Executive Summary: This Marketing Report is based on the Rancho Las Palmas Hotel in Palm Springs. The Marriott Hotel group had joined forces with the Sunrise Corporation to develop the hotel in 1979. The report considers the factors influencing the demand for hotel rooms in the Palm Springs area. It also looks at the difference in the mix of demand through the seasons. The winter season is the peak season with summer being the quite season. Rancho Las Palmas performance in the first year of opening is evaluated from various perspectives including the occupancy rates, the revenue generated and the costs incurred.
The positioning of the hotel is considered and the options of 4 versus 5 stars is discussed. The question of whether to remain open in the quiet summer months is also considered. The recommendation is for the hotel to remain 4 stars and to stay open for the summer months. A marketing strategy is then proposed based on the aforementioned recommendation. The marketing mix of product, price, place and promotion is also discussed. Finally a promotional strategy is proposed for the years 2002-2005.
An attempt is made at offering an integrated proposal covering the tools of advertising, personal selling, sales promotion, and public relations and publicity. CONTENTS: 1. Factors influencing the demand for hotel rooms in the Palms Springs area. 2.
How the marketing mix differs through the season. 3. How well Rancho Las Palmas performed in the first year, as well as the principal competitors. 4.
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Positioning of the hotel. 5. Marketing Strategy: 1980-1982. 6.
Promotional Strategy: 2002-2005. 7. Bibliography 1: Factors influencing the demand for hotel rooms in the Palms Springs area There are various factors influencing the demand for rooms in the Palm Springs area. Most obvious is the CLIMATE, making business quite seasonal with the popularity of seasons being Winter, Fall, Spring and Summer.
Those resorts that stayed open in the quiet summer months increased demand by substantial discounts being offered. The LOCATION and SCENERY of Palm Springs in the Desert also makes the Coachella Valley a popular resort area. The hotel is positioned in the middle of this desert resort area. The local airport is serviced by eight airlines offering direct services to most of the major western and south-western cities in the USA. Palms Springs is 110 miles from Los Angeles, 500 miles from San Francisco, and 275 miles from Phoenix.
The growing number of ENTERTAINMENT, RECREATIONAL, RETAILING and DINING facilities also enhances the popularity of the area. The recreational facilities are also seasonal, affecting demand, for eg. The Bob Hope Classic in January, skiing in the winter months in the mountains, and hiking, camping and riding in the summer. The Palm Springs area is known as the “Golf capital” of the world with 37 golf courses; “playground of the stars”, and “swimming pool capital” of the world with more than 6, 600 pools in one city alone. The area is populated by retired people. Condominium units were often purchased as a second home to be lived in for less than 6 months to avoid the high income tax.
These condo’s are another source of accommodation and some visitors to the area hire condo’s from residents who are out of town, which could account for the drop in room demand during holiday seasons when the residents could be out of town. The main purpose of visits to the area can be classified as: vacation /pleasure, vacation and business, conventions, business and therapeutic. 2: How the marketing mix differs through the season The Seasonal analysis of visitors shows that in the peak Winter season 45% of the visitors were from out of the state, whereas during Summer only 12% were from out of the state. These Winter guests were also more likely to be making their first visit to the area, the length of stay was twice as long as in Summer, they were generally an older crowd than the Summer visitors, and they were from a higher income group.
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The repeat visitors were more likely to be in Palm Springs in the Summer season. Conventions also are down by half in the Summer months compared to the Winter, which accounts for a drop in the demand in the hot season. Not many companies wanted to hold conventions / conferences in the hot summer months in Palm Springs. The majority of corporate clients that were booked in this period were from the California region. Transient guests in the peak seasons were a more middle-aged, affluent group than in the shoulder season. These were slightly younger, more family type guests.
The occupancy rates in the prime season were on average between 80-90%. In the summer months, where occupancy averaged about 55-60%, the clientele were more young, single adults, many of the military or airline fields, and more families with young children than at any other time of the year. Also, they tended to frequent the resort over the weekends rather than long week stays, hoping for a bargain rate. In the shoulder seasons the demand was also down from the peak times at 65%, although better than in the summer months.
3: How well Rancho Las Palmas performed in the first year, as well as the principal competitors. Rancho Las Palmas opened in the peak season at the beginning of January. Although this first month was disappointing due to the fact that rates were discounted by 50% to make up for the construction delays, and in February there was a bout of bad weather, the season was a success on average with occupancy rates averaging in the 80’s and 90’s. The average for the entire year, with projections for the last 3 quarters, averaged 69.
32% occupancy rate. The success was also gauged by the positive guest response, and evidenced by many return bookings. The shoulder seasons showed a decline in occupancy, on average about 65%, but business was still brisk, with average monthly revenue being $406 000, well up from the low summer season income. The resort opted to stay open in the Summer season, a period when most of the other larger hotels and resorts closed.
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This decision helped to minimise a staffing issue, as the number of employees needed for this period was half of the 400 needed for the peak season. Where the operating expenses weren’t necessary for the survival of the hotel there were adjustments made to accommodate the lowered occupancy rates eg. Reduced hours for the laundry, gift shop, certain restaurants; removal /replacement of certain guest room amenities such as expensive soap; and discontinuance of room service except for the continental breakfasts. A special marketing plan was in place for the difficult summer season and on the whole the executive committee was pleased with the hotel’s performance. Occupancy rates that had been budgeted for at 44% were more in the region of 55-60%, with most of the patronage being over weekends In October 1979 the cumulative financial results showed that Rancho Las Palmas was 4. 2% ahead of its budgeted revenue figures for the first 10 periods of the year, but 8.
6% ahead of budgeted costs. The result: a very narrow profit margin. At the end of the year they should still make a profit which isn’t bad going for their first year in business. Competitors: The city of Palm Springs boasted 177 hotels and motels offering a total of nearly 6300 rooms. A third of these rooms and more than half of the room tax revenues in the Coachella Valley were accounted for by 8 major hotels: the Canyon, the Spa, the Hilton Riviera, the Gene Autry, the Ramada International, the Westward Ho. The Travel Lodge, and the 7 Springs.
The 3 major hotels outside Palm Springs were Marriott’s Rancho Las Palmas Resort in Rancho Mirage, the Erawan Gardens in Indian Wells, and the La Quinta Hotel in La Quinta. There were also a number of small and medium-sized hotels in several of the other areas, notably Indio. Only a few of these resorts had the extra facilities of golf and tennis. Most of the resorts in the area closed for summer. In the General Manager’s opinion no other hotel in the Coachella Valley could match the “range and quality of amenities offered by Rancho Las Palmas nor the freshness of its physical facilities. The only weaknesses he admitted to were that initially the restaurants were not doing very well, but some changes had been instigated that seemed to be working; also the hotel lacked a health club and spa.
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The only local competition Small cited was the Canyon Hotel. This hotel also had tennis courts, a golf course, and swimming pools. However, it’s contentious plus point seems to be the fact that it has a spa. The physical facilities of the hotel had a jaded look to them and the lobby did not have the ‘look of luxury’.
The Canyon had always closed for the summer but rumours, unsupported by the latest brochures, were that it was considering staying open during the next summer season. The competition offered by the Gene Autry was for smaller meetings. Although the Rancho Las Palmas was confident that their resort was superior, the Gene Autry was less expensive, closer to Palm Springs and by no means shabby. Management positioned the Rancho Las Palmas as a “destination resort” and therefore also saw competition coming from other leading resorts around the country, such as the Broadmoor in Colorado Springs, the Arizona Biltmore and Camelback in the Phoenix area, and major resort hotels in California, Florida, and the south. Some of the more prominent hotels were not classified as competition as their prime season was later in the year compared to that of Palm Springs. 4: Positioning of the hotel.
PROFIT/LOSS TABLE FOR POSITIONING OPTIONS: Budget revenues and operating costs: open in summer close in summer open in summer close in summer Revenue: 369, 000 0 Decrease 0 Less Dept Costs: 298, 000 50, 000 3 = 150, 000 Increase 150, 000 + Less Unit Costs: 185, 000 185, 000-50, 000 = 135, 000 increase 135, 000 + Profit (Loss): (114, 000) (285, 000) (Loss) (Loss) Rancho Las Palmas is part of the Marriott group of hotels. In the 1970’s their marketing strategy had been to reposition the company in the top 10% of all hotels in the country. The company prided itself on being high in quality, not at “the top of the scale in luxury or price” (pp. 295) and certainly not “flashy.” It planned to expand conservatively into the luxury market with the Camelback in Arizona, and the new Rancho Las Palmas. When a hotel is part of a bigger chain it is quite difficult given the overall branding and image created for it to be seen as different to the rest. Rancho Las Palmas would need to do some serious marketing to position itself in the top 2% of the Marriott hotel group.
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Marriott hotels is a household name in America, but most people think of the hotels in the light of the predominant marketing image created. Most of the recently constructed hotels were conventional in design, focusing on business travellers and meeting groups at locations in downtown and suburban areas, and near airports. The quality of personal service was also emphasised in the advertising, as was the Marriott slogan, “when Marriott does it, they do it right.” Even Small admitted that although the hotel chain was positioned high in the market, it wasn’t high enough to acquire the five star rating. They would need to consider “extra touches, extra amenities, extra services.” These would need to be marketed to the public so that they would notice a difference between the Rancho Las Palmas and the rest of the chain. The advertising budget was based on an assessment of total revenues and while the hotel was still finding its feet it was unlikely that the budget would be expanded just yet to the amount that would be needed for the aforementioned marketing campaign. The hotel is only a year old at this stage and to upgrade it to a five star Small is already talking about additional extras.
These extra expenses would up the already high costs, which might be able to be absorbed in the prime season, but which would most certainly lead to a loss in the lean shoulder and summer seasons. This is shown graphically in the table above. Additional costs might be the addition of the luxury spa, or a further upgrading of the restaurants. Small had just recently ironed out some problems in the restaurants and it would be a while before they acquired a loyal following.
The Mobil awards are done on an annual basis, Small should hold off on trying to rush the five star status and give the hotel time to settle in to deal with any hiccoughs. The extra expenses would necessitate an increase in prices, not just in room costs, but also in the restaurants and the gift shops. According to the analysis in question 2. the clientele differs quite radically from season to season. If Small can keep the hotel well priced they will be able to accommodate a more diverse income group, more of the year round.
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Higher prices than current, which are already out of the league of some of the smaller associations, would also cut out the younger, lower income family type guests who seem to be keeping the hotel in business in the summer and shoulder seasons. If Small opts to try for the five stars he would have to close for the summer season given the clientele the season traditionally attracts. It doesn’t suit the image of a five star hotel to offer discounts. Already Small has noted that when the discounts are in place the guests are of a different calibre, the type that can’t resist pocketing the fancy toiletries as souvenirs, and wondering around the lobby in their pool wear. A five star hotel has to be five stars all year round. It wouldn’t do to drop the niceties in the bathrooms, discount the prices for the summer periods and expect the snooty high income folk to want to spend their winter months in the self same place that their employees spent summer in! A problem with closing in summer is that is causes staff issues.
One of the primary characteristics of a five star hotel is the personalised, high quality service. If the hotel can only offer employment for certain months of the year it might not attract the best human capital. Another concern is the training of staff; the hotel can’t keep training new staff every few months. It would be much better if a core group of talented top performers could be kept on all year round. Morale, motivation and expertise would certainly be on a higher level. The Mobil criteria for star ratings are quite firm on consistently superior performance, and high quality service, and high level of attention for guests- this could be difficult to maintain with an unstable staff base.
Conclusion: 4 star versus 5/Open or close for summer: My recommendation given the above would be for Rancho Las Palmas to remain a consistent four star hotel. To be consistent in this category might be better than acquiring the five stars at an expense that can’t be sustained. The loss to reputation of having one’s star taken away would be far more detrimental to the image of the hotel. Four stars still raises it above the three star motels and means more paying customers for more of the year.
The high paying meeting planners do not frequent the Palm Springs area as much as the corporates and associations, so why raise the bar when the majority of regular customers wouldn’t be able to afford the luxury of five stars. If the hotel were to close for the summer months there would be no revenue coming in to offset the operational expenses that continue whether or not there are guests in the hotel. As one can see from the table there is a drop in costs but the overall effect on the loss is greater due to the lack of revenue coming in. If the hotel was operating as a five star hotel it would probably be much more sensible to close in the summer months given the current clientele, given that it wouldn’t be appropriate to discount, and given the overall room rates etc. would be more expensive; on the negative side the expenses to establish and maintain a five star hotel would be more and so the effect on the bottom line would be that much more. Of course in the prime months the revenue would be much more than if the hotel was operating as a four star hotel as the rates and other costs would be more.
However the prime season is only for four months of the year, and probably not sufficient to carry the hotel for the rest of the lean periods. As a four star hotel, my suggestion would be to remain open in the summer months. The benefits include the effect this would have on the employee base. Their morale would be up as fewer would need to search for other work in the summer months.
In addition management could strive to keep their top performers who would be enriched in their work due to the multi-skilling that would need to occur in these times of less staff. The adjoining country club, also managed by the Marriott group stays open all year round and having the hotel do the same could mean that the two entities could consider some joint marketing ventures- maybe a sporting competition at the club during the quieter months to attract more guests to the hotel, and visa versa. The records show that even though the numbers decrease in the summer months 13, 000 odd passengers arriving at the Palm Springs airport is nothing to be sneezed at. The proximity of the hotel to the airport could be capitalised on a lot more to acquire more of this passenger list. If one considers the Group bookings during the summer months there are quite a few from the corporate markets eg. Sales incentive meetings etc.
in the California area itself. To close in the summer months, or to raise prices (five star option) would be to lose this market. The rumours are also out there, although unsubstantiated at this stage, that the Canyon hotel is considering staying open in the summer of 1980. The summer guests would be lost to them if the hotel decided to close.
The market research also shows that a lot of the summer guests are repeat customers, returning again and again and this loyalty could be capitalised on in the long run. The Canyon was considered to be the only worthy local competition so if the Rancho Las Palmas could gain a few of their clientele in the summer months they might decide to return here in the more expensive prime season as well. Given that most hotels in the area normally close in the summer season this first year of operating might not be a good indicator of future success as with more marketing of the fact, coupled with word of mouth from this years guests the summer season could look a lot better in 1980 than projected. Final recommendation: 4 stars, open for the summer. 5: Marketing Strategy: 1980-1982. Desired status: 4 star hotel, open for summers Goal: to be a profitable consistent 4 star hotel.
Company SWOT analysis: Current Strengths: . Middle of desert resort area. 15 mins from airport. surrounded by country clubs, restaurants and fashionable shops. strong support and positive image from being part of the Marriott group.
warm dry climate even in the winter months. guests able to utilise the Rancho Las Palmas Country Club’s facilities ie. golf course and tennis courts- 8 lit for night use. newly built. 2 pools and hydrotherapy pools.
experienced general manager. well trained personnel Current Weaknesses: . No health club. No Spa. Initial poor performance by the hotel restaurants. Low bookings in shoulder and summer seasons.
Budgeted costs are 8. 6% higher than expected resulting in a narrow profit margin Threats: . Canyon was considering staying open for the following summer. Fall market is looking more difficult to crack than expected, transient business in particular is down Opportunities: .
Airport passenger traffic has increased to the area in the last 5 years. The Marriott group is also managing the country club which allows for access to their facilities for the hotel guests Competitor’s SWOT analysis: (based on a collection of Hotel analyses viz. The Canyon predominantly, Spa Hotel, Hilton Riviera, Gene Autry, La Quinta, and Erawan Gardens. ) Strengths: . Canyon Hotel: was part of the Pick group which also had hotels in Pennsylvania and Florida; .
10 tennis courts, 3 swimming pools and a Spa at the Canyon. Hank’s Restaurant at the Canyon was highly regarded by locals and tourists alike. Gene Autry had an advantage re. Smaller meetings, less expensive, closer to Palm Springs; 3 swimming pools, 2 therapy pools, 6 tennis courts, golf by arrangement. Spa Hotel: 2 swimming pools, natural spa with 34 therapy pools; golf and tennis by arrangement; short walk to Palm Springs shops and restaurants; conference facilities for small groups. Hilton Riviera: 5 tennis courts- all night lit, Olympic size pool, therapy pools; golf by arrangement; Convention Centre seating 2, 500.
La Quinta Hotel: bungalows in park-like setting; 1 swimming pool, 6 tennis courts- nightlight; golf by arrangement; own course being constructed; rates include all meals. Erawan Gardens: also two storey like Rancho Las Palmas; mini-health club-jacuzzis, sauna, executive room, 2 pools, golf and tennis by arrangement; headquarters for the Bob Hope Classic golf tournament Weaknesses: . physical facilities at the Canyon were “tired” looking. lobby didn’t create the ambiance of a luxury resort at the Canyon. Canyon and most others closed during summer The Competitive Advantage: choosing a positioning strategy In terms of the Mobil awards the hotel has a few criteria it needs to build in to any strategy it might adopt, viz. good furniture, high ratio of well-trained, courteous staff, high-quality services and amenities, including restaurants.
To be a high and consistent 4 star hotel they should blur the boundaries between 4 and 5 stars and aim also for well-landscaped and cared for grounds, skilled instructors, special entertainment programmes and consider the appointment of a social director. Rancho Las Palmas should position itself as a luxury hotel, but as an affordable luxurious hotel. Its value proposition should be about “more for the same.” The prices will obviously be competitive with the other resorts but the guest should feel he’s getting much more for his money. This strategy would appeal to the wealthy guests as well as the family types. The hotel should also try to capitalise on its group bookings market. As a new hotel in the area, Rancho Las Palmas would be coming in as a Challenger to the other established resorts, seeking to try and gain some of the market share.
The short term positioning should focus on quality service, superior venue, and the existing amenities offered. In the next two to three years the hotel should attempt to extend those amenities, and develop itself into more of the “destination” resort it claims to be. A resort in the middle of the desert should cater for hot summers, so that it’s the resort people want to come to when the temperatures are high. The other future consideration should be the building of spa facilities to compete with the others in the area. Target Markets: Seasonal influence means that in the peak season the hotel is aiming at the high paying wealthy customer, and in the shoulder and summer seasons at the lower income, family type guest. The trick here is through a clever value proposition and pricing strategy to up the numbers of both types of guests the whole year round.
All year round they would also be targeting the business community for conventions, sales conferences etc. The Marketing mix needs to support the Positioning strategy: In order to produce the desired response in the market the Hotel needs to consider the tools available at its disposal, namely the 4 P’s (or 6 or 10 as some would have it) and the 4 C’s. The four P’s are: product / service , price, promotion and place. Others add positioning, people, profits, and politics to this list. The 4 C’s consider the market from the customer’s perspective and we have: customer solution, customer costs, convenience, and communication. Service/Product: In order to maintain their 4 star status the hotel’s service needs to be of superior quality, consistently.
This means that the staff need to be highly motivated, client focused, and top performers. Mr Small himself trains all key personnel to ensure there is alignment in the way the staff are thinking. He is quite team focused realising that he alone can’t accomplish excellent client service. By remaining open in the summer means that he can retain his key personnel, which is good for the staff morale.
Also, it’s normally the best ones that would get other work if the hotel closed and the hotel can’t afford that. The hotel’s decision to remain open all year round means that the guests can visit any time they choose. The facilities offered to the guests at this stage compete fairly adequately however in the next three years Small should aim to make the hotel more guest-friendly in the summer and shoulder seasons. So the temperature is high, they need to build more facilities catering to making summer at the hotel fun and more pleasant.
The obvious feature lacking compared to the competitors is a spa and health club. The quoted cost to build a first class spa is in the region of $1, 5 million. Seeing as the hotel is still finding its feet the recommendation would be to hold off initially with the capital outlay as the costs are already exceeding the budgeted amounts. In the next few months Small should question his regular clientele as to just how attractive a spa and health club would make the hotel. The needs analysis is important as he needs to ensure some return on the investment. The spa would contribute to the “relaxing holiday” atmosphere that Small is trying to cultivate.
As a lot of the customers in the quieter seasons are more family oriented he should also consider some family oriented entertainment and childcare facilities. If the kids are busy it gives the adults time to relax in the spa. The hotel could also focus on capitalising on the facilities it currently houses eg. The golf and tennis. They could offer golf and tennis academies for young and old. A service already on offer is the use of the venue for business meetings, conventions etc.
Clients of this nature don’t seem to want to hold their functions in the summer months due to the heat. Small needs to focus on making Rancho Las Palmas “the” venue of the corporates in this season. The marketers need to come up with more unique offerings for making the hotel attractive to this market. Another area to capitalise on over the next few years is the relationship the hotel has with the country club.
The country club with its annual memberships for both residents and non-residents doesn’t have much accommodation and the hotel is good for the spillovers. The hotel needs to improve its restaurants over time to be more competitive. There have been some changes recently instigated and Small should wait to see whether there are any improvements. A restaurant is a way to get a non-guest into the establishment, and hopefully if they like what they see they will choose to stay there next time. Price: A service cannot be stored for later sale or use like a product so Rancho Las Palmas needs to fill the rooms with as many guests as it can for most of the year. The price / rates charged by the hotel need to support the marketing strategy chosen.
In this case the four stars accolade awarded to the hotel means that the guests would pay the price expecting a certain standard of service / product in return. The hotel business is seasonal and the strategy to stay open in the summer months means that the pricing strategy must support this. The room rates are heavily discounted in the summer and shoulder season months to try and attract clientele. Unfortunately the drop in rates attracts a different type of guest, but a paying guest none-the-less.
Other strategies that can be adopted by the hotel are package deals: stay-longer-for less, two for the price of one, family deals where the kids stay for free or get free meals, sporting trips which include golf days, etc. A point and reward system redeemed with discounted rates could go a long way to building client loyalty. People always want to feel they are getting something in return and this type of system allows them to control the returns- the more they stay the more they can stay! Price is a dynamic variable that needs to be carefully managed, checking that the hotel is not out of line with its competitors but at the same time managing to cover the expenses generated. Place: Small claims that Rancho Las Palmas is a destination resort.
The location of the hotel is fairly conveniently placed, in the middle of the desert resorts, close to the airport. This could be further capitalised by shuttle services from the airport for hotel guests. Packages could be worked out with travel agents that include airfares as well as accommodation. The Marriott group has more than one resort in the Palm Springs area and they should rally together with the other big groups, eg. Pick to push for regional advertising.
A campaign to attract tourists, both local and foreign to the area. Promotion: This part of the marketing mix is all about communication with the consumer, letting them know what’s on offer in such a manner that they MUST have it. The message that the hotel must promote should be in line with the rest of the marketing mix ie. A destination resort, affordable luxury, relaxing and serene. At this stage of the hotel’s life span it is still relatively new in the market, a year compared to some of the more established resorts in the area. The promotions used must be designed to influence the identified customers in the target market.
Rancho Las Palmas has its own marketing director, supported by the regional director of marketing in Los Angeles and the vice president for marketing for Marriott. The current marketing plan addressed all the different areas of the hotel: the rooms, F&B as it related to the restaurants and cocktail lounges, F&B as it related to the banquets, and the gift shop. Also considered was the marketing of conventions. Advertising and public relations were also a focus.
The hotel used a local PR firm for its press releases. On a national level the Marriott group used mainly print media to advertise their services, namely Time, Newsweek, Sports Illustrated and in-flight airline magazines. Rancho Las Palmas’s allocation for national advertising, assessed as a percentage of its total sales revenue, was $44, 000. The company also had a book of generic adverts that any hotel could use to advertise services and events, eg.
Mother’s day lunches. Small was reluctant to use these standard items as he felt the hotel with its distinctive flavour should have its own brand of advertising. If the budget allows then this is ideal. The advertising and brochure budget was set at $252, 000, with advertising claiming about a third of this.
Over the next three years the promotion aspect of the marketing mix will be critical, as it will establish the image of the hotel in the public’s minds. The hotel must be seen as a desert experience, luxurious but affordable, affordable but not cheap. The advertising should be different for each season as different clientele are targeted with different needs and wants. It’s the hotel with something for everyone, from those who want to pamper themselves at the “still to be developed” spa, to the family who want to have fun with the kids, to the sports fanatics who want to play all day.
The advertising should also be different for the different geographical areas- local people can use the facilities on a daily basis, like the restaurants and cocktail lounge, or the sports facilities; but the further person would need to see the whole package with accommodation thrown in. Brochures went from plain to lavish and were used for direct mailings, as part of the sales staff’s toolkit, and travel agents. The hotel should assess the value of direct mailings, often this is a costly exercise with little return. Placement of brochures in selected venues is better because each is taken by a potential customer. The marketers need to source better venues eg.
Airport waiting areas, town information centres, car rental agencies- all places that travellers frequent. The marketing staff need to get in touch with the clients as well, not just the sales staff, to get first hand information from the guests as to what they like, what draws them to the hotel, because its these features that should be splashed in the adverts and brochures. Advertising currently appeared in travel industry publications, general interest magazines, and newspapers targeted at affluent readers in selected western and midwestern markets. The local publications ran adverts and listings regarding the restaurants and cocktail lounges. The present placement of adverts will not draw the younger, lower income groups that are filling the rooms in the shoulder and summer seasons. The person in the household who normally arranges family holidays is the woman, so adverts should also run in family type magazines.
Also the sporting aspect of the hotel could be further exploited in sport’s magazines, like The Golfer etc. where package deals pertaining to golf for example could be advertised. Group business was projected to account for 65% of total room nights. The budget for sales promotion and public relations was $263, 000. There was a director of sales and three sales managers who were responsible for selling group bookings to national associations and major insurance companies. Projections showed that the national association segment accounted for two-fifths of total group sales at Rancho Las Palmas.
Relationships need to be fostered with the relevant meeting planners who set up these bookings. The point system could be run on a company level, for eg. If a certain number of conventions are booked then certain discounts can be negotiated etc. However the sales team need to promote the uniqueness of coming to the desert in summer, and the hotel must back up the sales pitch by making the venue exciting, novel and appealing.
By advertising in business newspapers and magazines the hotel could appeal to the attendees of the meetings so that they actually ask to come to Rancho Las Palmas. Package deals where the spouse is catered for during the convention period could also work to draw these types of guests. The corporate market, that used get-aways as incentives or bonuses, was also a strong source of business. Here the sales force could also negotiate discounts for a certain number of bookings per year- an incentive for your incentives type of line. The third market of state and regional associations seemed to find the hotel a tad expensive. Encouraging bigger numbers from them could allow for discounts that might go a long way to encouraging a loyalty following in this market.
The ballroom facility is huge and the sales force should try to market the venue as a place to hold national competitions eg. Dance competitions or beauty pageants or sports completions. Those sales staff targeting travel agencies and airlines could look at incentivising these staff. The same principle could be used with the meeting planners, although unless they are from an independent firm this could be against company policy. The rewards for the travel agency and airline staff could range from discounts to freebies during the quieter times. Sometimes this could be beneficial to the hotel as well as it looks better to have guests staying in the hotel than for it to be empty.
Car rental sales staff could be targeted to assist with sales as well. Joint venture promotions could be looked at as a possible strategy to increase revenue eg. Offering a special if a guest took an Avis vehicle etc 6: Promotional Strategy: 2002-2005. The two promotional missions that could be relevant to the Rancho Las Palmas during this time period would be awareness – ie. Ensuring that as many people as possible are aware of the hotel and the amenities on offer; and loyalty ie. trying to reinforce the brand or image of the hotel in guests minds so that they keep on returning.
A push and pull strategy would be good for the hotel at this stage. A promotional mix to draw the guests to the hotel, and a structured plan to get the meeting planner, the travel agents and other referees to pump the hotel as the destination of choice. There are five general categories of promotional efforts: Advertising Personal selling Sales promotion Public relations and publicity Direct selling An integrated strategy regarding the marketing communications is very important. Rancho Las Palmas must not only make sure that their personal company communications are aligned but that they are also in line with the bigger Marriott groups communications strategy.
The promotional budget could still be based on a percentage of the revenue generated, as was done when the hotel first started, so this could vary from year to year. Other factors to consider could be competitor’s spending, or the hotel could base the allocation on an analysis and costing of the communications objectives and tasks. The following checklist is helpful in integrating the hotel’s marketing communications: 1. Analyse trends both internal and external that can affect the hotel’s ability to do business: The trends identified when the hotel still opened are still relevant eg. Factors such as seasonal demand are still an issue; competing with other venues for group business eg conventions is still problematic; the hotel now has a Spa that it needs to draw customers to; the golf and tennis amenities are available at most of the hotels in the area. To assist with the aforementioned issues the tools most usable to the hotel in its promotional mix over the next 4 yrs would be advertising, personal selling, sales promotion and public relations and publicity.
Frank Gara han, the General Manager, 2001, explains that the marketing strategy of the hotel has to be fairly aggressive due to the intense competition in Palm Springs. He was referring specifically to the convention business and was quoted on the Event Solutions web site. He also cites relationship building as an important strategy to gain business. Although the hotel has been around for twenty years and one would classify it as being at a mature stage of its life cycle it has undergone some recent refurbishments eg. The Spa and the Tortuga Island Pool and recreation complex, which would still need some INTRODUCTORY tactics, coupled with some PERSUASION and REMINDER tactics to draw the tourists away from the competition and to remind the others as to what’s on offer. 2.
Audit the pockets of communications spending throughout the organisation: Rancho Las Palmas still has a structured marketing department so the budget is well controlled. Some advertising is still handled on a national level by the Marriott group. The Marriott group has a department that specialises in interactive sales and marketing to the benefit of all hotels and resorts in the group. 3. Identify all contact points for the company and its brands: The point of doing this is to ensure consistency. An immediate focus here is that the hotel should re look at its web sites.
The few that are reachable each have a different look and feel; there needs to be consistency so that the hotel’s brand is entrenched in a certain way. It is also more professional for the hotel to have one corporate image on the net. 4. Team up in communications planning: The communications planning should not be done behind closed doors with just the marketing team. The marketing team should be communicating with existing and potential guests to hear what works and doesn’t; input from the various other parties that the hotel interacts with could also add value eg. the meeting planners could tell the marketers where they normally source their venues from; the travel agencies could add some insight as to what attracts a potential guest to the hotel.
5. Create compatible themes, tones, and quality across all communications media: As mentioned already eg. The web sites need to be aligned. This also refers to the sales team that goes out to the travel agencies, planners etc; they should be well trained to deliver the same marketing message of the Rancho Las Palmas. If all aspects of the promotional mix are geared to similar goals it just means that the reinforcement is that much stronger and the overall impact is that much better. 6.
Create performance measures that are shared by all communications elements: If one doesn’t assess the value of using a certain promotional tool then one has no idea as to whether it achieved anything. Guest surveys could be used to achieve some of these measures with questions like: Where did you hear of the hotel? Focus groups to assess advert campaigns impact and understanding. 7. Appoint a director responsible for the company’s persuasive communications efforts: Rancho Las Palmas recognised the benefit of having a dedicated team for marketing and this is still true. Promotional mix tools for 2002-2005: 1. Advertising: The reach and frequency of a chosen medium are important considerations when deciding where to spend the budget.
The product of reach and frequency is the gross rating point, and the sum of all these is the total rating point. These two measures are how radio, tv and outdoor advertising is bought and sold. Given the size of the United States, the strategy for these costly promotions should be carefully looked at. Local tv stations presentations geared toward eg. Travel or golf could be more beneficial than spending a fortune on a national advert. By local, the area should be close enough to drive, but not too close that staying over wouldn’t be necessary.
On a national level the hotel should be able to hitch onto advertising by the Marriott group, this will attract the further afield guests. Another way of getting tv coverage could be for the sales team to offer week packages to eg. The winner’s of one of the many beauty pageants, or of any other competition where there would be tv coverage of the resort. The other option is to offer discounted rates for a competition to be hosted at the hotel in return for the tv coverage and exposure it would receive.
The ballroom is clearly large enough to host a big event. Advertising on radio stations might be a cheaper option than tv. This would be a good medium to target the travelling salesmen types. A discount deal could be worked out for them, such that if they stay over at the hotel a certain number of times a year they could get a discounted holiday with the family. Magazine and newspaper advertising is purchased based on the size and segmentation variables of their circulations. Magazines have a longer shelf life than newspapers, but newspapers deliver a much more immediate and focused geographic readership, which is beneficial for sales promotions.
These print audiences are purchased on a cost per thousand readers basis. When considering the target markets for the next few years, use of trade publications, travel industry publications and business oriented magazines, and sports magazines would still be relevant. The bigger the company the bigger the advertising budget, necessary if you want to make a lasting impression in any of the advertising media mentioned above as to make an impact the advert needs to run more than once, and to make an impact which is a costly exercise. A medium available now that wasn’t previously is the Internet. It falls under direct marketing. Rancho Las Palmas has a few web sites and many linkages from other relevant sites.
The Internet is cheaper than the costly television and the coverage is world-wide. The company claims at present that it is using its web sites as less of an advertising tool and more as a means of interfacing. (web) The Marriott group has been using the Internet since the early 1990’s and the most popular uses of the sites seems to be for mapping instructions, checking of account balances by Marriott reward members, and meeting planning. The different target groups can be targeted in different ways without too much extra outlay on the web sites, from the sporting focus, to the relaxing spa and health focus, to the family, to the corporate groups / convention focus. The web sites should be updated regularly to reflect current specials operating at different times of the year. This is the joy of the web, in that the hotel doesn’t have to wait for the next episode of a magazine or newspaper and can update or adjust as they wish.
Someone in the marketing team should have e-business as his / her focus, and should be sourcing ways and means of capitalising on the exposure gained from being on the World Wide Web. Space on other relevant web sites is also important for eg. A web site about accommodation or golf or health etc. Linkages from web sites will also direct potential guests to the hotel web site. The use of a web site helps with the selling of an intangible service vs. a product as the internet allows potential guests to take virtual tours, partake in competitions, to read reviews, to check up on their reward points etc.
It brings the experience to life in people’s homes in a less expensive manner than tv, radio or magazines ever could. Ad campaigns over the next few years should focus on the competitive strengths that the hotel has: The spa is a definite winner and ads reflecting the superior facilities, the health benefits should be promoted. The pull strategy could include various package deals eg. A his and hers package for honeymooners; a his and her / golf and spa package; discounts for spouses of convention guests; etc. the wide variety of treatments available should be exploited as a competitive opportunity. The rooms themselves could be advertised as part of package discounts: for honeymooners, sports weekends / weeks pay for mom and dad and the kids stay for free.
Different media would be suitable at different times of the year due to the different packages on offer that would attract different clientele. The F & B as it relates to the restaurants, cocktail lounges and banquets could also benefit from some local coverage. The sales staff could try and promote the 30, 000 square foot ballroom to associations, companies etc for the their Christmas and Thanksgiving etc functions. Dance and beauty competitions could also benefit from the large venue. The convention facilities should also be given focus. The uniqueness of the offering should be highlighted, eg.
The 10, 000 square foot rooftop terrace that is shaded and has a special misting system for cooling purposes. Direct mailing is also a direct marketing tool. Used correctly it can be effective. Direct mailings to meeting planners / associations /corporates advertising the unique features of the convention facilities could also be effective.
As with any advertising, but especially with direct mailings- they have to grab the reader’s attention and quickly, before the material is tossed into the bin. A picture speaks a thousand words and might be the attention grabber needed. 2. Personal selling: The strategy here would revolve around relationship building with the various role players ie. travel agencies, car rental agencies, meeting planner, corporate companies etc. The tactics used could be trade-directed sales promotions tools: incentives and competitions, branded merchandise gifts, discounted stays etc.
Ethics is quite important in this domain and the hotel should ensure that the sales team handle these important role players with integrity at all times. Brochures used by the sales team should be regularly updated to reflect any major changes. The more generic the brochure the longer shelf life it has. The web sites allow an indirect form of personal selling as the net surfer can view all the details he / she wants without giving out any personal information until a reservation is needed. As the population becomes more and more e-enabled the “pull” capacity of the web sites becomes more important. It then makes sense that some of the advertising could be directed to awareness of the web sites.
3. Sales Promotions: Sales promotions are normally directed at quick wins as their duration is limited. They involve a wide range of tools, some of which have discussed in the previous bullet as they related to the secondary sales role players. Rancho Las Palmas has been using discounts to attract guests in the off-season periods for years and this will continue. Promotions linked to special events should be planned eg. Christmas, Thanksgiving, Easter, Mother’s Day, Father’s day etc.
The Marriott group initiative of Reward points is a sales promotion tool that has a longer shelf life than normal promotions and serves to build longer-term loyalty. The hotel could look in the next while at offering a promotion with the country club eg. Golf package deals over the quieter periods; or with other business partners such as the local airline or car rental agency, or with the acquiring institution servicing the hotel. The hotel could leave guests with complementary etc for them to take home as gifts for friends eg. A “My friend stayed the Rancho Las Palmas hotel” sticker on various items like soaps/ chocolates etc. After an initial trial period these items could be stocked in the gift shop.
The promotions could also focus on different areas of the hotel at different times eg. After the financial year ends or in holiday times the Spa could be promoted as the “relaxing reward.” After winter when the flab piles on sports and health facilities could be put on promotion. Other than the known quiet periods of the year when promotions are needed to attract guests the hotel could budget for “just in case” promotions for those surprise quiet times when business needs a bit of a spurt. Promotions that bring feet to the hotel are should also be considered, for eg. Starting a competition to win a weeks accommodation / discounted stays, the competitors receive a key that they need to bring to the hotel to try in the door, if the key fits they are winners. This could be a locally run promotion for those in the vicinity.
4. Public Relations and Publicity: A number of web sites contained letters from guests of the hotel writing about their experience at the hotel. The web sites actually request that guests put letters on the site telling others about their experience. The public often feels that this is a far more objective form of advertising for the hotel. Letters written in to magazines from guests also illicit publicity for the hotel that is free. As long as it is favourable it is a positive means of building relations with future guests.
If there are complaints the hotel should deal with them and publicly acknowledge the positive outcome. The hotel used to make use of a local firm to handle their publicity. This is probably the most economical method. Newspaper articles will be adhoc as and when anything newsworthy occurs, but could also include possibly an invitation to the local restaurant critic to come and enjoy a meal and hopefully give a good review. Similarly invitations could go to travel writers. 7.
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