La Hacienda Del Sol Harvard Case Solution & Analysis

La Hacienda del Sol

  1. Should Juanita Garcia consider the possibility of promoting La Hacienda del Sol to U.S. “snowbirds” wishing to travel south during winter months rather than promoting to local Mexicans, using the logic that the hotel could charge higher prices to U.S. citizens looking for a warm place to spend some time? What cost considerations would be involved in such a strategy?

Juanita Garcia wants to enhance the occupancy rate of the Hacienda during the winter season that is during November to February where the occupancy rate stands in between 30% to 20%. During these four months the temperature stands at 69, 64, 75 and 73 degree Fahrenheit respectively.

Considering the fact that the two cities of U.S. are the target market for Hacienda is 3.7 million of the total target population this figure; which comprise of the house hold families, families with children below 18 and people over the age of 65. This target population has a total collective income of $101 billion, which leads to income per person of $27000 and per month income of $2250. Comparing this to the Mexico city, Mexicali that has a target market of 358,000 with a total target income of $3.5 billion, which leads to income per person of $9,963 round to $10,000 and per month income of $830 per person.

As the current structure of Haciendo is designed to give a luxury vacation where visitors normally spend on an average of $500 per stay in the summer season; on the other hand it seems very difficult that people form Mexicali will come to spend the weekend in San Felipe with limited per month income that they have and considering the high cost that they will incur for the visit. It will seem a waste of resources for Haciendo to target the locals for the off season unless they can introduce a more cost friendly structure in the off season.

  1. Assuming La Hacienda del Sol offered major discounts during the off-season, should they be given to both locals and any U.S. citizens wishing to visit the hotel during the off-season? Why or why not?

If Hacienda does update and introduce a cost friendly system in the off season, then it has to be for every person who visits Hacienda during that time because the hotel requires greater number of people visiting the hotel during the off season and the discounts will ensure that without the visitors, the employees will not have any work to do, the use of restaurants and spa will be heavily reduced which will be a demotivating element for them. The strategy is to attract as much visitor as possible in the off season to cover the fixed cost.

If the U.S citizens are not given the discounts in the off season and the local are given this then it will create geographical discrimination; which can harm the reputation of the Hacienda and they may even lose customers in the long term that can severely harm the business.

  1. Which traditional advertising media do you believe would be most effective in reaching the local Mexican market and potential hotel guests in that market? Which would be the least? Defend your response.

The best option of traditional advertising media for Haciendo in order to reach the maximum amount of people is the Press release, as television is very common in Mexicali resident and about 85% have access to it and watch it regularly, which means it reaches a total population of 672,000; this gives it the largest reach in the local market.

The least effective traditional advertising media in order to reach the local market will be the Newspapers/flyers which are distributed in the local malls. There is only one mall which is air conditioned where a large population come to visit in the summer season; there is no conclusive percentage of people that will be targeted by this exercise as it is assumed to be 20%, which means a population of 163,000 are reached through it making it the least effective...................................

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Vice President Resort in San Felipe, Mexico to deal with low winter sales. Students will gain experience in the assessment of the current marketing strategy, analysis of attack opportunities, making pricing decisions, development of advertising campaigns and the calculation of the market share, and get some practice in the use of break-even analysis and analysis capabilities with both qualitative and quantitative point of view. "Hide
by Elizabeth M. Grasby, Neeta Khera Source: Richard Ivey School of Business Foundation 11 pages. Publication Date: June 14, 2005. Prod. # 905A11-PDF-ENG

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