales and marketing plan together with the budget for the fiscal year 2006, the main objective is increasing the occupancy of the lounges and the suites of that particular hotel. Basing from the previous year statistics of 2005 and 2004, there was a 2 percent from the previous lodging revenue, which was channeled toward media advertising. The intention of Astor Lodge and Suites is to capture a variety of customers, including those who are travelling and lack places to sleep or those who have decided to have a weekend out. It therefore becomes important for Elizabeth to increase that percentage so as to nationally market the lounge and suites. An equal allocation should be available when considering the usage of the amount of revenue spared for the purposes of marketing. One group of people, for instance the business class people, should not receive a higher priority than those coming for holidays. The structure should be in the form of one-operation complements the operation of the other. Elizabeth should therefore propose that 40 percent be allocated for marketing to the vacation/leisure traveler segment, while the remaining 60 percent of the revenue should be channeled to the (348) business traveler. It is duly noted that holidays come occasionally; therefore, it makes more sense if Elizabeth channels majority of her funds to business travelers who may boost their overall sales.
Sales representatives should also be included in the marketing and sales plan and an equivalent budget set for them. A sum of $145000 should be appropriate because in as much as the marketing and sales operations will be conducted, it will have to be done by a group of skilled people so as to effectively infiltrate the market.
