1.

Introduction: Avari Lahore Ramada Renaissance Hotel, a hotel reflecting the

traditional hospitality of Lahore combined with five star standards. It was situated
down the beautiful tree-lined Shahrah-e-Quid-e-Azam overlooking the zoological
Gardens and conveniently adjacent to the Provincial Assembly and commercial
zones of Lahore.
2. Competitor Analysis
Being one of the only two 5 star hotels in Lahore, Avari Ramada faced a taut and
direct competition with Pearl Continental Hotel. Pearl was situated one kilometre from
Avari so it was essentially in the same neighbourhood adjacent to Governors house
and near beautiful Jinnah Gardens. Pearl had similar pricing policies as those at
Avari, with the same rate structure and reassessment policies. However, the room
rates of Pearl had always been marginally lower than Avaris. November 1988 was
the first time the room prices of Pearl had overtaken the prices of it competitor. The
summer package of Peal in 1988 was a greater success than Avaris. This was
believed to be due to peoples predilection of Pearls fresher look with bigger rooms
and widespread lawns.
3. Marketing Recommendations
Brand Building
One of the major weaknesses of Avari Ramada hotel was the lack of Brand Image in
the minds of the consumers. This can also be categorised as an opportunity if the
management is able to build a differentiating and distinct brand image for
itself. Create the Brand Avari, so when a potential customer thought of Lahore they
thought of Avari. Initially at the nascent stage of brand building Avari should harp
Service as their Unique Selling Proposition (USP).
Leveraging its weakness
Avari can make its background and history a selling proposition in the second stage
of marketing.
With the deep routed tradition and culture of Pakistan, it can differentiate itself from
Pearl, an experiential boutique hotel offering more than just stay. It can leverage its
smaller sized property to Pearl by calling it a hotel with a more intimate setting. This
strategy will provide Avari and edge over Pearl, especially for leisure travellers who
will be coming to Pakistan to feel the countrys essence.
4. Questions
Q1 ) Should Raza seek to increase the occupancy rate or average room rate? What are the
trade-offs? What factors should he consider? Avari Ramada Hotel: Pricing
Hotel Rooms
The management at Avari seemed fine at not gaining the summer package share as
long as their 80% occupancy target for the year was achieved. This was not the right
approach; since they were already giving discounts and promotions to the guests it
will be in the best interest of Avari to make these rates competitive to those of
Pearls.
Increasing the Occupancy Rate
Along with having competition and demand pricing approach, Avari Ramada should
concentrate on profit oriented approach. The hotels main focus at this point in time should
be to increase the occupancy rate. Out of 11 months in 1988, occupancy for 8 months had
been higher for Pearl. Avari should concentrate on increasing not just occupancy solely, but
Profitable occupancy. In the month of November 45% occupancy was with individuals

carrying 45 to 60% discount as per the Special rates. That is a colossal percentage seeing
that the special rate has an adverse affect on the revenue. One of the strategies would be to
limit the number of rooms given in Special Rates for corporate and to try and increase the
influx of Executive Business service Clients. To attract more of Frequent Individual Travellers
and Executive Business Service clients the hotel should do some sort of sophisticated
pricing strategies like bundling. Since Avari will not be able to change their infrastructure to
compare it to Pearls spacious rooms and extensive lawns, they need to follow a more
competitive pricing strategy to gain market share. Their average room rate for the months of
May, June and July was almost Rs 89 higher than Pearls.
Bundling
The hotel can package two or more products together to gain a pricing advantage. This can
be done by combining two services like room stay and dinner together. The hotel can charge
a little higher price than the room rent for this service but still keep the prices lower, if taken
either of them of them separately.
Q2) What other metrics could /should Raza use to evaluate the performance of his pricing
structure? Why?
The pricing strategy should be simplified by classifying the rates by not only client type but
room type as well. It should be segmented in the right manner as per our recommendations
for it to help in inviting more guests and increasing its occupancy.
Pricing Recommendations
1. Room Differentiation: At this point of time Avari Ramada hotel has various pricing
strategies for different clientele. They should classify the rooms, starting from basic,
deluxe to superior. The distinguishing factors can arise by providing increasing
amenities as you go along in ascending order. For all the Contract and Garbage rates
the hotel should provide the basic room type with an option of upgrading by paying a
little extra amount. This is not only going to help the hotel increase its revenue but
also help it to tap into the entire inert consumer surplus.
2. Utilizing additional sources of revenue: More than 50% of the hotel revenue was
from sales other than those of rooms, these sales included - Food, Beverage (from
restaurants and room service) and other miscellaneous sales like spa, gymnasium
etc. The main focus of Avari management should not be restricted to the room
revenue but should expand towards these additional amenities. Avari should peruse
strategies on increasing this untapped source of revenue, by promoting the facilities
to the incoming guests as well as potential customers.
3. Summer Packages: Promotions are one of the most crucial tools used to increase the
occupancy of a hotel. Even though Avari was aggressively providing various different
deals with the summer package, they were not able to successfully outdo their
competitor, Pearls promotion. The emulous gain on summer package will be even
more crucial, once the flights from Europe and United States with the influx of leisure
travellers coming to Pakistan during summer.
4. Conclusion: Avari Ramada has an opportunity to build its brand image in the minds
of potential customers and the management should steer their marketing
strategies towards the attainment of this goal. It should be positioned, in the minds of
the customers, as a brand with not only unparallel service but also a deep routed
cultural heritage.