MK610 Professor Hossasin
November 4, 2012
Tom Green, Angela Cosner, Ryan Williams, Ramakanth Desai, Todd Ricketts
Anton Cahoon left a successful career in manufacturing to purchase an independent motel, near an interstate highway exit, a short distance from a rapidly expanding resort area. Mr. Cahoon relied only upon passersby as clientele with little other advertising. For the first two years operations went smoothly, however the Goodnight Inn had not become profitable. While occupancy rates stabilized near 55%, they were still well below the industry average of 68%. Anton had run his motel avoiding “unnecessary expenses”, and as a result had a 40% price advantage over the full-service hotels in his market area. Customer surveys found the GoodNight Inn acceptable. After much thought, Anton has begun to consider affiliating with a either Holiday Inn or Days Inn, both offering the advantages of a central reservation system, and their national marketing presence.
Anton Cahoon owns a motel that is losing money due to low occupancy rates. What marketing strategies can be adopted to increase both occupancy rate and profitability?
a. NAICS Code 721110 Hotels (except Casino Hotels) and Motels b. This U.S. industry comprises establishments primarily engaged in providing short-term lodging in facilities known as hotels, motor hotels, resort hotels, and motels. The establishments in this industry may offer services, such as food and beverage services, recreational services, conference rooms and convention services, laundry services, parking, and other services. Anton Cahoon is in an interesting situation. There are a lot of factors at play that he can use to his advantage as well as some that he should look to avoid. Fortunately he is in position with many opportunities rather than one without any choices. His competitors are not choking him out of the market; however they are negatively impacting his revenue. He can also take the “If you can’t beat em’, join em’” approach by affiliating with either Holiday or Days inn. Being that Goodnight Inn is currently losing money, cash is of concern and he must make a decision fast. Regarding his consumers, he has many different target markets that he can tailor his business to. As it stands now, there are a few avenues he can take that will be relatively inexpensive and increase his customer base. Some of these options are related to his advertising and booking systems, which are the main appeal of affiliating with a national chain.
• Half mile from interstate
• High traffic interstate
• 10 miles from tourist “destination” area • In the vicinity of several metropolitan areas • Standard rooms suitable for most customers • Low employee cost
• Price 40% below full-service hotels
• Patrons happy with their experience
• In a growing area
• Currently losing money
• Lack of restaurants
• Same price as resort area motels
• People drive off after initial impression • No recreational facilities
• Other motels being planned for the area
• More signage along the interstate
• Create a more appealing storefront
• Attract more business travelers
• Install a restaurant
• Develop online presence
• No other Holiday or Days inn in the vicinity • Option to affiliate with either chain
• Run out of capitol
• Other more established Hotels
• Politicians play major role in community development...