Avari Ramada Hotel

Case Report

12/10/2013

Submitted By GROUP 1 Madhav Mathur -80 Mayank Raheja-85 Nikhil Dangayach-89 Nikita Bhalla-92 Puneet Malhotra- 112 Rahul Satija -115 Ritika Mital -123 Shine Justin-198

Contents
1. Introduction .............................................................................................................................................................3

2.

Competitor Analysis ................................................................................................................................................3

3.

Marketing Recommendations .................................................................................................................................3

Brand Building .............................................................................................................................................................3

Leveraging its weakness ..............................................................................................................................................4

4.

Conclusion ...............................................................................................................................................................6

5.

Questions .................................................................................................................................................................4

1. Introduction
Avari Lahore Ramada Renaissance Hotel, a hotel reflecting the traditional hospitality of Lahore combined with five star standards. It was situated down the beautiful tree-lined Shahrah-e-Quide-Azam overlooking the zoological Gardens and conveniently adjacent to the Provincial Assembly and commercial zones of Lahore.

2. Competitor Analysis
Being one of the only two 5 star hotels in Lahore, Avari Ramada faced a taut and direct competition with Pearl Continental Hotel. Pearl was situated one kilometre from Avari so it was essentially in the same neighbourhood adjacent to Governors house and near beautiful Jinnah Gardens. Pearl had similar pricing policies as those at Avari, with the same rate structure and reassessment policies. However, the room rates of Pearl had always been marginally lower than Avaris. November 1988 was the first time the room prices of Pearl had overtaken the prices of it competitor. The summer package of Peal in 1988 was a greater success than Avaris. This was believed to be due to peoples predilection of Pearls fresher look with bigger rooms and widespread lawns.

3. Marketing Recommendations
Brand Building
One of the major weaknesses of Avari Ramada hotel was the lack of Brand Image in the minds of the consumers. This can also be categorised as an opportunity if the management is able to build a differentiating and distinct brand image for itself. Create the Brand Avari, so when a potential customer thought of Lahore they thought of Avari. Initially at the nascent stage of brand building Avari should harp Service as their Unique Selling Proposition (USP).

Leveraging its weakness

Avari can make its background and history a selling proposition in the second stage of marketing. With the deep routed tradition and culture of Pakistan, it can differentiate itself from Pearl, An experiential boutique hotel offering more than just stay. It can leverage its smaller sized property to Pearl by calling it a hotel with a more intimate setting. This strategy will provide Avari and edge over Pearl, especially for leisure travellers who will be coming to Pakistan to feel the countrys essence.

4. Questions

Q1 Should Raza seek to increase the occupancy rate or average room rate? What are the trade-offs? What factors should he consider?

Avari Ramada Hotel: Pricing Hotel Rooms The management at Avari seemed fine at not gaining the summer package share as long as their 80% occupancy target for the year was achieved. This was not the right approach; since they were already giving discounts and promotions to the guests it will be in the best interest of Avari to make these rates competitive to those of Pearls. Increasing the Occupancy Rate Along with having competition and demand pricing approach, Avari Ramada should concentrate on profit oriented approach. The hotels main focus at this point in time should be to increase the occupancy rate. Out of 11 months in 1988, occupancy for 8 months had been higher for Pearl. Avari should concentrate on increasing not just occupancy solely, but Profitable occupancy. In the month of November 45% occupancy was with individuals carrying 45 to 60% discount as per the Special rates. That is a colossal percentage seeing that the special rate has an adverse affect on the revenue. One of the strategies would be to limit the number of rooms given in Special Rates for corporate and to try and increase the influx of Executive Business service Clients. To attract more of

Frequent Individual Travellers and Executive Business Service clients the hotel should do some sort of sophisticated pricing strategies like bundling. Since Avari will not be able to change their infrastructure to compare it to Pearls spacious rooms and extensive lawns, they need to follow a more competitive pricing strategy to gain market share. Their average room rate for the months of May, June and July was almost Rs 89 higher than Pearls. Bundling The hotel can package two or more products together to gain a pricing advantage. This can be done by combining two services like room stay and dinner together. The hotel can charge a little higher price than the room rent for this service but still keep the prices lower, if taken either of them of them separately.

Q2 What other metrics could /should Raza use to evaluate the performance of his pricing structure? Why?

The pricing strategy should be simplified by classifying the rates by not only client type but room type as well. It should be segmented in the right manner as per our recommendations for it to help in inviting more guests and increasing its occupancy.

Pricing Recommendations

1. Room Differentiation At this point of time Avari Ramada hotel has various pricing strategies for different clientele. They should classify the rooms, starting from basic, deluxe to superior. The distinguishing factors can arise by providing increasing amenities as you go along in ascending order.

For all the Contract and Garbage rates the hotel should provide the basic room type with an option of upgrading by paying a little extra amount. This is not only going to help the hotel increase its revenue but also help it to tap into the entire inert consumer surplus.

2. Utilizing Additional Sources of Revenue More than 50% of the hotel revenue was from sales other than those of rooms, these sales included Food, Beverage (from restaurants and room service) and other miscellaneous sales like spa, gymnasium etc. The main focus of Avari management should not be restricted to the room revenue but should expand towards these additional amenities. Avari should peruse strategies on increasing this untapped source of revenue, by promoting the facilities to the incoming guests as well as potential customers.

3. Summer Packages Promotions are one of the most crucial tools used to increase the occupancy of a hotel. Even though Avari was aggressively providing various different deals with the summer package, they were not able to successfully outdo their competitor, Pearls promotion. The emulous gain on summer package will be even more crucial, once the flights from Europe and United States with the influx of leisure travellers coming to Pakistan during summer.

5. Conclusion
Avari Ramada has an opportunity to build its brand image in the minds of potential customers and the management should steer their marketing strategies towards the attainment of this goal. It should be positioned, in the minds of the customers, as a brand with not only unparallel service but also a deep routed cultural heritage.