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Astor Lodge & Suites Inc.

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on 9 October 2013

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Transcript of Astor Lodge & Suites Inc.

Astor Lodge & Suites Inc.
Sales & Marketing Division Presentation


Overview
Presentation to new CEO and President of company
Presenting the initiatives, expenditures, and outcomes for each of the past two years and planned initiatives and budgetary needs for the next year
Need to provide motivation for initiatives and expenditures
Fiscal Year 2004
Objective of marketing plan was to increase overall occupancy for properties
Designed to attract pleasure/vacation travelers
tagline "The Place to Stay on the Way"
ads showed families enjoying the amentities of properties during their travels
Fiscal Year 2005
3 objectives
increase overall occupancy in guest rooms and suites
attract first-time guests
increase length of stay per visit
Ad placement extended to Texas and Oklahoma
known as "frontier strategy"
emphasized brand awareness and acceptance
Implemented summer promotion of 50% off a 3rd night stay in a suite and 25% off in a guest room
Status of Hotel Industry
In 2004: record revenue of $113.7 billion, gross pre-tax profit of $16.7 billion, 4.4 million hotel rooms
Competition based on amenities, price, and service
2/3 of hotels are brand affiliated
Astor Lodge & Suite, Inc.
250 property hotel chain with locations in ten western and Rocky Mountain states
200 properties are Astor Lodges
50 properties are Astor Lodge and Suites
Average of 120 guest rooms or suites
Service mission: Provide primarily business travelers with clean and comfortable accommodations in convenient locations at reasonable prices
Fiscal Year 2006
Preliminary media budget of $12.5 to $12.9 million
Sales budget of $4.85 to $5 million
Current Status of Company
2005 (current year) was expected to be third unprofitable year in a row

Current Status of Marketing
Sales and marketing has lagged behind other functions in showing measurable profit results from its expenditures

Goal is to keep budget from being cut
Corporate Goal
Goal is to become profitable within 2 years

Profitability based on EBITDA
7% increase in EBITDA over the next two fiscal years

Tracked Operating Statistics
Occupancy -- 61.3%
Average daily rate -- $86
Revenue per available room -- $53
Hotel Guest Profile
Business Room
One adult male, ages 35-54, employed in a professional or managerial position. Paid $96/room/night
Leisure Room
One adult male, one adult female, ages 35-54, paid $89/room/night
Positioning
Positioned as a limited service hotel
falls between economy and full-service hotels
Against Fairfield Inn, Marriott, Hampton Inn & Suites, and La Quinta Inn
not necessarily competitors
Locates properties on premium sites
along highways, near airports, office complexes, or large shopping centers
Operations
Projected annual lodging revenue growth of 7.4% for 2005, slightly below industry average, but higher than segment growth rate
Posted 3rd consecutive net loss while industry as a whole profited
During 2005
closed 2 under-performing lodge properties
opened 1 suite property
Since 2003
closed 12 under-performing lodge properties and opened 3 suite properties
Lodging Statistics
Projected consolidated company occupancy about to be 67.1%
average daily rate $57.52
revenue per room $38.60
Properties showed improvement in occupancy and revenue per room in 2004
Average daily rate lower in 2005
due to "free-night" stay promotion implemeted during summer
Budget
Budget
Sales budget increase $4.4 million for 2 new sales representatives
given responsibility of contacting and working with travel organizations
promote pleasure traveler business
Results
achieved objective of increasing overall occupancy
average daily rate unchanged
increase in weekend occupancy
pleasure/vacation travelers
Total lodging revenue increased with fewer properties
Revenue per room also increased
Budget
Media advertising budget of about 3% of total lodging revenue
$12,500,000
increased expense due to frontier strategy
About 35% targeted pleasure/vacation traveler
65% targeted the business traveler
Budget
Two additional sales reps added in 2005
increased sales budget to $4.7 million
responsibility was to develop working relationships with companies/organizations in the midwestern states
goal to increase brand acceptance with companies
Results
Occupancy rates 7.9% higher than previous year
Increased percentage of new guests
Average stay slightly increased
Revenue growth of 6.2% with one less property
Average daily rate per room decreased
Increase in revenue per room
Issue 1: Allocation of media spending between the pleasure traveler and business traveler
More business guests than pleasure guests
business guests tend to complain about pleasure guests
business guests tend to pay higher rates
company usually pays for travel expense
In one quarter 2004, 80% of room rentals were business travelers
Currently (2005)
65% media spending on business
35% media spending on pleasure travelers
Recommendation:
Increase pleasure traveler room rate by $5
Increase media spending to a 75/25 split
Issue 2: Continue "Frontier Strategy?"
Based on Jim Harvey's speech structures
Lodging Expenses
Corporate Expenses
SG&A Expenses projected $44.9 million
$5.9 million increase over 2004
due to increased employee compensation, health insurance, IT expenses, and sales and marketing costs
Added 2 national sales reps in early 2005
Issue 3: Promotions
Weekend specials vs Free night stay promotions
weekend specials would promote weekend stays
no additional advertising cost
one weekend per month for Saturday and Sunday nights
15% discount instead of proposed 25% discount
due to rising expenses for coming year
more revenue by offering this discount than the money lost from offering a free night
Recommendation:
Utilize the weekend special promotion program vs. the free night stay program
Projected to be $211 million for 2005
include variable costs
direct labor, utilities, supplies,
Direct cost per room/night expecte $28.75 in 2005
due to higher labor and utility expenses
Other expenses projected at $62.5 million
property taxes, maintenance, remodeling, insurance, corporate allocations - loyalty program, website, reservation systems
Increase marketing plan advertising led to substantial increase in media advertising budget
Budgeted about 2.7% of total lodging revenue for media advertising in 2004
$11,360,000
About 28% of this expense targeted pleasure/vacation travelers
72% of expense targeted business travelers
Strategy started in 2005
Preliminary results positive but mixed
Recommendation
Continue the strategy, consistent with overall changes to integrated marketing communication strategy
"Brand awareness and brand acceptance does not happen over night"
Advertising Media Budget
Sales Budget

Kristen Jedrosko
Reed McElfresh
Ashley Warfield
Full transcript