Amber Inn & Suites, Inc
Amber Inn & Suites, Inc
Amber Inn & Suites, Inc. is a hotel brand that is part of the highly fragmented hotel industry in the United States. The hotel industry as a whole has shown growth since 2003, with industry revenue reaching almost $114 billion in 2004. However, this is not the case for Amber Inn & Suites, Inc., whom will be “in the red” for the third consecutive year.
Competition in the hotel industry is strong and varies tremendously on the basis of amenities, price, and service. Full service hotels are those who offer restaurants, convention facilities, concierge, and room service among other things. Full service ranges from luxury hotels, such as the Ritz Carlton, to midscale hotels, such as the Holiday Inn. Limited service hotels are more narrowly focused on renting hotel rooms and do not offer the amenities found in full service hotels. Limited service hotels do not offer food and beverage but range from midscale, Hampton Inn, to economy, Motel 6. Amber Inn & Suites, Inc., is positioned as a limited service hotel between economy hotels without food and beverage and midscale hotels with food and beverage. Despite the limited service sector being profitable over the past three years, Amber Inn & Suites, Inc. has not.
The buyers in the hotel industry are those who stay in the hotels for a certain period of time whether it is for one night or more. The hotel patrons also have the option of making reservations. Patrons of Amber Inn & Suites, Inc. were profiled in 2002 and then again in 2004 and their answers were compiled into usable data. The most significant findings of these guest profiles are, about 80% of the guests are staying for business purposes and on average stay for 2.5 nights at a time about 10 times a year. This segment of business people is the most important for Amber Inn & Suites, Inc. Also, about 66% of the guests replied that their company paid for their stay, so while price does matter a slight increase in price would not force familiar companies to book elsewhere.
The market for hotels can be segmented into four major categories- business, conference, personal, and vacation. The largest segment is business with almost 28%. Business and conference consumers together take up a little more than half of the market segmentation (see appendix 1). This not only is a huge market in and of itself, but a prominent market for the limited service sector of the hotel industry whose main focus is business related people.
Amber Inn & Suites, Inc. specifically strides to provide mostly business travelers with clean and comfortable accommodations in convenient locations with reasonable prices. In the survey provided Amber Inn & Suites has shown distinctive competency in the areas of having returning customers to all locations. The survey also revealed that the locations and signage were convenient for most patrons, the staff was friendly and knowledgeable, reasonable prices were offered, and personal preference of the patrons caused them to come back. Their offering to the market should be mainly focused on being a convenient place for business travelers. The past and present performance of Amber Inn & Suites, Inc. has been poor due to lack of marketing direction. Its highest potential could be one of the most coveted hotel brands for single business travelers.
The current situation in which managers and the organization itself are in is an exponential decrease of revenues since the market downturn. The hotel industry was affected by the September 11th attacks in 2001 because of weary customers and since then Amber Inn & Suites have not seen much of an increase in profitability. The past three years there have been different strategies employed to raise revenues and in turn have been the reason for the current situation.
Beginning with the 2004 fiscal plan and budget, the marketing department and marketing managers have been focusing on attracting more vacationing patrons and families. Their attempt to tap into these other markets was mobilized by the slogan “the place to stay on the way”. This marketing campaign and media budget was 2.7% of the overall lodging revenue, higher than the industry standard of 2%. Finally in the 2004 plan they also introduced two national sales representatives, making the sales budget rise.
The 2005 fiscal plan and budget was slightly more successful than the last. The heightened marketing effort, which became known as the frontier strategy in 2005, main objectives were to increase occupancy and length of stay, but also to attract first time guests. In order to do this the marketing budget went up to about 3%. Also, two more national sales representatives were signed in 2005.
Fiscal 2006 plan and budget raises the following issues: allocation of media budget to vacation and business travelers, future of the frontier strategy, and promotions. The