AVARI RAMADA

PRICING HOTEL ROOMS

Group-6
Praveen Kumar
Parikshit Chaudhuri
Srinath Sundar
Ramkrishnan MA

INTRODUCTION

Avari Ramada is a five star hotel in Lahore

1944 : Founded by Dinshaw Avari

Byram Avari is the current CEO of Avari Lahore Hotel

Branches in Pakistan, Dubai and Toronto

1978 : Avari Lahore started under the patronage of Hilton chain

of hotels

1987 : After a lawsuit, Mr. Avari took over the management and
renamed it as Avari Lahore Ramada Renaissance Hotel.

FEATURES

190 rooms including 15 suites

12 junior suites

Executive

Bridal

Presidential suites

5 Food & Beverage outlets

Coffee shop Kim's

Snack bar - Samovar lounge,

Barbecue restaurant- Fort Grill

Pastry corner

Swimming pool

4 function rooms (Business conventions, large dinners, Social occasions like weddings)

Other facilities included Sauna, Massage parlour, Gymnasium

Executive Business Centre

OCCUPANCY

The above bar chart represents the month-wise occupancy in percentage at

Pearl and Avari Ramada for the year 1988.

AVERAGE ROOM TARIFF

The above bar chart represents the month-wise average room tariff at Pearl and
Avari Ramada for the year 1988.

4P's MARKETING MIX

Produc
t

Product- Different Types of Rooms and Suites,

F&B outlets, Function Rooms, Spa
Price- Rack Rate, Commercial Rate,
Preferential Rate, EBS & Group Rate, VEBS
Rate, Special Rates
Place- Strategic Location, Metropolitan City,
Tourist and Business Hub

Price

Marketing
Mix

Promotion- Summer Packages, Mailing

Promotional Letters, Free bed tea and
meals(EBS&VEBS)

Promotio
n

Place

CURRENT SITUATION

Avari International took the control of Avari Ramada Renaissance

since Oct1,1987 from Hilton Group of Hotels.

Every year the target for the average room rate was increased by
10%.

Bonus of marketing employees was based on Target

Achievement. So the Marketing team calculate the average room
rate and occupancy on daily basis

Room Rates at the Avari were increased twice a year( Jan& June)

Avari was constantly trying to expand its guest base and

emphasised on getting business accounts from Pearl.

CONCERN

Average Room Rate had fallen below its competitor Pearl

Continental Hotel.

Asst. Marketing Manager felt a need to revaluate the current

pricing policy before the beginning of the New Year.

SWOT ANALYSIS
STRENGTHS

PRICING STRATEGY
PRICING STRATEGY
INDIVIDUAL RATE

RACK
RATE

S1806
D1986

COMMERCIA
L RATE

S1641
D1821

CONTRACT RATE

GARBAGE RATE

PREFERENT
IAL RATE

EBS &
GROUP
RATE

VEBS
RATE

SPECIA
L RATE

GOV
OFFICIALS
RATE

S - 1478
D - 1658

S - 1165
D - 1345

S - 1020
D - 1200

S- 993
D- 1092
(45% of
RR)

S - 903
D - 993
(50% of
RR)

WHOLESA
LE RATE

B/W EBS AND

VEBS(BOTHS&D
)

JOURNALI
-STS
RATE
S- 1444
D- 1588
(20% OF
RR)

AIRLIN
E RATE

S- 812
D- 893
(55% OF
RR)

IATA
RATE

S - 903
D - 993
(50% of
RR)

1. Ten percent hike in all room

price
Clientele

Annual Occupancy Revenues under

for each room
each department

Novemeber
Occupancy

November
Revenue

8%

319200

351120

30%

1197000

1316700

10% increase
in November
Revenue

Frequent Individual Traveler (FIT)

11%

5654770

Executive Business Service (EBS)

30%

15422100

Volume Executive Business Service (VEBS)

31%

15936170

Tour

3%

1542210

5%

199500

219450

Special

9%

4626630

45%

1795500

1975050

Summer Package

3%

1542210

Conventions

2%

1028140

Airline

7%

3598490

10%

399000

438900

Other2

4%

2%

79800

87780

3990000

4389000

1000

1100

Annual Room Sales for the year 1988

Average room rate

2056280

51407000

2. Ten percent hike in all rates other

than EBS and VEBS
Annual
Occupancy for
each room

Clientele

Frequent Individual Traveler (FIT)

11%

5654770

Executive Business Service (EBS)

30%

15422100

Volume Executive Business Service (VEBS)

November
Revenue

10% increase
except EBS and
VEBS

8%

319200

351120

30%

1197000

1197000

Revenues under November

each department Occupancy

15936170

31%

Tour

3%

1542210

5%

199500

219450

Special

9%

4626630

45%

1795500

1975050

Summer Package

3%

1542210

Conventions

2%

1028140

Airline

7%

3598490

10%

399000

438900

Other2

4%

2056280

2%

79800

87780

51407000

3990000

4269300

1000

1070

Annual Room Sales for the year 1988

Average room rate

3. Bridge the difference between the

group rate and least expensive individual
rate
This can be done by either reducing the least expensive individual rate(impacts

revenue and profitability) or increasing the group rate (which may cause customers
to sign with the competitor, Pearl)

So this option is not feasible

Q1. Should Raza seek to increase the occupancy rate or

Average room rate? What are the trade-offs ? What factors
should he consider?

Raza should focus on increasing the occupancy rate in the immediate future and not just increasing
the occupancy alone but profitable occupancy.
Trade-offs

Increase in advertisement and promotion (long run)

Training and Hiring Manpower

Increasing guest amenities leading to expenditure

Factors

Demand and competition

Brand Image

Implementing Bundling Strategy

Increasing Banquet Sales

Q2. What other Metric could/ should Raza use to evaluate the performance of his pricing structure ? Why?

Pricing strategy should be simplified not only by keeping client type but also room
type. It should be segmented in the right manner as per our below recommendations
for inviting more guests and increasing the occupancy.
Recommendations

They should classify the rooms as basic , deluxe and superior. The rooms should be
charged according to their classification.

Option of upgrading the room type by paying a little extra amount.

Emphasis more on selling of function halls.

Promoting Hotel Facilities to incoming guests so generate more revenue.

Develop and promote more vacation packages during lean period.

RECOMMENDATIONS

Avari should focus in strengthening of its brand image in the

customers mind.

Avari Ramada should concentrate on the profit oriented approach

by increasing the occupancy rate

They can also introduce bundling strategy.

The hotel should also concentrate to generate more revenues

from the hotels F&B outlets, Spa, Gymnasium and Banquets.

Create more promotional packages as the summer package to

attract more tourists.

SEGMENTATION

Segment Marketing
Business
Walk Inn
Tour Groups
Others

Local Marketing
Local People (Marriage, Parties, Events)

Individual Marketing
Existing customers(Newsletters, leaflets, mailing list)

TARGETING

Corporates

Airline Crews

Targeting Local and Domestic Tourists during lean period.

POSITIONING

USP : Not turning away any potential guest(s)

SERVICES CHARACTERISTICS
Intangibility

Hospitality

Customer Relations

Ambience

Aroma

Music

Variability

F&B order and Service

Housekeeping and Laundry

Inseparability

Anticipating and exceeding customer expectations

Perishability
Rooms can get perished if not booked or unoccupied, moreover, in long term
they may require structural changes.

Thank You