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Case Discussion

question on marketing   Posted By major [ dr] m m singh    Date : 26-Mar-09   11:58 PM     Reply

The hotel glut has produced a tremendous windfall for business travellers. Service is up, but prices are not. Because of overbuilding, hotel chains are engaging in an all out service war to pamper the business traveller. Business persons spend about $34 billion a year at hotels and motels and account for nearly all the occupancy except at resorts.

The number of available rooms increased 40 % during the1980s, resulting in an average occupancy rate in 1989 of 63.8 percent. The break-even point for the industry is 65 percent. Thus, about 60 percent of Americas hotels lost money in 1990. To make matters worst for profit margin, corporate discounts have become increasingly popular and the size of the discount is going up. From 1985 to 1990 the average corporate discount rose from 18 percent off 4 regular rates to 25 percent.

Yet despite this difficult environment, economy hotels are thriving. When corporations began tightening expense account for lower level employees, demand surged for rooms priced at $ 40 per night and under. The low-end segment of the market was once characterized by seedy independents offering  run down facilities on roads along bypassed interstate high-ways. The big chains like Marriott, with lower growth in their traditional markets, moved him as into the economy market segment and began upgrading its image.

Marriotts entry into the economy market is Fairfield Inns. For $ 35 per night, the business traveler receives a king size or two double-size beds, a large work area, free cable TV, and a bathroom with a separate vanity area so the traveller will not fog up the mirror with steam from a shower. When guests check out fog Fairfield Inns, they can rate their stay on two computers at either end of the reception desk. Four questions pop up on the screen But we dealing with cleanliness, service, value for the price, and overall rating; the guest punches a key to indicate excellent, average, or poor. Employee bonuses are pegged to the rating.

1) Would you say that the data gathered at the two computers at the reception desk was marketing research? Why? - . 2) What kind of market research infonnation do you think Marnott gathered before it developed the Fairfield Inns concept? Would it be applied or basic research? Why?

3) Now that Fairfield Inns are a viable, ongoing operation, do you see the need other i information? If yes. Give some examples.





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