The Eden Savoy Hotel Rotterdam is a centrally located 4-star hotel with 94 rooms.

It is a member of the Eden City Hotels, a family owned operation, which is becoming one of the largest hotel chains in the Benelux area, following the acquisition of the Hampshire Hospitality group. According to the CEO Etienne J.A Verkerk, this acquisition is to give tremendous opportunities for solid future growth. In the future, newly formed Hampshire Hospitality keeps focusing on development of its current operations and acquisition of hotel companies in the Benelux and Western Germany. Also, according to Lon D.H. Dijkstra, member of Supervisory board of Hampshire, Hampshire and Eden operate in a branch in which consolidation, market segmentation and optimization of distribution are becoming increasingly important. Scale enlargement is one of the key factors for the long term development of mid-size hotel operating and franchise companies. The hotels current market share is 3%. However, the management team is deeply concerned that the opening of 7 new direct competitors will erode average daily rates and occupancy, and ultimately reduce the profitability of the hotel .

This pyramid outlines our proposed solutions for the central question. The logic behind is that by marketing actions we are hoping to achieve increased revenue (package customers & partnership customers spending/person/nigth is above average in their respective segments) and average length of stay (packages and partnership deals include minimum stays that exceed current average; 2 nights). Increased ALOS would then result as a lowered cleaning costs since rooms arent needed to be cleaned that often. Altogether, these two factors would finally result in increased profit.

These data describes the different revenue sources, as well as the distribution of costumers between Dutch and foreigners along with business and leisure. It also emphasises the commission that the hotel has to pay when bookings are done through third-party channels instead of directly with the hotel. This is important because some of our suggestions are aimed at increasing direct bookings, in order to increase the hotels revenue without asking for higher prices.

Since the biggest issue that the Eden Savoy Rotterdam will be facing is the increase of competition in the upcoming years, this map is meant to show the most important current players and the upcoming ones. Although only 1% increase in demand is expected, new entrants will bring a 30% increase in supply. It is therefore important that ESR prepares itself to maintain its competitive position despite the increased competition.

Here the numbers explained in the previous slide are converted into number of available rooms in 4-star hotels in Central Rotterdam. It is observable the increasing gap between supply and demand, meaning that each player will have to upgrade their efforts to reduce as much as possible the impact of so many vacant rooms. The full situation-trigger framework can be found in the appendix. From this central question, the group looked into the various sources of revenue and cost, and came up with three different lines of action: improvement of advertising and partnerships; increasing length of stay, mainly through packages; and cost reduction. Full questions and answers can be found in the appendix, along with the full issue tree.

The group conducted a survey of 37 guests to find out how they came to choose the ESR. We enquired them to find out which aspects of the hotel were most worth promoting. The conclusion is that, apart from having a competitive price, the hotel should definitely emphasise its central location in Rotterdam. Details on the survey can be found in the appendix.

Based on this information, ESRs marketing message is in line with their value proposition since customers clearly value the location of the hotel when making their decision about the hotel and ESR is highlighting their central location in their advertising activities. This can be noticed from their print advertisements, interned ad and slogan: Love city life. Based on the customer survey, almost 80 percent of all reservations are made online. This suggests that also the advertising should be targeted into internet since almost all the customer are there. Since ESR is obligated to pay fee, ranging from 18%-25%, to 3rd party agencies, its main concern is to guide customers to its own website and thus avoid the costly fees. One way to achieve this goal is to place advertisements to the 3rd party websites and include their promise: find a lower rate elsewhere and well match the rate and offer the room for free for the first night in those ads. This way they would reach their potential customers while making a strong statement about benefits of booking on their own website.

Leisure: 40% of total rooms, with 40% occupancy on lower periods. 15% occupancy increased = +68 nights/month (for 45 customers) Average spending ~45 + 3060 revenue Business: 60% of total rooms, with 50% occupancy on lower periods. 10% occupancy increase = +42 nights/2 weeks (for ~18 customers) Average spending ~70 + 2940 revenue Variable costs: ~25/night Part of the costs may be compensated by reduction in print advertising. Online ads: ~1,5/1000 views (CPM) Success rate: 0,1% for leisure; 0,06% for business need 45000 views for leisure, 30000 views for business Cost: 75*1,5=112,5 Non-immeadiate benefits such as awareness, increasing potential future customers.

Gay Travellers: Why? Research on gay customers explains that they are valuable customers because: - On average they spend more than heterosexual consumers - Earn above average income compared to heterosexuals. - Spend more days travelling, mainly because most do not have children. How? Partnering with gay social groups such as Gay Rotterdam. Gay Rotterdam has a traffic site. The hotel should place online advertisement emphasizing the location and gay friendly attitude. The hotel should contact the site directly and discuss options of being a headline ad. Educational Institutions: Why? Educational institutions are frequent users. They are also loyal to particular hotels. Erasmus University has existing partnerships (not with Eden Savoy) and account for a large portion of their business. Pursuing University partnerships might be difficult, but can be worthwhile. How? Create a proposal that offers a discount and cash back to the university. Our initial recommendation would be to develop a Promotion Code that can be used when booking through the hotels website. The hotel should offer a 10% discount to the guest and a 10% cash back to the university. Consulting Firms: Why? Consulting firms frequently travel. There are 28 consulting firms which have offices in Rotterdam. Many of them are quite autonomous and can make decisions locally about hotels. Also, they have frequent visitors from other offices. How? Offer 15% discount for direct bookings. For frequent users offer room upgrades. The sale manager should directly contact the firms (list will be provided in final report).

The hotel should contact the partners proposed directly and invite them to see what they have to offer, seeking for an optimal solution that will satisfy both parties. These contacts should be made preferably within the next month, so that strategic partnerships can be already put into practice in the upcoming year. CitizenM, which is expected to be one of the hotels main competitor is entering the market in less than a year, so this should be a priority. The hotel should strive for long-term business partnerships as long as they are effective in attracting more guests.

10

Banner: Costs (0,10 per click)=50 + ~25/night Expected click-thrus per month 500 Resulting bookings from click-thrus 1% +10nights/month (for a 2 nights stay) Average spending ~45 +450 revenue Educational institutions: 15% occupancy increased = +68nights/month Average spending ~45 +3060 revenue Costs: 10% discount to the guest + 10% cash back to the university + 25/night Consulting firms: Aiming for a 5% increase in business guests through partnerships with consulting firms = +22 nights/month

Average spending ~70

+ 1540 revenue

Costs: 25/night + free room upgrades for frequent users 20/night + 15% discount for direct bookings

11

Why? Based on offerings of another four star hotels of Rotterdam, this is one of the few ways to differentiate ESR from its competitors. This is also great way to differentiate ESRs offering from its direct competitors and allow to charge a price premium with and improve average length of stay of customers. How? By marketing these packages on hotels own website and on websites of companies that are related to these packages.

12

13

14

Based on the conversations with the manager and our own analysis, following cost factors are consequential and possible to cut: Cleaning decrease

By increasing the length of stay we can reduce the total number of turnovers. However, the cost per turnover is fixed.

Role Integration This initiative was initially suggested by the hotel. It will allow significant cost reduction. The hotel is also currently considering other cost-cutting measures, including automated check-in. A downside to be taken into account is customer reactions but, considering current trends and the example of other hotels, customers will tend to accept these new ways of doing things with ease.

15

16

The current average length of stay is 2 at the moment.The graph depicts the estimated cost savings related to the growth of average length of stay. This growth of ALOS is supposed to be achieved by marketing packages (that contain minimum stay of 2 nights) and partnerships (ALOS = 2,6 at the moment).These marketing acitivies would hopefully entail growth of these to customer segments and thus, effectively reduce the need of cleaning, since rooms would be held longer by the same persons. Numbers for the graph are based on the contracts that hotel has made concerning the housekeeping, guest suplies, linen. These numbers are stated in their business plan for the 2012.

17

The graph depicts the estimated cost savings related to the integration of front desk & bartender tasks during the off-peak hours. These yearly cost savings are based on the following assumptions: Possible to integrate these task 10h / day (overnight shift) Cost per employee/hour is 20 as a total

18

Since we came up with many different recommendations concerning the possible steps that the hotel can take in the future, it is reasonable to assume that they do not want to engage in all of them, or at least not simultaneously. Rather they can now choose from these different options to implement those that in their opinion would yield the best result. This decision is motivated by the fact that they still posses the best knowledge about their own business, and can thereby comprise the best overall combination of our recommendations.

19

Appendix
Situation-Trigger Framework
Situation: 4-Star Hotel in Central Rotterdam

Trigger: 7 new competitors in the next 2 years (30% increase)

Undesired result (R1): Weakened competitive position; Lower profit

Question: How can Eden Savoy Hotel increase its profit given an upcoming increase of direct competitors and sluggish economic growth?

Desired Result: Increase overall profits

Issue Tree
Can we lower maintenance and repair costs?

Can we reduce utilities costs per unit?

Can we reduce fixed costs ?

Can we reduce utilities? Can we reduce the cost of salaried employees? Can we reduce the amount of utilities consumed?

Can we decrease costs on a volume adjusted basis?

How can Eden Savoy Hotel increase its profit given an upcoming increase of direct competitors and sluggish economic growth?

Can we reduce variable costs given increased revenue ? How can we increase ADR? (per client basis)

Can we integrate roles to lower the number of staff (i.e. front desk and bartender)?

Can we increase the consumption level of Food & Beverage per guest?

Can we reduce the cost of room turnover? How can we increase the Average Room Rate? How can we increase Food & Beverage Revenue per guest?

Can we increase the prices of Food & Beverage?

How can we increase revenue?

Can we modify or add variety to the Food & Beverage supply to match consumers preferences? Are there opportunities with to partner with businesses with local operations? Are there opportunities to partner with other hotels within the Eden chain? Are there opportunities with to partner with tour operators and agents? Are there opportunities with to partner with new 3rd party distributors? Are there opportunities with to partner with locally based institutions, for example Erasmus University? Are there opportunities with to partner with local attractions?

How can we increase Telephone revenue per guest? How can we increase Minor Operating Department (MOD) Revenue per guest?

How can we increase occupancy level without lowering room rates

Can we have an positive impact by increasing/changing promotions and stressing value-added?

Can we form new partnerships?

Can we create a membership program? Can we increase customer retention? Can we increase average length of stay (leisure travelers)? Can we create packages with other Eden City Hotels? Can we improve on the existing partnerships? Can we offer special treatments and/or exclusive services?

Survey
Gender: Age: Female Male 31-40 Business Yes 41-50 Leisure No 51-60 60 and above

18-30

Purpose of travelling:

Are you travelling with kids:

Whats your length of stay at Eden Savoy Hotel? 1 night 2-3 nights more than 3 nights Where did you book the hotel? Eden Savoy Hotel website Third-party website e.g. booking.com Travel agency Others. Where? ________________________ What do you value the most when choosing a hotel? Rank their importance from 1 to 4, one being the most important factor. ___ Price ___ Location ___ Guest Reviews ___ Brand Are you here for a specific event? Yes No If yes, what is it? ___________________ If no, whats the purpose of your visit? _____________________ Did you utilize room service during your stay at the Eden Savoy Hotel? If yes, what products would you add to the menu? _______________________ Yes No

Rank the following factors, from 1 to 5, 1 being very bad and 5 being excellent, during your stay at Eden Savoy Hotel ___ Location ___ Services ___ Food & Beverages ___ Clean ___ Comfort After your stay at the Eden Savoy Hotel, will you be willing to pay more for the services and rooms the hotel offers? Yes No If yes, how much more will that be? _________ If you have the chance to visit Rotterdam again in the future, will you choose to stay at the Eden Savoy Hotel again? Yes No Depends on prices and promotions

Survey Procedures
The above questionnaire was successfully filled out by 36 people. We opted to conduct the surveys on two distinct days: one Thursday in the early morning, which was targeted at business travelers (accounts for 38% of the respondents) and a Sunday morning, aimed at leisure travelers checking-out on that day. Gender division is 55% female and 45% male. Age distribution of respondents is as follows:

Age Distribution
14 12 10 8 6 4 2 0 18-30 31-40 41-50 51-60 60+

Business travelers account for about 40% of this sample, being the remainder leisure travelers. About 53% of the surveyed people were stayed for a single night, whereas 40% stayed for two or three nights and the others opted for longer stays than three nights.

Analyses Conducted