Amber Inn Case

Problem Identification

Amber Inn & Suites major problem is that they are facing a decision on whether to divide their marketing strategies and advertisements between guests staying at the hotel for personal, pleasure or professional vacation. The company normally introduces their property to mainly business travelers but this created a problem because this targeted market only stays for short time. Therefore, the company had to re-strategize because of net loss of 5 consecutive years. The company's new president and board of directors is Joseph James and he wants to have the company focus on using growth in Earnings before Interest Taxes, Depreciation & Amortization (EBITDA) which will result in approximately 7% increase within 2 years.

Case Analysis

Amber Inn & Suites Inc. is a corporation hotel franchise found in 1979 with 250 properties positioned in 10 different Rocky Mountains and Western States. The hotel offers limited services and positioning between cost efficient and full service hotels. Hotels are categorized into these two categories based on the services they offer, the amenities and the price of their rooms. Amber Inn & Suites main task focuses on providing business travelers with relaxing, clean, cost efficient and comfortable lodging in locations close to attractions, restaurants, major highways and airports. The company's board of directors and President Joseph James' main goal for the company is to make the company profitable within the next two years. He stated that the company would use growth in Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA) as a corporate performance measure and a basis for determining senior management and executive incentive compensation (Kerin & Peterson, 2010).

Mr. James appointed the company's four vice presidents to organize presentation that would demonstrate plans, expenditures and the results for each of the past two fiscal years. He also requested, for each of the vice presidents to provide a budget plan for the fiscal year 2006. This plan will allow the president to familiarize himself with the operations and goals of the company. The fiscal year 2005 will be the fifth consecutive net loss and non-profitable year for the company. James is hoping to utilize the EBITDA to generate the company profit by 7% within the next two years.

Identifying the Root Problem Components

The Amber Inn & Suites case indicated three problems that the company can encounter before it can reach its successful goal of 7% EBITDA profit in the next two fiscal years. The senior vice president of the lodging Kelly Elizabeth illustrated three problem that the company should consider directing their immediate attention to when gathering information for the April 11 presentation to the president. The first problem was the allocation of the media advertisement dollars between the pleasure/vacation traveler and business traveler market (Kerin & Peterson, 2010). This problem is highly focused on instead of the company directing their full attention to the initial mission of the company that is to provide their customers with clean, relax, convenient and comfortable accommodation. The pleasure/vacation travelers are more economically savvy than the business traveler mainly because they might be staying at the hotel longer than the business traveler. Therefore, they will tend to shop around more for hotels to find the best deal.

Second problem identified was the idea of providing weekend special instead of free night promotion that was used in the fiscal year 2005. The idea was to offer once a month approximately a 25 percent discount. The third problem was deciding whether the frontier strategy initiated in the fiscal year 2005 plan should be carried into the fiscal year 2006. Although, when this plan was executed in 2005 it was very successful and resulted in positive outcomes. In order to present logical and reasoned presentation the fiscal year