Amber Inns and Suites

Problem Identification:

The Amber Inns & Suites, Inc. is a 250 property hotel chain in the western and Rocky Mountain states. Fiscal year 2005 was projected to be the fifth consecutive unprofitable year for Amber Inn & Suites Inc. The company projected lodging revenues of $422.6 million for fiscal 2005 and a net loss of $15.7 million. Joseph James, the company’s new president and chief executive officer, wanted an hour presentation that described (1) his or her initiatives, expenditures, and outcomes for the past two fiscal years, and (2) planned initiatives and budgetary needs for fiscal 2006, starting June 1, 2005. Based on this direction, the V.P. of Sales and Marketing and the V.P. of Advertising have to work together to decide on the proper allocation of their respective budgets.

Alternatives:

The two vice-presidents decided the same media vehicles used in 2005 would be used in 2006 and no new sales representatives would be added. There were three areas that required immediate attention for the presentation. The first area at the top of the list was the allocation of media advertising dollars between the pleasure/vacation traveler and business traveler market. There was some concern form the senior vice-president that too much emphasis was put on pleasure/vacation travelers. He felt the family business detracts from the company’s original concept of servicing the business traveler. The company had received complaints from frequent business travelers. The second issue the “frontier” strategy initiated in fiscal 2005. This strategy had three objectives: (1) to increase overall occupancy in both guest rooms and suites, (2) to attract first-time guests, and (3) to increase the length of stay per visit. The results of the “frontier” strategy were positive, but it was too early make a final decision on its success. A third issue was related to promotions. The V.P. of Advertising