In the year of 2005 Astor Lodges Suites, Inc projected that it was the fifth consecutive unprofitable year. The company’s new president and CEO Joseph James set a goal in which the company HAD to achieve, that goal was to gain profit within two years. The company was formed in 1979 and has 250 properties in ten Midwestern states (200 Astor Lodge and 50 Astor Lodge & Suites). The net-loss of the company is $15.7 million so four senior vice presidents were bought in to present the effects of the last five years.
Kelly Elizabeth who is very experienced in the marketing field was bought in to try and solve and help with a profitable year from 2004.
With five consecutive years not making profit a marketing strategy needs to be put in place. The hotel industry has seen a $16.7 billion pre-tax profit in the 2004 with 4.4 million hotel room available in the country. The competition of 213 affiliated hotels with a brand company is going to be a challenge but achievable.
From 2004, objectives are completed but still turning over unprofitable years with marketing plans put in place.
The root of the problem I believe is not distinguishing what type of hotel/s the company is targeting to the audience as it has changed through the years between the pleasure/vacation traveller and the business traveller. As a frequent guest to hotels trying to mix the two is not going to work and even though objectives were met the daily average rate objective was not met.
Furthermore, the in 2006 the frequent business traveller complained about the hotel system at Astor Lodges & Suites. Other key factors that are also a problem is either being a limited service hotel or a full service which Astor Lodges differs. Also, what locations are beneficial and hotel segments are helping with profits within the company.
With Kelly Elizabeth taking the reigns I saw a lot of strengths when she introduced her plans between 2004 and 2006. Each year the objective was to increase and attract more occupants which she did for the company. Also, the introduction of internet communications is a big plus for the business traveller using the hotel. We now know how important the internet is to every type of guest these days. Furthermore, location positioning is important and with hotels located on major highways, office complexes, airports and surrounding large shopping centres it is fighting other competitive hotels.
Changing targeted guests is the biggest weakness and affecting the company in my opinion. 2006 has seen complaints from frequent business guests as the hotel targeted the vacation traveller. Even though the window of opportunity was there due to the travel industry being sluggish those guests that were frequent guests have now gone to another company. Furthermore, the challenges from leading companies have more rooms and properties in the U.S with a great reputation.
There are many opportunities for the company to make profit and need to focus on one type of guest I feel as this seems to be a problem. The company are also offering the opportunity for guests with special offers which are also not affecting the company with any additional promotional costs. I can totally understand why Elizabeth targeted the pleasure vacation traveller during the travel industry in decline.
The biggest threat in this industry is the challenge from the biggest hotels in U.S which are now making their mark worldwide. With great reputations and affordable rooms Astor Lodges & Suites must match these companies if they want to survive and meet Joseph James goal. The “frontier strategy” has not yet to be rendered effective which could affect the company if not successful.
The situation and plan needs to be put in place and worked on in the next couple of years. If the company can stick by this plan with limited changes then I believe they will see progress until the company is back making profit. The main aim is to decide what hotels will attract first time guests and increase occupants by location in the Midwestern states. The company should settle on either offering limited service hotels or full service. Also, a dramatic alternative could be for the company to only use hotels which are making profit each year and close the ones that are not making profit. These hotels can maybe be used for other opportunities. Guest profile should be decided instead of mixing between the vacation and business traveller.
There are drastic ways for the company to profit from but a high risk such as closing underperforming hotels and using the profitable hotels only. Sometimes you have to go back to move forward and the company could even sell these in poor locations and look to build more in locations with a higher success rate. The introduction of a few hotels moving to other states is great for promoting the company and a good opportunity for the company to grow so I like the idea of that. Offers on hotel rooms should be made each month as its costing nothing to promote special offers. Every month there is a different offer throughout the year e.g. summer specials, weekday specials etc. What can Astor Lodges offer that other companies cannot? If it’s the business guest then aim at business heads and work with other companies to offer them deals for their employees to stay at the Astor Lodges hotels.