Avari Ramada Hotel Case Study Solution

Introduction

Avari Ramada is one of the four five-star hotels to provide luxurious hospitality to its customersin Lahore, Karachi and Islamabad which are the largestmetropolitan areas of Pakistan. Mr Tahir Raza Mian who is the assistant sales and marketing manager at Avari Lahore Ramada division have concerned on the pricing policy although Avari’sprices of theroomdepend upon demand and competition.

Avari Lahore Ramadahas 190 rooms capacity with a number of suites including bridal, executive and presidential aswell. Avari Ramada Lahore has six restaurantsnamed Fujiyama, The Lakhnavi, Dystiny, TheTolling Ton, La Patisserie and CinnamonCoffee featuring different cuisines and taste. The hotel contains rooms with modern appliances and an attached bathroom, functional conference room and lawn; some other recreational facilities are also available to include a mini spa, gymnasium, jogging track and an outdoor panel.

He argues that the Avari Lahore Ramada is offering alower price in comparison with the quality of services offered as their closest competitor who is offering analmost same blend of services but has the higher price.AvariRamada Lahore is currently facing competition with Hilton and Hotel Pearl Continental although The Ritz Carlton or Shangri-La are the predictable rivals faced by Avari Ramada in Lahore.

1 Performance of the Hotel Industry

Occupancy rate expresses the rate of room hired by the client to avail the offered services,and the average room rate states the average price charged and is calculated on the total amount of all room packages into the number of rooms busy in every package.

If Avari Ramada hasefficiently increased the occupancy rate, it will result in an increase in the earnings.Similarly, if Avari Ramada successfully increases its average room price, it will also impact revenues. Hence it can be concluded that the occupancy rate and average room rate are directly proportional to the revenue earned assuming other things remain constant.

Pros:

Occupancy rate and average room rate are the key performance indicator for any corporation working in the hotel industry. It is because it shows that how much a corporation has achieved their target in accordance with their capabilities. High average price with having the same occupancy ratios than other corporation in the hotel market shows that the company have productively fulfilled the requirement demanded by their clients.

The hotel industry is facing a high amount of fixed cost which made them obligatory to achieve high occupancy rate and high average price to hedge it. High occupancy rate means that the company hedged their fixed cost and entered into a more profitable zone. However high average price means that the company is charging high price against the offered services favourably due to increase in uncontrolled demand. If these two are increasing together, it identifies that corporation is reaching the optimum level.

Cons:

These two indicators are not enough to make an opinion on the performance of Avari or any other hotel in the industry as they ignore many other factors that are covered by other indicators. Furthermore, these two measures also converse to each other, making it difficult to appraise performance.

Like a company having higher occupancy rate than other companies look efficient in the market, but may be underperforming if it is offering abnormal lower price or have a lower number of rooms capacity than others operating. Hence losing the revenue share which needs to be considered.

There should be another measure in place for taking decisions like;market depart should collect customer feedbacks, and recommendation should be taken with the quality of service and pricing aspects,return on investment is so far best measure to appraise performance as it tells the ultimate mission of the corporation also.

Discussion on the Occupant

An occupant is a person who is a resident at the hotel. Avari Ramada Lahore is dealing with different types of clients and also trying to manage them accordingly. Here is a list of different types of customers with respect to the package claimed with Avari Ramada Lahore.

The occupant at Avari Ramada Lahore can be broadly categorised into six types according to nature and deal although Ramada supply 61% of the capacity of business customer and remaining resource to other.

The Business customer consists of executive customer and volume executive customer they are the risk eliminators for Avari Ramada Lahore as they guarantee to make are servation of their business employee through contract. They are differentiated on the basis of guarantee thres hold agreed, and their rates are also set accordingly although one of a customer here have special rate facility and are covered in aspecial package having an occupancy rate of 9% alone.

Lahore is the capital of Punjab province and second largest urban city of Pakistan which also have an international airport which makes it a hub for business, people come to visit Lahore throughout the year for their business purpose, thus do not have any seasonal effect although the hotel occupancy will improve if the city have growth in trade.

Airlines are one the clients of Avari Ramada Lahore to whom lower prices are offered although Avari Ramada Lahore has currently only Saudi airline in his clientele but a high occupancy of 7% throughout the year................

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