Amber Inn Case Analysis

Introduction

Amber Inn & Suites is a top-rated, large hotel chain that was founded in 1979 and now holds 250 hotel properties in many states. The Amber Inn & Suites have a great total of 30 thousand rooms and the company's profits are estimated to be at $ 422.6 million while running a deficit of nearly $ 16 million. Amber Inn tends to attract and to cater to mostly to a professional clientele that is typically traveling on business and is seeking luxury guest rooms at an affordable price. The company's many hotels are located across many convenient locations across ten Western and Rocky Mountain States, with each hotel typically consisting of one hundred and twenty single guest rooms and suites. Amber Inn follows a savvy business maxim of being located near major travel highways and airports as well as near businesses, offices and shopping plazas. Despite a good track record and successful business model in the past, the company lately has experienced a decline in sales and profits and has been running deficits in several million dollars.

Identification of Issues and Problems

Faced with the issue of declining occupancy rates and thus lower sales and lower profits, the company has to analyze and arrive at a decision with regard to expanding their marketing and advertising budgets to target leisure travel guests and those on business trips. The advertising campaign of Amber Inn is geared toward attracting the business traveler whose hotel stay typically lasts between one or two nights. As part of its mission statement, Amber Inn has positioned itself as a business that caters to the professional clienteles. However, after five running years of no profits, the executive management is seeking to find the correct marketing strategy that will result in an increase in EBITDA and a projected growth of 7 percent in two years. In addition, Amber Inn must decide whether to maintain the frontier technique and what would be the optimal way to handle promotions such as offering a free night stay or other holiday specials and discounts.

Business Environment and Competition

The US hotel industry is a large and lucrative sector with a total of 4.4 million rooms and recorded revenues of $ 113.7 billion. Although about two thirds of all hotel rooms are owned by the large hotel brands, with the remaining third being independently owned and operated, there is no single brand or company that dominates the majority of the market shares. As such, the US hotel industry forms a whole spectrum of offerings where different brands have created their niches based on the amenities and services they offer. Room pricing and price segmentation is typically a function of the venues and services offered and they range from the luxury hotels that offer luxury suites with a full range of services, such as restaurant and lounges,