Example Of Human Resource Management Case Study
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Accra Beach Hotel Case
1. If I were Cherita, I would decide as to whether or not to go ahead with the Corporate booking for WICB using the revenue management approach. While it is true that individual guest satisfaction reduced once too many corporate clients are using the hotel, Cherita also needs to take into account room occupancy rates and average room rates, both of which are reflected in RevPar (revenue per available room). Therefore, if the net revenue from the corporate account exceeds the revenue from potential individual guests, Cherita should agree for the WICB offer.
2. The hotel benefits from hosting the series by way of the advertising that the WICB has promised the hotel. The WICB has promised to list Accra hotel as the host hotel in all promotional material and in the televised matches. The broadcast is to be beamed to the entire Caribbean region, India and New Zealand. Therefore, the publicity potential is substantial. If Accra Hotel were to undertake this publicity exercise on its own, it would have cost money that Accra Hotel would now save due to the free publicity. Overall, the tournament is over one month (28 days). One month’s advertising budget for Accra Hotel is 1/12 x 7 million = $5833. This amount could be offset from Accra Hotel’s advertising budget.
Guest satisfaction argues against giving away the rooms to WICB. Guests do not appreciate corporate clients as they are inconvenienced. Moreover, if guest dissatisfaction is excessive, it could lead to a drop in occupancy rates, resulting in even lower RevPar. Therefore, a balance needs to be made between guest satisfaction and the benefit of publicity and assured corporate client.
3. Cherita is hesitant to accept the offer due to the price differential, which works out as follows: -
If individual guests were to occupy the rooms, the net revenue would have been $ 176463.5.
On the other hand, if WICB gets the rooms, the net revenue (reducing $20 per day for laundry) would be $157500, a net revenue loss of $18963.
WICB could then argue that the difference of $4963 would be reflected in the promotional and publicity benefit that would go to Hotel Accra.
4. The marketing mix reveals the mix of clients Hotel Accra gets over the affected months of April, May and June. The proportion of corporate clients far outweighs individual high paying customers in May and June. The average daily room rates are higher than the net rate offered by WICB (130 – 13 (breakfast) – 20 (Laundry) = 97). However, the Revenue per Available Room model needs to be taken into account, as there are vacant rooms. Occupancies are 76.7% in May and 70.7% in June. Therefore, it would be possible to displace higher paying guests.
5. The net decision to accept or reject the offer is based on: -
Difference in room rates vis a vis RevPar: 130 offered v. RevPar as indicated per month.
Subsidized breakfast - $13
Subsidized laundry - $20
Enhanced brand image. 28 days’ advertisement revenue for the hotel is $5833. If the promotion through WICB is more than this amount, the excess value could account for losses if any on the revenue front.
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