Apollo Hotel (100 points) Case Study Analysis After just 10 months of operation, Ryan Sawyer was proud of what he had accomplished managing the Apollo Hotel, but he knew that much work remained. The Apollo was owned by the Williams Cosmetic Company and was located in Kentucky. The hotel had originally been built to serve as housing for students who attended the Williams Cosmetology School and was converted to an eighty-two-room hotel in September 2002 to serve the general public. In addition to the hotel, the complex contained a manufacturing plant for personal care products and the corporate headquarters of The Williams Cosmetic Company. The Williams Cosmetic Company discontinued the operation of a cosmetology school and decided to concentrate on the manufacture and sale of cosmetics. The hotel was opened to use the existing building. When the hotel opened, there were very few guests, almost no staff, and a limited budget. The hotel had no brochures, Web site, or even a listing in the yellow pages. Although Ryan had no previous hospitality industry experience, he was told to build the business and turn it into a profitable operation. Ryan held a bachelor’s degree in economics/business management from Colorado State University. He had worked with a large regional bank and with JCPenney Company. Marketing Strategy Ryan decided that the hotel should be marketed to a wide spectrum of guests. Over the years Mr. and Mrs. Williams had met many people through their church and community work. These contacts proved useful in promoting the hotel. The Convention and Visitors’ Bureau also proved to be helpful and referred many guests. Ryan contacted the Little League and secured contracts for teams to stay in the hotel by offering free lodging to referees on a double occupancy per room basis. To entice guests during the season, Ryan decided to offer three nights for the price of two if guest would make reservations two months prior to arrival and pay in advance. This proved to be moderately effective. A large electric utility company was offered very good rates to encourage their crews to stay at the hotel. This resulted in many nights of occupancy. US Military personnel were also encouraged to stay at the hotel through very good rates. Ryan believed that with only eighty-two rooms, the best opportunity to fill beds was to contact organizations rather than attempt to market to individual travelers. Apollo Hotel by Kotler, Bowen, & Maken (2014). The hotel seemed to be gaining a reputation as “value lodging” and had experienced 58 percent occupancy on average for the last four months. Ryan observed that the company’s cosmetic items were not used or sold in the hotel even through they were manufactured on the grounds. This was corrected by placing Williams amenity products in the rooms and opening a gift shop in the hotel, which sold the company’s personal care products as well as other traditional gift shop items. Personnel As a small, privately owned hotel not operating as a flag property, the management of Apollo could explore different operational strategies. As an example, front-desk employees were paid a commission on business that they brought to the hotel. This encouraged them to “sell” the hotel to their friends and to organizations they knew such as churches, schools, and clubs. Ryan said that with commissions, front-desk employees average more income than their counterparts in other area hotels. Ryan believed that his primary responsibility was to “keep the lights on” by marketing the hotel and that operational decisions should be left to those responsible for the operational areas. He held the belief that most people who desired personal growth and responsibility could learn the operational tasks and would b find ways to do the job better without top-down micromanagement. He also believed that all employees should be crossed-trained and willing temporarily to accept responsibilities outside the primary department. The maintenance man had once been asked to war a suite and serve as bellboy during a heavy occupancy period. This seemed to work well. All new employees were expected to learn how to clean rooms and make beds so they could help with that important are in crunch times. The number-one criterion for employment with Apollo was, “Are you willing to learn and willing to work?” Employees were also expected constantly improve their professionalism. When management needed decisions, department heads were expected to type up their proposal and present it in a professional manner. This forced the department heads to think through the proposal, take it seriously, and be prepared to defend it. Openness to New Ideas Ryan said he was open to new ideas from employees and others concerning ways to improve occupancy and operations in the hotel. Apollo Hotel by Kotler, Bowen, & Maken (2014). Case Analysis Questions Hotel Analysis Please answer the following questions based on the information in the case study, please be sure to use complete sentences. 1. Marketing Mix – Please identify how the hotel addresses each marketing tool. a. Product i. Core product ii. Facilitating product iii. Supporting product b. Pricing Strategies c. Place aka Distribution Channels (Hint: consider grass roots or non-professional channels for your answers) d. Promotional Mix (What promotional tools does the hotel implement?) 2. Market Segments a. What 3 market segments does the hotel pursue? Provide a brief description of each market segment. b. Based on your knowledge of positioning, write 1 positioning statement for each market segment that could be used in the hotel’s communication messages. i. ii. iii. 3. Based on your understanding of Derived Demand, which of the two market segments hotel stays might be impacted? Why? 4. What recommendations would you offer to Ryan to: a. Increase occupancy b. Improve REVPAR c. Improve operations Apollo Hotel by Kotler, Bowen, & Maken (2014).
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