Regent Hotel: Case Study on Pricing and Weaknesses

Regent Hotel guinea pig Study on set and WeaknessesThe Regent Hotel Case Study1. Pricing Strategy Review Key IssuesThere argon several bring up issues which must be considered when determining the pricing strategy for a hotel. The master(prenominal) vari sufficients that affect hotel room pricing in general leave behind embroil transient demand at the location, for prototype during festivals, conventions or major holidaymaker occasions, and also whether it is currently mellow, low, or shoulder season. Weekly arrival or departure patterns can also affect business there may, for example be many spargon rooms on a thorium wickedness, or even worse, excessive demand on one night of the week, due to overlap from arriving and departing guests, which means that rooms may send away up being empty on the surrounding days. For example, if guests confineing from Monday to Friday choose to also prevail Friday night, it may make the rooms unsuitable for people who want to stay ov er the weekend, thus leaving a shortage of rooms on Saturdays.Equ ally, the ratio of guest rooms to meeting, or conference, rooms can inflict pricing strategy, as if the hotel has plenty of guest rooms, merely little conference space, it may have to offer excessive discounts to pull back conference guests, but in the opposing scenario, it may be able to guide a premium. In a similar vein, a hotel with a successful memorial of holding meetings or conferences, and thus a good reputation in bodied circles can also command a premium for melodic phrase functions. The potential difference for incremental revenue from the restaurant and legal profession areas should also shock absorber on pricing, both for the rooms and the facilities themselves. Should a hotel have a high residuum of guests victimization its additional facilities, then it can use these revenues to subsidize the cost of the rooms, thus enabling it to lower prices and thus attract much(prenominal) guests, who will ideally also use the facilities. However, should the facilities be of poor quality, or also expensive, then the price of the rooms may have to be raised to compensate for the shortfall. A final factor to consider is the potential for risk to the hotel, such as the likelihood of cancellations or damages, which can be mitigated to some extent by including cancellation and attrition clauses in the monetary value and conditions, provided these are made clear to guests at the time of booking.Pricing strategies at major brand hotels also tend to fluctuate more with the market place, because of their size of it and power. Serlen (2004) reported that many of the major brands lowered rates dramatically during the late(a) period of difficulty for the industry, but these rates were unprofitable, and thus the hotels couldnt cite those rates and be profitable. As such, most hotels chose to keep rates more stable, sacrificing some revenue during that period, but meaning that they wont be the same(p) pressure of profitability once demand has returned. However, a Datamonitor Company indite (2005) of the market in which the Hyatt and early(a) premium hotels, such as the Regent, hunt has shown that pricing power within the market is currently heavily influenced by the hotels capacities, and also the pricing decisions of competitors. The downturn in the travel industry has lead to a competitive environment where supply currently step upmatchs demand. Therefore the market as unit, ranging from low costs leisure up to the premium end in which the Regent operates, is currently dictated by the pricing strategies of competitors. Competitors actions largely within the current climate could cause supply growth to outstrip demand growth, which could be disastrous for the Regent, and thus attention should be nonrecreational to these considerations.Specifically for the Regent, the refurbishing of the conference rooms has modifyd it to offer high quality corporate facil ities, which should enable it to charge a premium for conferences, over and above what other hotels in the region can charge. However, the opening of the Edinburgh International Conference pore could lead to problems for the hotel, as it appears of offer far superior facilities to that which the Regent, or and so any hotel, could possibly offer. Therefore whilst the Regent can still wish to gain significant conference revenue, especially during high season when the EICC will be in great demand, it may non be able to rely on conference revenue as a make stream. However, given that delegates who use the EICC still need to be accommodated, the Regent could potentially attempt to negotiate with the Edinburgh Convention Bureau to become the hotel of choice for conferences using the Centre, and this would enable it to charge the desired premium.With regards to the additional facilities, such as the bar and restaurant, given that there is currently not a high proportion of guests usi ng these facilities, it is difficult to justify using them in the pricing strategies of the rooms, as reducing the price of rooms to attract more guests will not necessarily greatly affect the revenue generated by the facilities. However, it is important to inspection the pricing strategy of the bar and restaurant, to ensure that these are not priced so high as to drive away guests, and possibly including some meals in the price of the room could be a good way to append demand for the rooms and the additional facilities, whilst potentially also slightly change magnitude the price.Finally, it is important to determine whether the node dissatisfaction is being caused by pricing at all, and also whether other hotels in the city are pursuing warring pricing strategies which are taking demand away from the Regent. If this is the case, then it may be necessary to accept some short term losses in order to fight back and prevent the Regent Hotel losing so much business that it has a s tigma attached to it, and is unable to attract any guests back, however this is likely to be a drawn out and costly process.2. Front Office Operation Key IssuesThere are several other key issues concerning the hotel that it is vital to assess if the brand is breathing out to be developed and revitalised in the eyes of the public. Using the debone compend ( accessory One) Firstly, it is important to determine which of the first three identified weaknesses are causing the decline in customer satisfaction, and ensure that remedying this is given highest precedence in the coming refurbishment. However, regardless of which of the identified weaknesses are most answerable for the sharp decline in customer satisfaction, it is vital that all weaknesses are addressed as part of the refurbishment and handover process in general.Firstly, the outdated financial and reporting systems need to be replaced with an integrated solution, which connects all the distinguishable plane sections, and facilitates the transfer of information between the various heads of the departments. This system should enable fare and beverage staff to input orders directly into the cash registers in the prohibit and restaurants, and these orders should then be transferred directly onto the relevant customers bill, perhaps using the customers signature, or their room key, as certainty of their identity and room number. A similar system should also be put in place for the mini bars, enabling housekeeping to modify the charges on the mini bar bills as they replenish the bars any day.An improvement to the reporting system would also enable staff to mold the usual and predicted levels of occupancy when taking group bookings, thus enabling them to charge the relevant amounts for each period. This would help avoid the potential for offering groups too great a discount during busy periods, and would also help let staff cognize to when offer larger discounts, such as during pipe down perio ds. Equally, sales and financial data and targets for Front Office, Sales and Food and drinkable could be shared across the three departments, so that each department knows what other departments are doing, and also what all three departments are aiming for. This would enable each department to maximise its own contribution to the hotels revenue, without adversely alter the performance of the other relevant departments, for example Sales would know not to offer a cheaper meal option to large groups if the restaurant is likely to be very busy for that period.The question of modernising and replacing the linen appears to be the main reason for the refurbishment, and Andrew Brennan should have this well in hand. However, no mention has been made of plans to refit or expand the laundry facilities, which is a key consideration, as not only does it appear to be affecting guest satisfaction, but it is also resulting in insurance claims, which drive up costs, and thus put a drain on the hotels profits. The whole laundry operation should be reviewed, and its capacity should be increased so that, not only can it handle the demands placed on it by the normal running of the hotel, but also to ensure that it has sufficient barren capacity to complete all laundry requests to a high model and on time.The threats arising from the slow tourist industry, and the loss of bookings from Milton Hotels could be problematic, however provided the customer satisfaction issues can be resolved, word of mouth, together with a successful refurbishment and re-launch of the hotel should be sufficient to attract customers back, and the number of bookings appear to be picking up, as can be seen from the trendline on the room occupancy graph in Appendix Two. However, the final main issue to be addressed is that of revenue maximation. As can be seen from the financial analysis (Appendix Two), only in the highest season does the hotel come close to completely using all its rooms, and occup ancy often drops below the 60% mark. Equally, even in the busy months of June, July and August, total revenue realised is less that half that if all the rooms were charged at their full rate. As such, it is vital to reassess the marketing and advertising used to attract people during high season, as not only should rooms be as fully meshed as possible, but they should also attract as high a price per room as possible, and currently this is not the case.ReferencesSerlen, B. (2004) Hotel Programs Grow. Business trip out News Vol. 21, Issue 15, p. 1.Datamonitor Company Profiles (2005) Global Hyatt Corporation SWOT Analysis.Appendix One SWOT AnalysisStrengthsBeautiful Victorian architecture brilliant location with fine views.Modern food and beverage areasPrestigious feasting and conference areas.WeaknessesOutdated financial and reporting systems.High need for modernisation of rooms and replacement of linen.Inadequate laundry facilities. overlook of revenue maximisation across all de partments.OpportunitiesPotential to house EICC guests.Growing importance of Edinburgh. medical prognosis to completely refurbish and re-launch hotel.ThreatsDeclining customer satisfaction.Slow tourist industry.Loss of bookings from Milton Hotels.Lack of customers using dining facilities.Appendix Two Financial Analysis