Avari ramada motel pricing rooms in hotels essay

BACKGROUND

Five-star hotel affiliated with the Ramada Renaissance resort chain. Located in Lahore, the main city of the Punjab province in Pakistan. Founded in 1978 by simply Byram Avari as part of the Hilton hotel chain. Independently working since 1987.

ROOM COSTS AND COSTS POLICY

Avari priced its rooms on the basis of competition and demand. The rates at Avari were modified and adjusted twice a year according to the inflation rate. Avari’s policy is definitely not turning away virtually any guest therefore they have established different types of rates such as: Individual rates ” include holder rate (for frequent individual travelers), commercial rate (for those having no accounts but good reputed) and preferential rate (lowest rate).

Ordinary friends were not conscious of this label of rates. Agreement rates ” include Business business school rate (30% below tray rate), amount executive business class rate (40% under rack rate) and special rates (45% to 65% below stand rate) which usually had a awful impact on the hotel contribution margin. Rubbish rates ” include diplomats rate (50% discount of rack rate), net wholesale rate (below than EBS but above VEBS), reporter rate (20% discount), aircarrier rate (55% off) and IATA level (50% discount).

CLIENTELE

Business customers ” 61% of the hotel’s business, many profitable buyers to provide. Constantly developing client portion. Individual strolling guests (frequent individual travelers) ” seasons client part, decreasingsignificantly during the summer. Travel groups ” seasonal sessions during the winter months and springtime due to extreme temperatures in the summer. Additional clients ” non periodic guests, which includes airline crews, government representatives and journalists.

SUITES

Junior package ” 3300 Rupees.

Executive selection ” 5500 Rupees.

Presidential package ” 7150 Rupees.

Bridal collection ” contributory if wedding party is kept at the resort.

PROMOTION & ADVERTISING

Discount charges

Primary promotional tool used by Avari to increase the hotel’s occupancy rate.

Summer package

Exceptional discount plan offered yearly by the motel during its period of low occupancy (45 ” 55 % occupancy rate). Additional promotional activitiesOther forms of advertising used by Avari included free pickup bed tea and meals, and customer marriage management. Supervision at Avari developed a mailing list which included the names coming from all previous consumers. Leaflets and newsletters had been sent to this list of clientele to keep these people informed and updated together with the hotel’s activities and offers.

INDUSTRY ENVIRONMENT

Competition

At that time their very own competitor was “Pearl Continental, the only different five-star motel in Lahore. The bedrooms at Gem were more spacious than those at Avari, and their yards were also greater. Pearl got pricing guidelines similar to those of Avari. The rate structure was the same, as well as the review and re-assessment of contracted place rates happened twice 12 months. Rooms by Pearl had been priced at 95 to 2 hundred Rupees below the prices of Avari. Avari maintained a greater average area rate than Pearl (the difference was been among 120 and 130 Rupees). Management believed that this higher average area rate was achieved because of Avari’s outstanding service, which usually attracted more customers.

Market Trends

In 1992 it was expected that Sheraton and Holiday Resort would be completed and the two hotels had been an impending threat to the existing elegant hotels in Lahore because of the good photo in the minds of the consumers in Pakistan.

CURRENT SITUATION

Every year the target for the typical room rate was increased by 10%. Room prices were improved twice a year ” in January and June. Avari placed superb emphasis on receiving business accounts from Treasure. Occupancy goal rate: 82% in 1988, and 85% in 1989.

Normal room level: Rs 1200 per month 23 years ago, and Rs 1320 in 1989.

CONCERNS

As mid-November, Avari’s average space rate started coming below Pearl’s. This was a sign that Avari’s prices policies needed to be reviewed and other alternatives would have to be considered. The condition faced simply by management of Avari took place in December 1988 when Avari’s average area rate (Rs 1000) was lower than Pearl’s (Rs 1065). This was a challenging activity for marketing managers since their performance was examined on the basis of concentrate on average place rate and occupancy level which was 70% in Avari and 80 percent in Pearl. Another problem was that Avari’s image, in contrast to the image of Pearl or perhaps former Hilton, had not been yet fully produced in the minds of customers. Threats: access of Sheraton and Holiday break Inn hotels.

Proposed alternatives

Boost the price of all rooms by 10%.

Increase almost all rates apart from EBS and VEBS.

Introduce another kind of rate which could bridge the vast gear between the group rate and the individual charge.

RECOMMENDATIONS

Avari should certainly focus on building a brand photo in the minds of the shoppers, so when a potential customer considers of staying in Lahore, the first motel that occurs to you would be Avari. Avari ought to use a revenue orientedapproach and its focus should be to increase the average occupancy price and the average room price. Avari may use a bundling strategy. This could be done by combining two solutions. For example , a vacation package with two hotel room nights and a trip ticket in one cost, or space + rental cars at a single price. Additionally it is very important that Avari is targeted on improving their summer package deal services which are lagging in back of Pearl’s. Occupancy rate is a lowest through the summer period and Avari needs to introduce the best offers and discounts to boost their current 50% rate.

Avari has to learn the lessons and take those example of Gem. Having a good competitor like Pearl is helpful to Avari because they can learn a large amount of lessons off their way of doing business, so they can enhance their pricing strategies and marketing activities, and ultimately appeal to more clients and increase hotel guests rate. To respond to the risk of new entrants such as Sheraton and Getaway Inn, Avari needs to offer high-quality and variety of differentiated and unique services. These are generally very strong competitors with established brand images, but on the other hand Avari has the first-mover advantage inside the Lahore location.

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