Work 1:
"How much will it cost to make the change?" asked Tamara Stevens.
Tamara owned the 50-Yard-Line Steakhouse. She was meeting with Stacy Black, the restaurant's executive chef, and Faye Cavanaugh, the sales representative for Broiler Meats, a potential vendor that Stacy had gotten very excited about.
"Well, it depends on the cut," replied Stacy. "Faye can give you the details. But the point is, when we print on our menus that we serve only Certified Angus Beef instead of the USDA Choice we now advertise, I think our customers will be happy to pay more for it."
"Because they will be getting better quality for their money," said Faye.
"Are you saying that all Certified Angus Beef is of higher quality than USDA Choice?" asked Tamara.
"Not exactly. Some Certified Angus Beef is equivalent to high-grade Choice, but most of it is equivalent to USDA Prime," said Faye.
"And you believe our customers will readily accept paying more for a Certified Angus Beef steak?" asked Tamara.
"Absolutely," replied Faye.
"I agree," said Stacy.
1. As a hospitality professional, could you in response to a customer's query, explain the difference between a USDA Choice New York Strip steak and a Certified Angus Beef New York Strip steak?
2. How important would it be to know if this proposed quality enhancement would in fact be readily accepted by the 50-Yard-Line's customers before the decision to implement it has been made?
3. What inherent difficulties do RMs face when specialists in an area; such as Stacy in this example, are allowed to alter quality parameters independent of their effect on strategic pricing decisions?
Work 2:
"How many rooms do we have left for next weekend?" asked Ben Humphrey, GM of the Lennox Suites.
"165," replied Hillary, the Lennox Suites' Front Office manager.
"We got too aggressive," said Ben.
It was Thursday afternoon, and Ben and Hillary were discussing room pricing for the Friday, Saturday, and Sunday that were now only eight days away. The three weekend days they were discussing coincided with the International Cattle Breeders Association meeting, which was to be held at the convention center in the city where the Lennox was located.
Together, Ben and Hillary filled the role of revenue manager for their property, and they were discussing room rates.
"The organizers claimed their attendance would be higher," said Ben. "That's why I felt we should keep the rates at full rack, plus 20 percent, for so long. If we had known their attendance was going to be this soft, we could have backed our rates off earlier. But since we have only 200 rooms reserved as of today, we need to move quickly if we are going to sell our remaining 165 rooms."
"What do you think we should do?" asked Hillary.
"Let's take the rates from $299.00 per night to $199.00. Put that on our Web site. If we aren't fully booked by next Thursday, drop the rates another $50.00 per night. That should allow us to sell out any remaining rooms."
1. Consider the buyer's value formula. Do you think Ben's pricing strategy will significantly increase value offered and thus help the hotel sell out?
2. What impact will Ben's pricing strategy likely have on the value perceptions of those guests who have already booked at the Lennox?
3. Is it likely that those guests who have already booked rooms at the Lennox will find out about the new room rates? How would they? If you were Hillary, how would you respond to a telephone inquiry from an "early buyer" regarding the hotel's willingness to change the rate the guest had agreed to pay previously to the newer and lower room rates?
Key Concept Case Study
For Your Consideration
1. Assume that in a recently completed competitive site survey, Damario found the physical quality of the rooms sold and food served at the Barcena to be in the mid-range of its competitors with regard to quality. Now consider the "buyer's view of value" formula you learned about in this chapter. What would be the likely impact on that formula if the resort immediately implemented Mark's suggested pricing strategy?
2. In this meeting, Damario learned about two reasons (lack of money and lack of time) typically given for not having formal staff training in a hospitality organization. Assume that Damario's ultimate goal is in fact the ability to charge a premium selling price relative to the resort's competitors. Do you think it is likely that such a goal could be achieved with the lower-than-average levels of guest service and product delivery that typically result when employee training programs are deficient? Explain your answer.
3. Assume the Barcena is currently competing for a 400-room-night contract against a newer resort whose total bid is nearly identical to that of the Barcena. What would Mark advise Pam to bid? If you were the customer in this scenario, what would be your likely reaction be to such a bid? Support your position with information you learned in this chapter.
4. Mark's pricing strategy assumes immediately increasing the resort's prices will generate the revenue needed to improve its products and services. Do you believe such an assumption is reasonable? Explain your answer using the buyer's view of value formula.
Attachment:- Case Study.rar