Question

“Are you familiar with STAR monthly trend reports?” asked Mark, the

outgoing RM at the newly refurbished Bradford Hampton Inn.

Mark was talking to Ja Lin, the newly hired RM for the property. Mark

was retiring, and the hotel’s GM had asked him to “show her the ropes”

on his last day of work and her first day.

“I think I understand them pretty well,” replied Ja Lin.

“That’s great” said Mark, “performance is really important here. But

you’ll really like the freedom you’ll have in this position. Our GM and

DOSM are so busy with sales and their own to-do lists that rate and

inventory management decisions will be pretty much left up to you.

Since the renovation, we have always led the comp set. Our RevPAR

index for the month is 119.5 percent. That makes us first again. I’m

really proud of that!”

Ja Lin reviewed the trend report document Mark had handed her to her.

The competitive set’s overall occupancy rate for the month was

61.5 percent. Her property’s occupancy index for the month was 140.9

percent. Its ADR index was 84.8 percent.“Of course, the owners always want more. Just between you and me, I’m

not sure they will ever be satisfied. They are always pushing for us to do

better,” continued Mark as he shook his head.

“Do better?” asked Ja Lin.

“Yes, better. You know. Make them more money. Honestly, I just don’t

think they are very realistic,” said Mark.

1. What do you think has been the rationale

behind Mark’s revenue management strategy?

2. Do you think the current strategy is in the long-term best interests

of the hotel’s owners? Explain.

3. What actions would you advise Ja Linto take to learn more about

her hotel’s relative placement within her competitive set and the

customer value her hotel delivers?

Answer 1

1. The case extract seems to depict that Mark had followed a practice of focusing too much on the indicators in order to achieve the targets so that the management is overwhelmed with the performance.

His efforts have been directed towards achieving more & more revenue in order to improve the RevPAR index and as per the latest monthly report, the actual has exceeded the targets set by the company. Also, Mark had the freedom to take decisions & implement them as per his ideas to improve the performance.

2. I believe that the current strategy of focusing too much on the financial indicators is not in the long term interests of the hotel owners. It is always essential to consider both financial & non-financial factors to evaluate the performance.

Also, the performance is being measured on the basis of the occupancy rate which is not directly in control of Mark. Any performance evaluation criteria should be such that is controllable in nature.

Also, customer satisfaction is the key factor in a service based indsutry such as hotels.

3. Ja Linto should consider the below in order to add value to the customrers as well as the hotel's performance:

- Focus should not just be on achieving the targets

-Discussion with the management to consider non financial factors as well

-Focusing on the customer satsifaction in order to create a reputation in the market & create a sense of brand loyalty among the custoners.