Chapter 5 Case Study – Overcoming Rate Resistance
Joan called a meeting of her sales staff at the Reeves Hotel. She had described the meeting as a strategy session, but could see that her staff looked worried. She began, “I had a meeting with the General Manager last week, and he would like us to make a few changes to our marketing plan. I would like to brainstorm a few ideas to solve some of the problems that we have been having.”
The objections started as soon as Joan handed out her ideas. “Get rid of 5,000 room nights of our corporate account business, that’s crazy!” said Abby. “Some of my best accounts are corporate ones. I have worked hard to get them all under contract.”
Murmurs of agreement filled the room. Joan said, “let’s take this one step at a time. The hotel has too much contracted corporate business at a low rate. We need to replace about a third of that business, about 5,000 room nights, with higher rate business, including not only corporate, but also group and transient.” She went on, “we need to evaluate which accounts we should keep, which ones would accept a higher, but still discounted rate, and which ones don’t make good business sense to keep.”
Joan continued, “let’s set up some criteria for reviewing our corporate accounts. Which kinds of things should we look at? For example, keep accounts with attractive arrival and departure patterns.”
After a break, Joan went on, “I’d like to make a list of market segments and sources we could solicit more strongly, then we can evaluate which areas we should concentrate our sales efforts on.”
As the meeting adjourned, Joan asked the staff to continue thinking about what she had discussed and to reconvene next week to discuss their ideas.
Questions:
What are some of the criteria the sales staff should use to evaluate whether a corporate contract account should be retained or dropped?
What factors should the staff consider when determining new sources of business to replace the old corporate contracts?
How can Joan help her sales staff become comfortable with the changes in the hotel’s rate structure?
Be sure that your answers reflect the information presented in the text and the notes.
Each answer should be at least a paragraph.
