Amber Inn & Suites, Inc.

Topics: Hotel, Hotel chains, Fiscal year Pages: 9 (1892 words) Published: February 13, 2011
Amber Inn & Suites, Inc.

Case Recap

Amber Inn & Suites, Inc. is a 250 property hotel chain with locations in 10 western and Rocky Mountain States. As a special assistant to the corporation the goal is to prepare a comprehensive analysis with the possibility of establishing a solid base for future growth. (Kerin and Peterson, 2010). This case study will provide a summary and analysis of Amber Inn & Suites, Inc. options and an examination into the company’s strengths, weaknesses, threats and opportunities.

Problem Modification

Amber Inn & Suites, Inc. problems to be addressed are how to emphasize on the corporate travelers and vacationing family stays. The American Hotel and Lodging Association have reported one half of all guests are business travelers and the other half are for leisure or family vacations. In comparison, Amber Inn & Suites, Inc. basically offers the same amenities as other hotel chains in the midscale to economy range. (Kerin and Peterson, 2010). However, they are not able to compete with higher level hotel chains due to limited-services which inhibit their growth potential.

Case Analysis

Amber Inn & Suites, Inc. has projected growth in the annual lodging revenue of 7.4% for the current fiscal year. However, it is still slightly below the overall hotel industry average of 7.6%, but higher than the average limited-service growth rate of 5.8%. However, Amber Inn & Suites, Inc. is also projected to reflect its’ third year net loss while the hotel industry as a whole and the limited-service operations reported profitable operations over the past three years following improved economic conditions. (Kerin and Peterson, 2010).

During the past fiscal year, Amber Inn & Suites, Inc. has closed two underperforming Amber Inn locations and opened one Amber Inn & Suites property. In the past few years, Amber Inn & Suites, Inc. has closed 12 underperforming Amber Inn properties, and opened two Amber Inn properties and three Amber Inn & Suites properties.

Amber Inn & Suites, Inc. is projected to reflect lower revenue in the current fiscal year due to “Free-Night Stay” promotions. The loss of revenue for each location utilizing this promotion will have an effect on overall performance of the chain. The Direct Cost per room is projected to be $28.75 which has remained steady for the past three years. However, variable costs directly associated with the operation of the hotel properties, such as direct labor, utilities, and hotel/room supplies (including breakfast food and beverage service) are subject to change. (Kerin and Peterson, 2010).

Corporate expenses are subject to the going market rates for Sales, general, and administrative. These costs can include:

1. IT Services

2. Legal

3. Finance expenses (interest rates)

4. Accounting (especially if utilizing outside sources such as an accountant)

5. Human resources (outside sources are more costly)

6. Sales (outside sources are more costly)

7. Marketing (outside sources are more costly)

Amber Inn & Suites, Inc. hired two additional National Sales Representatives this past year for a total of 10 representatives. Marketing cost rose due to added marketing and media advertising. A large scale study was performed to identify Amber Inn & Suites, Inc. guests. Both of these additions increased the expenditures for the current fiscal year with results and benefits to be determined in the future.

Identifying the Root Problem Components

Executives have expressed concern over the occupancy level at each of the locations. Asking questions as follows:

1. Are we utilizing the very best promotions or are there better promotions we can offer

2. Are we asking questions about what consumers want

3. What determines which hotel they choose to stay at

4. Why are we comparing Amber Inn as an economy hotel when we offer better services

5. Are we meeting our...
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