Sal Ltd Case

Topics: Hotel, Hotel chains, Hotels Pages: 10 (3725 words) Published: November 4, 2012
Case Recap
Amber Inn & Suites is a 250 property hotel chain located in 10 western and Rocky Mountain States (Kerin & Peterson, 2010). The company was founded in 1979 and they operate 200 Amber Inn properties and 50 Amber Inn & Suites properties (Kerin & Peterson, 2010). They have 30,000 total rooms with an average of 120 rooms per property (Kerin & Peterson, 2010). The company has had five consecutive unprofitable years and the company wants to be profitable within two years. This case will provide a summary an analysis of Amber Inn’s options and an examination of their strengths, weaknesses, opportunities and threats.

Problem Identification
Over the past five years, revenues for Amber Inn have been increasing but so have their costs and this had led to five years of losing money. In 2005, they are expected to have revenues of over $422 million but are expected to report a loss of $15.7 million (Kerin & Peterson, 2010). While Amber Inn & Suites are struggling to make a profit, other companies in their industry are experiencing growth. In recent years, the company has closed seven properties and management would like the company to be profitable within two years. In order to meet the challenge set forth by company management, Amber Inn needs to examine their positioning, target market, advertising, marketing and promotions to set a plan for the fiscal year 2006.

Case Analysis
Amber Inn & Suites is a 250 property hotel chain located in 10 western and Rocky Mountain states. The hotel industry is a $113.7 billion industry and as a whole recorded $16.7 billion in pretax profit in 2004. It is a very profitable business. In the United States, there are 4.4 million hotel rooms with 10 companies controlling 54% of the available hotel rooms (Kerin & Peterson, 2010). Amber Inn & Suites is a limited-service hotel chain as they those types of hotels do not offer restaurants, lounges, and banquet rooms (Kerin & Peterson, 2010). There are 1.4 million limited service hotel rooms available in the United States. With 30,000 hotel rooms, Amber Inn & Suites represents 2% of the limited service hotel industry. They focus on the business traveler, with almost 80% of their customers traveling on business (Kerin & Peterson, 2010).

The corporate service mission of Amber Inn & Suites is to provide principally business travelers with clean and comfortable guest accommodations in convenient locations at reasonable prices (Kerin & Peterson, 2010). Amber Inn & Suites have located their properties on major highways, close to suburban industrial, office complexes, airports and larger regional shopping centers (Kerin & Peterson, 2010). The location of the properties is a huge benefit to the company. They have chosen to not be located in urban areas and downtown. They are looking to make the commute for business travelers as easy as possible to their meeting location. In a recent customer survey, 47.5% of Amber Inn’s customers chose the hotel because of its location to the following day’s activities (Kerin & Peterson, 2010). Being close to meeting areas is a major strength of Amber Inn & Suites.

Midscale hotels without food and beverage had an average daily rate (ADR) of $73 and economy hotels had an ADR of $50 in 2005. Amber Inn properties had an ADR of $55 and Amber Inn & Suites properties had an ADR of $66 in 2005 (Kerin & Peterson, 2010). Midscale properties had a revenue per room available (RevPAR) of $48 in 2005 and economy hotels had a RevPAR of $27 in 2005. Amber Inn had a RevPAR of $36 and Amber Inn and Suites had a RevPAR of $47 in 2005. Amber Inn’s company is well positioned with their competition as their pricing and revenue per room is in line with their competitors. The Amber Inn property actually has revenue of nine dollars more than their competition. Even though their revenues are in line with...

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