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THE ACCRA BEACH HOTEL The sales manager for a Caribbean hotel wonders whether to accept a large block

booking at a discount rate from a group participating in an international sporting event !o the promised publicit" benefits #ustif" the risk of turning awa" guests from higher$pa"ing segments% Cherita Howard& sales manager for the Accra Beach Hotel& a '('$room hotel on the Caribbean island of Barbados& was debating what to do about a re)uest from the *est +ndies Cricket Board The Board wanted to book a large block of rooms more than si, months ahead during several of the hotel-s busiest times and was asking for a discount +n return& it promised to promote the Accra Beach in all advertising materials and television broadcasts as the host hotel for the upcoming +ndies Cricket .eries& an important international sporting event The Hotel The Accra Beach Hotel and Resort had a prime beach$front location on the south coast of Barbados& #ust a short distance from the airport and the capital cit" of Bridgetown Located on / 0 acres 1' ( ha2 of tropical landscape and fronting one of the best beaches on Barbados& the hotel featured rooms offering panoramic views of the ocean pool or island The centerpiece of its lush gardens was the large swimming pool& which had a shallow bank for lounging plus a swim$up bar +n addition& there was a s)uash court and a full" e)uipped g"m 3olf was also available onl" '0 minutes awa" at the Barbados 3olf Club& with which the hotel was affiliated The Accra Beach had two restaurants and two bars& as well as e,tensive ban)uet and conference facilities +t offered state$ of$the$art conference facilities to local& regional and international corporate clientele and had hosted a number of summits in recent "ears Three conference rooms& which could be configured in a number of wa"s& served as the setting for large corporate meetings& training seminars& product displa"s& dinners& and wedding receptions A business

center provided guests with +nternet access& fa,ing capabilities& and photocop"ing services The hotel-s '44 standard rooms were categori5ed into three groups6+sland 7iew& 8ool 7iew& and Ocean 7iew6 and there were also '/ +sland 7iew 9unior .uites& and : 8enthouse .uites& each decorated in tropical pastel prints and handcrafted furniture All rooms were e)uipped with cable;satellite T7& air$conditioning& ceiling fans& hairdr"er& coffee percolator& direct$dial telephone& bathtub;shower and a balcon" .tandard rooms were configured with either a king$si5e bed or two twin beds in the +sland and Ocean 7iew categories& while the 8ool 7iews had two double beds The si, 8enthouse .uites& which all offered ocean views& contained all the features listed for the standard rooms plus added comforts The" were built on two levels& featuring a living room with a bar area on the third floor of the hotel and a bedroom accessed b" an internal stairwa" on the fourth floor These suites also had a bathroom containing a 9acu55i& shower stall& double vanit" basin and a sk"light The thirteen 9unior .uites were fitted with a double bed or two twin beds& plus a living room area with a sofa that converted to another bed Hotel 8erformance The Accra Beach en#o"ed a relativel" high occupanc" rate& with the highest occupanc" achieved from 9anuar" through <arch and the lowest generall" during the summer The hotel-s average room rates followed a similar pattern& with the highest rates 1=.>'0?$>'@?2 being achieved from !ecember through <arch but relativel" low rates 1=. >'4?2 during the summer months The hotel-s Rev8AR 1revenue per available room6a product of the occupanc" rate times the average room rate2 showed even more variation& with Rev8ARs e,ceeding >'(? from 9anuar" through <arch but falling to less than >'?? from 9une through October The rates on the 8enthouse suites ranged from >/'? to >/A0& while those on the #unior suites ranged from >'A0 to >4/0

3uests had to pa" Barbados value$added ta, 17AT2 of @ 0 percent on room charges and '0 percent on meals The Accra Beach had traditionall" promoted itself as a resort destination& but in the last few "ears& it had been promoting its convenient location and had attracted man" business customers Cherita worked e,tensivel" with tour operators and corporate travel managers The ma#orit" of hotel guests were corporate clients from companies such as Barbados Cable B *ireless& and the Caribbean +nternational Banking Corporation The composition of hotel guests had changed drasticall" over the past few "ears Traditionall"& the hotel-s clientele had been dominated b" tourists from the =C and Canada& but during the past few "ears& the percentage of corporate customers had increased dramaticall" The ma#orit" of corporate customers come for business meetings with local companies .ometimes& guests who were on vacation 1particularl" during the winter months2 felt uncomfortable finding themselves surrounded b" business people As one vacationer put it& DThere-s #ust something weird about being on vacation and going to the beach and then seeing suit$clad business people chatting on their cell phones D However& the hotel achieved a higher average room rate from business guests than vacationers and management had found the volume of corporate business to be much more stable than that from tour operators and individual guests to less than >'?? from 9une through October The *est +ndies Cricket Board Cherita Howard& the hotel-s sales manager& had been aproached b" the *est +ndies Cricket Board 1*+CB2 about the possibilit" of the Accra Beach Hotel serving as the host hotel for the following spring-s *est +ndies Cricket Home .eries& an important international sporting event among cricket$loving nations The location of this event rotated among several different Caribbean nations and Barbados would be hosting the ne,t one& which would feature visiting teams from +ndia and Eew Fealand

Cherita and 9on <artineau& general manager of the hotel thought that the marketing e,posure associated with hosting the teams would be ver" beneficial for the hotel but were concerned about accepting the business because the" knew from past e,perience that man" of the desired dates were usuall" ver" bus" da"s for the hotel The" were sure that the rate that the *+CB was willing to pa" would be lower than the average rate of =.>'(?$>'0? including 7AT2 the" normall" achieved during these times +n contrast to regular guests& who could usuall" be counted upon to have a number of meals at the hotel& team members and officials would probabl" be less likel" to dine at the hotel because the" would be on a per diem budget On averge& both corporate customers and vacationers spent >G per person for breakfast and >40 per person for dinner 1per person& including 7AT2 The margin on food and beverage was appro,imatel" /?H About G?H of all guests had breakfast at the hotel and appro,imatel" /?H of all guests dined at the hotel 1there were man" other attractive restaurant options nearb"2 9on <artineau thought that onl" about 40H of the cricket group would have breakfast at the hotel and ma"be onl" about '?H would dine at the hotel Also& the" worried about how the hotel-s other guests might react to the presence of the cricket teams .till& the marketing potential for the hotel was substantial The *+CB had promised to list the Accra Beach as the host hotel in all promotional materials and during the televised matches The *est +ndies Home .eries was divided into three parts& and each would re)uire bookings at the Accra Beach Hotel The first part pitted the *est +ndies team against the +ndian team and would run from April 4( to <a" @ The second part featured the same two teams and would run from <a" 4@ to <a" /? The final part showcased the *est +ndies against Eew Fealand and would run from 9une '@ to 9une 4: The *+CB wanted 0? rooms 1including two suites at no additional cost2 for the duration of each part and was willing to pa" =.>'/? per night per room Both breakfast and 7AT 1value$added ta,2 were included in this price and each team

had to be housed on a single floor of the hotel +n addition& the *+CB insisted that laundr" service for team uniforms 1cricket teams t"picall" wear all$white clothing2 and practice gear be provided at no additional charge for all team members Cherita estimated that it would cost the hotel about >4? per da" if the" could do the laundr" in$house& but about >4?? per da" if the" had to send it to an outside source Cherita called Ierne Armstrong& the Reservations <anager of the hotel& and asked her what she thought Like Cherita& Ierne was concerned about the possible displacement of higher$pa"ing customers& but offered to do further investigation into the e,pected room sales and associated room rates for the desired dates .ince the dates were over si, months in the future& Ierne had not "et developed forecasts But she was able to provide data on room sales and average room rates from the same da"s of the previous "ear .oon after Cherita returned to her office to anal"5e the data& she was interrupted b" a phone call from the head of the *+CB wanting to know the status of his re)uest .he promised to have an answer for him before the end of the da" As soon as she hung up& 9on <ortineau called and chatted about the huge marketing potential being the host hotel Cherita shook her head and wondered& D*hat should + do%D J=E.T+OE. ' *hat factors lead to variations in demand for rooms at a hotel such as Accra Beach% 4 +dentif" the various market segments currentl" served b" the hotel *hat are the 8ros And Cons of seeking to serve customers from several segments% / *hat are the main considerations facing the hotel as it reviews the booking re)uests from *est +ndies Cricket Board% ( *hat are the areas where Cherita can negotiate with *+CB% 0 *hat action should Cherita Howard take and wh"%