Case of

Amber Inn & Suites, Inc.

Integrated marketing

communication strategy and

management

1
Problem

The problem that Amber Inn & Suites has to face is to decide whether or not to expand their
marketing and advertising expenditures between pleasure/vacation guests or business
professionals. Primarily, Amber Inn & Suites promotes their commodities vastly to business
travelers who usually only stay in the hotels for one to two nights. Business users are the
target market that is in the company mission. After three years of continue loss, company
must find a strategy that will lead the Ebidta, to growth 7% in 2 years. They have also to
decide if continue, and if so how, the frontier strategy and what to do with the promotion as
weekend special or do a free night stay in the weekend (25% discount).

Alternatives

1) Focus on Business users, giving more services as Wi-Fi and study cooperative, increase
prices a 2% per year, and doing weekend special deals for leisure users. Cut not useful
advertisement, increase Internet and internet-sales. Leisure users are very price sensitive, so
is not the market to focus on (a few dollar increase can lead the choice to another hotel).
Stop the frontier strategy and do weekend special offers.
2) Focus on leisure users, but this is like changing the identity of the hotel.
3) The leave everything like it is right now is always an option.

Recommendation

Business users are in the mission of the hotel, and are the audience that can be more
profitable for Amber Inn. They are less price-sensitive and pay more for the staying. The
needs of those users are more standard than the leisure and vacation users, so is easier to
find out what do to. As stated from researches, the advertisement is not really relevant in
the decision of which hotel to take. Internet can be a key factor, as a sales tool (like
Booking.com or Trivago for example). I suggest to cutting ad for almost 4,4 million, reducing
the budget at 7,8 million dollars.
Improve loyalty programs.
Price must grow per 3 dollar per room for the new services of wi-fi etc.
Try to increase the nights in hotel for business users, making special discounts after the third
night in hotel, making deals with restaurants around the area.

2
Is it possible to increase EBITDA in 2 years if sales grow, and some cuts in the expenses, his is
possible, but in order to create profit we don’t have clear solutions, if not the one to
optimize services for business customers and have special solution for the weekends, when
business customers are usually not in the hotel.
A clear solution is not easy to find in this case (in my opinion). Reposition to business guests
is the key.

RATIONALE

Customers
Amber Inn guests profile is a business man (79,8 % of guests) that stays in the hotel for an
average period of 2,6 nights and for 39% of the case, the guest visit hotels once a week or
more. The trip is paid from the company (65,7%) and the customer travels by car (64,8%).

Market
US Hotel Industry has revenues for 113,7 $ Billion, with 16,7$ Billion in pretax profit in 2004.
Total number of rooms is 4.4 million; bigger player is Cendant Corporation with 439,279
rooms.
The 2/3 of the US rooms are affiliated to a brand, and as stated in the Smith Travel Research
survey the hotels are segmented by price and service levels.
Price segmentation is the following, with the average daily rate (ADR) forecasted for 2005:
luxury (246$), upper scale (139$), upscale (101$), midscale with food and beverage (76$),
midscale without food and beverage (73$) and economy (50$).
Most profitable segment is the luxury with revenue per available room of 172$ and the most
occupancy percentage goes to Upscale with 70,9%
Service can be full or limited depending on what the hotel can offers.
Full service hotels counts for 1,6 million hotel rooms instead limited service hotels rooms
counts for 1,4 million rooms.
Occupancy is at 61,3% and the average daily rate is 86$ with a revenue per available room of
53$.
Market is suppose to grow for 7,6% in fiscal 2005.

Company
Amber Inn & Suites, Inc is a 250-property hotel chain with various location in 10 western and
Rocky Mountain States. Company started in 1979, and operates 200 Amber Inn properties
and 50 Amber Inn & Suites properties. Each proprietes has 120 room or suite units.
Revenues are 422,6 $ millions and net loss of 15,7$. A total of 30.000 rooms
Company mission is to provide principally business travelers with clean comfortable guest
accommodations at a reasonable price.
Hotel is a limited service hotel between economy and full service hotels. Company locates
proprieties on premium sites on major highway close to suburban industrial and office
complexes, airport and large regionals shopping centers.
Company projected annual lodging revenue growth of 7,4% percent for fiscal 2005, but we
have to note that has posted a net loss for three consecutive years.

3
Rate occupancy is 67,1%, and the average daily rate is 57,52$ with a projected revenue per
avaible room of 38,60$.
Sales force is formed of 56 sales representatives, 2 are national’s sales reps and the
remaining 54 are sales representatives call on local business, government agencies,
universities and other organizations.

Competitions
Competitors are all the economy hotels and the midscale without food and beverage hotels
both for price both for services.

APPENDIX:

SWOT ANALYSIS

Strengths:

Location (premium sites: close to airports, office complexes, shopping centers)

Good promotions
Good service to customers
Good price
Sales net

Weaknesses
Pure business guests hotels
Underperforming properties in the last few years.
Bad financials performance
No correct ad politics
No hotels in downtown location

Opportunities
Increase the amount of leisure travelers during weekend
Become a full-service hotel
Attract new first-time guests
Increase the length of stay per visit

Threats
Competition from other hotel chains
Decrease of travel frequency
Lower prices strategy

4
Media Budget
  Actual Proposed Variation
Magazine 3236240 1618120 -1618120
Newspaper 4096965 2458179 -1638786
Outdoor 519700 259850 -259850
Spot TV 2340266 936106,4 -1404159,6
Cable Networks 1048589 1048589 0
Radio 25774 25774 0
Internet 1000500 1500750 500250
Total € 12.268.034 7847368,4 -4420665,6