SALES & MARKETING PLAN (For 2011 – 2012)

THE IMAGERY HOTEL,XYZ CITY, INDIA

The presented sales and marketing plan has been worked upon while covering the theoretical knowledge gained during the duration of module. The sales and marketing plan covers only the rooms division strategy due to word count limitation (Revenue aspects such as Food & Beverage outlets, other revenue etc are not being discussed). Glossary at the end of appendices features the key industry specific terms used in the plan.

Executive summaryThe Imagery hotel is an established luxury hotel located in the XYZ city of India. The hotel is part of a renowned chain of hotel. The hotel has been an industry leader in the city since its inception in 1991.

The hotel follows the objectives that are consistent with the company’s goals and mission statement. In the year 2011, The Imagery Hotel is targeted to contribute sales revenue of INR 165 Million against a projection of INR 140 Million. The Imagery Hotel, has to further maintain its market leadership in the city by achieving the highest RevPAR Premium.

The marketing plan addresses following major attributes: Growing need to increase the high rated businesses Increasing the market share Segment wise in depth analysis to gain competitor’s business Channel wise in depth analysis to gain competitor’s business Laying down the processes to ensure the customer is satisfied

IntroductionThe Imagery hotel located in XYZ city offers breathtaking views of the sea perched on the shore of Bay of Bengal. Imagery hotel is a part of renowned hotel chain of India that has been a domestic market leader closely competing with 2 more major players. The brand recall among the travelers is high and customer perception is of high service standards at a high price.

Imagery is the first five star hotel to have appeared in the city in year 1991 followed by two additional competitors following similar price guidelines and similar room occupancy patterns.

Current Product OfferingsThe Imagery hotel is a well known 95 rooms small high end hotelthat not only provides accommodation facilities to its guests but also a host of other services such as food and beverage (One Chinese Specialty restaurant, one coffee shop and one bar), spa, healthclub, pool, massage etc. 65% of the revenue share is contributed by the room division sales. All the rooms in the hotel have recently been refurbished and the technologies have been upgraded to ensure a better guest satisfaction on the product front.

The Physical Product – Ansoff’s product growth matrix in appendix 2 indicates the hotel to increase the market penetration. While considering the GE portfolio matrix (As appended in Appendix 2), we should hold our position by holding onto the current share and margins. In order to defend our share, following strategies can be applied:

Maintaining the customer value Maintaining the market communication Continuous product improvement

The Brand – The brand of The Imagery Hotel is well established and gives a high end luxury perception in the market. The parent chain of The Imagery Hotel uses House Branding strategy.

Business Market, trends and expected futureCity XYZ, located on the eastern coast, is a tier 2 city of India. It is a major centre for IT support, Defense, Shipping, Logistics, Exports and heavy engineering industries with a large sea port. The city also serves as a major transit point for the smaller industrial locations and set ups around the area and is about to witness a flurry in hotel development with one additional 5 star hotel aiming to open by the 2nd quarter of 2011 and another two big hotel projects to be operational by mid of 2012.

Taking in account the past data, domestic feeder markets to the city are Chennai, Mumbai, Delhi, Hyderabad and Kolkata. Internationally, Russia, Spain, Italy and China, are the major feeder markets. The recent economic meltdown affected all these countries and thus the business in the sectors like IT support, Logistics and Shipping was affected. However, the hotels managed to sustain due to an increase in the visitors working on the long term government projects. This however, decreased the hotel ARRs due to lower entitlement of these visitors (As declared by the government). Imagery hotel believes that since hotel accommodation service is highly perishable with a shelf life of just one day, it needs to be sold at the highest possible rate for the day, thus it chose to accept the lower rated government businesses in order to accommodate for the lost chunk from higher paying sectors such as IT support, Shipping etc and attained market leadership in the city.

Appendix 3 refers to the past performance of the city hotels and industry trends. The city occupancies have dropped by 15% over the period of last one year due to economic instability. In order to sustain, hotels were forced to reduce their prices and thus ARRs

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decreased by 10%. An overall decrease of 25% has been cited in room revenues in the city. Imagery hotel has shown a 17% increase in its RevPAR Premium owing to following factors:

Imagery hotel decreased ARR by 19% in order to achieve 4% increase in the market share.

Competitor 1 losing 25% of its market share because of its reluctance in compromising with the rates (Competitor 1 has increased its ARR by 8% over the Last year).

Least degrowth in room revenues of Imagery hotel. Gaining the competitor 1’s business (Increased by 18%)

With a bumpy economic improvement in EU and an uncertain future of USA (IMF, 2010), the imagery hotel will have to continue with the last year’s strategy. During the economic downturn, the potential of government sector did not suffer (as per the past records available with the hotel). The sector kept contributing 128 rpd in the city (64% of the total business for 5 star hotels) in the year 2010.

New projects (Majority of them being government backed) in the city is expected to increase the footfalls in XYZ city thus generating an increased demand as compared to Last Year (The data collated from various market sources – Various MNCs, SMEs & industry development authorities of the state.). Data shows an upward movement in RPDs from 200 in 2009 to 300 in 2010. From the data collected, the 300 footfalls is expected to increase to 375 in 2011.

By 2nd quarter of 2012, however, ABC hotel will open up to add up another 120 room inventory (Increasing the available city supply from 260 rooms to 385 rooms). As per the calculation the overall occupancy percentage may go up by 1.2%. The addition of fresh inventory will allow end user to witness a better playground of bargaining. As a result, while 1st quarter will show a consistent upward trend in city ARR, it will start falling with the advent of 2nd quarter. Hotels will thus have to strive & increase as much revenue as the possible in the 1st quarter itself in order to fill up the deficit that may arise from 2nd

Quarter of 2011 onwards.

EnvironmentThe current environment in the city seems to be highly volatile with following forces changing the market dynamics on an uncertain basis:

Political Environment – The current state of politics in the state is highly unstable with a group of politicians working in order to get the region passed as a separate state. In such a case, there might be instances of MNEs pulling off their investments around the city affecting the hotel business adversely. However, on contrary, since the city will gain a reputation of state capital, it may attract further investment thus generating business for hotels. The matter is unpredictable and makes the future highly uncertain.

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Economical Environment – The regional economy is going through the ripples of economic instability of EU and USA and affecting the business as discussed initially.

Social Environment – The parent hotel chain is run by a trust under a bigger brand. The trust believes in social causes and donates a part of Profit into a charity that helps the victims of any terrorist attack across the world.

Technological Environment – Continuous improvements and technological enhancements call for a need of constant updating in order to maintain the product superiority over competition.

Legal Environment – With an unpredictable political future, the legal environment also is subjected to controversy since new legislative regulations will come into play ones the verdict is given by the government.

Ecological Environment – The hotel has acquired various initiatives for sustainability. Some of these are waste reduction, reusing and recycling, constant monitoring of gas, oil and electricity usage etc.

The environmental factors can further be explained on the basis of Porter’s five forces model in the appendix 4.

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SWOT AnalysisImagery hotel, on one hand has various advantages to its side that it can leverage to its advantage, while on other hand; it has some disadvantages that need to be looked into. The SWOT analysis below will discuss the same.

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Market overviewImagery hotel currently has six well defined market segments with eight subsegments as shown in the model below:

Figure 1Each of the market segment has been coded (Codes are mentioned next to each segment) for an ease of reference at later stages. The structure of the past segment mix for competition was also made in year 2010 – 2011 based on the market feedback, resident guest feedback, taking information from competition employees, our own employees and meeting competition guests on various occasions. The data was then verified with the market figures being shared on a regular basis to prove the genuineness of figures. Following graphs give a segment mix of the competitive set in the city in terms of occupancy level contribution and revenue contribution.

Figure 2

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Sales and DistributionThe segments as mentioned above utilize our services from the following distribution channels (Please refer to segment codes in Market Overview):

Figure 3

Mission, Direction and ObjectivesThe parent company’s vision is to operate 30,000 hotel rooms in 30 major destinations across the globe to earn a group turnover of 2 billion USD and to maintain market dominance in each of the locations.

In line with the parent companies vision, The Imagery hotel follows following objectives: Financial Objective: To achieve the budgeted revenues of INR 165 Million for the

financial year 2011 – 2012 Competitive Objective: To achieve the market dominance by achieving the

highest RevPAR premium in the competitive set.

Targeting and Positioning DecisionsReferring the market overview section (Figure 2), our targeting and positioning should be based on different strategies depending on the market segment, viz:

Corporates: Since corporate market segment contributes maximum share to the revenues (55%) and has the highest paying capacity, hotel should continue to retain its share. Another notable aspect is the historical data that shows the paying capacity is higher in Non Negotiated Territory Accounts and Negotiated National Accounts is higher in comparison to Negotiated Territory accounts. So the efforts should be more concentrated on the earlier 2 subsets. The segment contributes maximum on weekdays (i.e. Monday to Friday). Competitor 1 has traded off this segment with groups since the location of the competitor gives it an advantage to

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attract leisure groups to fill up on the weekends. The competitor 2 has traded this segment with Long stay.

Long Stay: The imagery hotel has taken a conscious decision to use this segment as filler so that the gap created by corporates on weekends can be traded off with this segment. In case of Imagery hotel, this segment contributes to 35% occupancy share but only 20% revenue share. There is a huge gap evident in this case when this figure is compared to the competition figures. Competition hotels seem to have customers who are paying comparatively more to them. The reason of the same could be our historical data that shows we do not receive support from Negotiated National Accounts sub segment. This segment has higher paying capacity and our reports confirm their usage of competitors. The field sales team will play a major role in identifying the competitor customers in this segment.

Conferences: The imagery hotel has maintained highest share from the conferences due to the largest conference hall that the hotel built two years ago within its premises. Since the hotel has largest conference hall, it charges a premium to the guests attending the conference and using its accommodation facilities. This segment contributes to 15% to occupancy and 15% to the revenue of The Imagery hotel. The strategy of charging slight premium to this segment will be continued.

Groups: Since Imagery hotel is a business hotel, the share of groups is lower it. The highest share for Groups is for Competitor 1 due to its location advantage (Located on the beach). It will be wise not to disturb that segment from competition since The Imagery Hotel is not fully equipped to provide a beach resort experience. However, the plans could be taken up by the corporate office at a later stage to revamp the facilities and connect the hotel directly to one of the close by beaches.

Events: The XYZ city due to its size is not able to attract a lot of events. This is evident in the overall city performance as well. Being a competitive product in terms of brand value and domestic recognition, Imagery hotel can continue charging a premium to this segment.

Crew/ Layover: City XYZ does not have any crew base due to its size and location.

Product and Brand DecisionsProduct Marketing Decisions – The Imagery Hotel offers distinct product with exclusive service levels. Renovation and product upgrade was finished in the 2010. In the forthcoming year, the hotel plans to promote its product by its improved interiors and established service levels. Following aspects will be covered:

Theme of advertisement and media releases will focus on upgrades done at the hotel. Concentration will be on print media.

Printing of new brochures to be distributed across the hotels in the chain, sales offices and to be handed over to the major business sources.

Organizing familiarization trip for sales office employees working in different locations and major business sources in order to showcase the actual product offering

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Brand Marketing Decision – Brand value enhancement to be undertaken in line with the corporate marketing strategy. Owing to renovation and product upgrading, brand value can be revamped this year to maximize the room revenue. On a local level, the hotel will get associated with the high end exclusive shopping arcades, monthly magazines etc for joint promotional activities.

Pricing DecisionsIn line with the overall company strategy, The Imagery Hotel plans for 10% increase in published tariff. The expected published tariff is attached in Appendix 5. It also carries the pricing template to be followed in order to load rates on all the channels. For corporate rate negotiations, rate tie up negotiation guidelines are also given in Appendix 5. The hotel has prepared an expected demand calendar that considers the past occupancy trends and future Business on Books. Accordingly, dynamic discounted price (Rate of the Day) has been set against each day of the year. The rates are to be loaded on the system and will be visible on all the distribution channels simultaneously. These rates can be changed by the hotel as and when required.

Channel DecisionsFigure 3 shows the distribution system of The Imagery Hotel. As per historical data, maximum revenue for the city hotels is achieved from reservations offices, sales offices and electronic channels (GDS Channels). The Imagery Hotel will attain a strong channel support by concentrating on following aspects:

Sales Offices: Sales blitz to the domestic feeder markets to be done by the hotel sales team. An aggressive push is required from Sales offices to increase the business. For this, new brochures will be helpful.

GDS Channels: The hotel receives GDS/ Electronic channel booking requests from Galileo, Sabre, Worldspan and Amadeus. Out of these, Galileo and Amadeus contribute maximum to the city hotels. In year 2010 The Imagery hotel received a fair share of 46% from Galileo which is highest in the city, however, there is a scope of improvement in the Amadeus channel wherein the hotel received only 24% of fair share. In the year 2011, The Imagery Hotel needs to promote itself more aggressively on Amadeus by joint marketing programs and tie ups, online virtual store and channel advertising.

Marketing Communications Decisions Advertising: Advertisements to appear in print media in feeder markets.

Advertising this year will concentrate on the enhanced product features which have been added during the renovation of the hotel.

Public Relations: Press meets will be conducted before every food promotion and will include all publications from the city. The press meet will also be conducted in order to showcase the renovated rooms to the general public. Cricket

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teams that are scheduled to stay with us in March, June, August and September will increase the buzz surrounding the hotel.

Sales Promotions: Channel selective sales promotion for Amadeus will be initiated as earlier discussed. Familiarization Trip is to be arranged for the major business sources in order to showcase the improved product (As discussed earlier).

Personal Selling: Sales team will continue to visit the corporate houses and maintain the relationship with existing users (Retention Accounts) and to flourish the relationship with the competitor users (Hit Accounts).

Direct Marketing: Reservation department has been given an authorization to go 1 level below the approved Best Available Rate as mentioned on the Demand Calendar in case they feel the customer is not willing to pay the rate of the day.

Customer Service and Internal MarketingCustomer Feedback System is in place as per the corporate office guidelines. All the feedback as received is being addressed by the General Manager within 24 hours of feedback receipt. The practice will continue to be followed. The sales team will send E Mailers to their respective clients about any new activity taking place in the hotel or is related to the hotel. The sales team will take customer feedback after the sale and feed it into the online Customer Feedback System as per the process.

People DecisionsThe Imagery hotel attracts a healthy talent pool due to its brand and generous salaries. In the forthcoming year, employees in direct guest contact especially the once from Front office and reservations will be authorized to take their own decisions which is discussed further in the next section.

Process DecisionsIn order to make the decision process faster, employees working in the Front Office Department are authorized to do the following in order to do customer recovery in case of a complaint:

Charging one slab lower than the Best Available rate of the day. Including a breakfast/ lunch/ dinner complimentary in the rate Including a complimentary airport pick up/ drop in the rate. Including a complimentary fruit basket/ cookies platter in the room.

Marketing ProgramsA calendar has been prepared for the marketing activities to be conducted in 2011 and can be referred to in Appendix 6.

Forecasts and Financial DetailsBudgeted forecasts show room revenue of INR 140 Million for the Financial Year 2011 – 2012 with an average occupancy rate of 74%.

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APPENDIX 1The 7 P’s Marketing model

The Sales and Marketing plan uses the above 7 P model to attain the objectives as mentioned in the plan.

APPENDIX 2

Ansoff’s Matrix

The Ansoff’s Matrix is showing the current hotel positioning in the market. The product exists in an already existing market. So the strategy should be of market penetration

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GE Portfolio Matrix

The GE Portfolio matrix above shows the positioning of the 3 hotels in the city. The circles carry the revenue share of each of the hotels. The Imagery Hotel has a very high competitive edge but located in an unattractive market due to low demand. Thus, as per GE portfolio matrix, it falls under zone 2, which suggests following strategy (Maximize profits while maintaining position):

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APPENDIX 3

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APPENDIX 4

PORTER’S FIVE FORCES ANALYSIS

Following is an analysis done in order to find the effects of factors on hotel industry in the city as per Porter’s 5 forces model:

THREAT OF NEW ENTRANTVery High - - High - - Moderate - - Low - - Very Low

ENTRY BARRIERS NEW PROJECT ATTRACTIONSHigh capital expenditure and costs Long term perspective of increase in

demandHigh investment recovery time Government efforts in creating

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attractive environment by tourism promotion channels

Political instability in the state Development of corporate and industry environment.

Existence of existing brands with a first mover advantage

BARGAINING POWER OF BUYERSVery High - - High - - Moderate - - Low - - Very Low

FACTORS DISCOURAGING THE CUSTOMER TO BARGAIN

FACTORS ENCOURAGING THE CUSTOMER TO BARGAIN

Top end brand perception. Long term business potentialHigh service delivery standards Overall brand usage of the company

(Customer using services at all the locations)

Superior product standards Bulk BusinessesPhysical location of the hotel – In close proximity to client premises – Easy to commute.

Size of the company using our service.

Similar pricing structure of competitive set

More supply then demand

Ease of access to senior management for feedback. Opportunity to negotiate effectively in future.Highly perishable product

THREAT OF SUBSTITUTE PRODUCTS AND SERVICES (Example – Guest houses, alternate accommodation etc)

Very High - - High - - Moderate - - Low - - Very Low

FACTORS DISCOURAGING SUBSTITUTES

FACTORS ENCOURAGING SUBSTITUTES

High service standards Cost consciousness of consumersHigh brand perception Increase in the transit travelHigh levels of security, cleanliness and staff training

BARGAINING POWER OF SUPPLIERSVery High - - High - - Moderate - - Low - - Very Low

FACTORS DISCOURAGING SUPPLIER BARGAINING POWER

FACTORS ENCOURAGING SUPPLIER BARGAINING POWER

Long term relationship Increasing inflationBulk purchasing from suppliers Flexibility for supplier in order to meet

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demands as per fluctuationsMore supply then demand

On analyzing the above five factors, we can establish the given diagram on the basis of Porter’s Five Forces model.

APPENDIX 5

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Appendix 6

Marketing Activities Calendar

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Glossary

RPD Rooms Sold per dayARR “Also known as ADR is a statistical unit that is often

used in the lodging industry. The number represents the average rental income per occupied room in a given time period. ADR along with the property's occupancy are the foundations for the property's financial performance. The ADR can be calculated by dividing the room revenue by the number of rooms sold” (Wikipedia, 2010).

Occupancy “Occupancy is the percentage of available rooms that were sold during a specified period of time. Occupancy is calculated by dividing the number of rooms sold by rooms available” (STR Global, 2010).

Competitive set“A competitive set consists of a group of hotels by which a property can compare itself to the group’s aggregate performance. There must be a minimum of three hotels in any competitive set and a minimum of four hotels in Europe, excluding the subject hotel. To protect proprietary data, a single hotel or brand can not exceed 40% of the competitive set for North American hotels and 50% for hotels outside of North America. A single hotel company (i.e. Marriott brands, Choice brands, etc.) may only comprise 60 percent of the competitive set room supply” (STR Global, 2010).

Market Share PercentageAlso referred to as Occupancy Penetration Index. “An index designed to measure a hotel's share of the segment's (comp set, market, tract, etc.) demand (demand = rooms sold).  It is calculated as: (Hotel Occupancy / Segment Occupancy) x 100 = Occupancy Index. (STR Global, 2010)

Other Revenue“Includes all other revenue excluding room revenue and F&B revenue” (STR Global, 2010). 

RevPAR (Revenue Per Available Room) “Revenue per Available Room (RevPAR) is the total

guest room revenue divided by the total number of available rooms. RevPAR differs from ADR because RevPAR is affected by the amount of unoccupied available rooms, while ADR shows only the average rate of rooms actually sold” (STR Global, 2010). 

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RevPAR PremiumAlso referred to as RevPAR (Yield) Index. “A RevPAR (Yield) Index measures a hotel’s fair market share of their segment’s (competitive set, market, submarket, etc.) revenue per available room. If a hotel is capturing its fair market share, the index will be 100; if capturing less than its fair market share, a hotel’s index will be less than 100; and if capturing more than its fair market share, a hotel’s index will be greater than 100” (STR Global, 2010).

Room Revenue“Total room revenue generated from the sale or rental of rooms” (STR Global, 2010).

BibliographyInternational Monetary Fund, 2010. World Economic Outlook 2010, Chapter 2. Washington DC: International Monetary Fund.

STR Global, 2010. A Guide to our terminology [Online]. Available from http://www.strglobal.com/Resources/Glossary.aspx#R [Accessed: 1st January 2010]

Wikipedia, 2010. Average Daily Rate [Online]. Available from http://en.wikipedia.org/wiki/Average_daily_rate [Accessed: 1st January 2011]

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