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Sleepy Inn Motel - Case Study Example

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Sleepy Inn Motel

Even though it is near a quickly expanding resort region, this represents long-term growth and Huang needs to change his revenue stream much more quickly. Huang faces competition from Hilton Inn, Ramada Inn, and Best Western as well as many other lower-priced hotels similar to his own. His larger competition represents very well-known brands with a great deal of brand recognition and brand loyalty by a variety of mixed demographics. Further, since the only promotional material for this region are two billboards operated by the Tourist Bureau, Huang simply cannot rely on the marketing competency of this agency to fill his capacity rates. Huang maintains a low-cost pricing policy that he had established in the hopes that it would bring enough attention to make travelers choose Sleepy Inn Motel over other well-established branded competition. However, the problem here is that 68 percent of visitors to the region are younger couples and older couples with no children, two demographic groups that typically have much more access to higher financial resources. This is likely the reason why Huang witnesses visitors turn into his parking lot, but never enter the building. Once a hotel has established brand recognition and brand loyalty, it is difficult for a smaller, virtually unknown name to compete effectively without very intensive integrated marketing campaigns that must be managed and updated constantly. Further, the study conducted of local tourist needs identified that 78 percent believed it important to have recreational facilities before choosing to make a purchase. This is a substantial volume of customers and it is likely that Huang’s lack of a swimming pool is the reason why individuals turn in, but then leave in favor of the larger hotel brands. The costs of adding a swimming pool and other recreational facilities, such as a gym or child’s area, would be a budgetary problem for Huang who is currently experiencing lower-than-average occupancy ratios. Days Inn does not require extensive financial investment and this is a very well-known brand with many different loyal demographics, including military, school teams, business travelers, and senior citizens. Days Inn already has their own well-established marketing campaigns that include on-air promotions such as the described promotion with Blue Bonnet margarine and also a senior citizen discount card to invite incentive purchases. Since Days Inn also has a dedicated customer reservation line, a travel magazine, and a website, this represents the best long-term option for Huang under a franchising agreement. Days Inn might also allow Huang to establish his own unique in-house marketing literature if this were required which could be determined at the time of contract negotiation. The amount of money demanded under the franchising agreement, by Days Inn, is only eight percent of total room revenues. To support choosing Days Inn rather than operating his own brand, a brief revenue analysis is required. At $45 per night, with only 55 percent of occupancy, this represents $10,395 weekly in gross revenues. By moving under the Days Inn brand, at $70 per night and 68 percent of occupancy, Huang will earn $20,090 in gross revenues weekly or $80,360 monthly. This is almost double what Huang is ...Show more

Summary

YOUR NAME HERE YOUR TUTOR HERE YOUR COURSE HERE DATE HERE Recommendations for Sleepy Inn Motel Eng Huang has a difficult decision to make regarding whether or not to continue operating Sleepy Inn Motel or join a more well-established hotel chain. After assessing the case study, Huang should make contact with Days Inn and express his interest in becoming a franchisee of the chain…
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