The Diamondback Plaza Hotel

I. Title The Diamondback Plaza Hotel II. Executive Summary The Diamondback Plaza, owned by Dwight Robinson, is an enormous hotel found in a popular vacation area. The hotel has a reputation among local hoteliers of having casual elegance and always sticks to the “rack rate”. But his dignified advertising isn’t helping him to reach the 78 % average nightly occupancy.

So, Robinson hired a consultant that will help him. The consultant, after studying the situation, came up with a suggestion: Mr. Robinson, your rooms are not yielding the income that they might because you establish one price for your rooms and then sit back hoping people will stay with you.

In today’s market that strategy won’t work; you have to manage your situation to improve your yield per room.

You need to use all available means to lure travellers into your hotel when you see at a certain time in the evening that your hotel is not going to be full, you have to cut prices until your occupancy rate is over 95%.

Follow this principle: don’t go to sleep yourself until your get people to sleep in all your rooms. Your debt relative to your property value is low: you don’t have high interest charges to cover. So you can offer lower room prices than your competitors and still make a profit.