Fairmont Case Synopsis

Case Synopsis:

The case talks about Chateau Lake Louise (CLL) - a luxury resort hotel located in the foothills of Rocky Mountain Hills in Alberta and owned by the chain of Fairmont Hotels and resorts. Since it is situated on the banks of Lake Louise, the hotel is a prominent attraction within Banff National Park. CLL has a total of 497 rooms of varying sizes catering to various customer segments along with multiple facilities such as meeting halls, conference rooms, swimming pool, spa, boutiques, hair care service centres and multiple dining options. The main attraction for tourists coming to CLL was primarily to enjoy the scenic beauty that the location had to offer. Situated close to Banff National Park, CLL location proved to be beneficial since it was considered to be a premier tourist destination.

Banff National Park was being administered by Parks Canada - a federal government agency that was responsible for managing and preserving country's national parks. A number of regulatory bodies such as CEAA and NPA were present to keep a check on Parks Canada with regard to environmental laws and regulations. BNP catered close to 4M customers in a year primarily belonging to the province of Alberta, 10% from the neighbouring Canadian provinces, 19% from US and a good 20% from overseas. Of all the customers coming to BNF, three quarters were pleasure travellers while the rest would constitute to be business travellers with their families. Pleasure travellers would take up activities such as general sightseeing, rock climbing, skiingskateboarding, white river water rafting etc. Visitors travelling overseas would prefer staying overnight in the multiple hotel options available at BNP of which CLL was one of them. Customers coming to CLL were majority from outside of Canada - primarily US, Japan, Germany and UK due to relatively friendly exchange rates that were available and the scenic beauty that it offered.

Customers coming to CLL were broadly belonged to the following segments:

Tour Groups - usually consisted of about 50 guests in a group that would buy a package or a bulk deal from Tour Organizers or wholesalers that would accurately describe and position the hotel. A fixed itinerary would be provided to them that would mainly cater to accommodation and travel arrangements during their stay that were fast paced. These packages were pre-planned; less structured but would guarantee bookings to CLL and was designed to keep the costs down. Customers to this category usually belonged to the Asian countries but due to the economic crises in 1997 this segment seemed to be affected.

Independent Travellers - close to 24-28% of travellers coming from UK and US with a stay period ranging from 2-3 days. Travellers were mainly interested in basic activities from sightseeing to extreme sport adventure activities. Bookings would be made either through travel agents or internet or over the phone with separate purchase of dining and stay. They had varied requests for rooms. With the use of internet were capable enough to work out their own destinations, hence had to be a focus of direct consumer advertising. They were willing to pay a higher price for quality service. Sub-segment of this category was romantic couples looking out for privacy and high quality dining experiences.

Business Travellers- contributed 15-20% of travellers. Primary requirement would be that of large rooms, breakout rooms for smaller gatherings with basic wants such as internet, fax, photocopy etc. They had a fixed meal requirement but varied room requirements based on participants travelling with families. Basic activities for this segment ranged from biking, skiing to sightseeing trips. The bookings would be done by meeting planners that would contact the sales team of CLL and book based on their requirement. It required the CLL sales force to maintain relationship with meeting planners and based on their annual requirement predict their travel. Due to global economic downturn this segment had started to become sensitive to the costs involved for such trips.

To cater to all of the above segments the CLL team maintained a sales force of 2 people that would manage the entire customer segment.

The pricing for the hotel business is based on demand projections. CLL would usually maintain a 'Rack Rate'that was set based on projected demand. The actual pricing was further divided into retail, contracted and negotiated rates.

* Retail Rates - Mainly for independent travellers and would focus on their needs. The price fluctuation for this section was high since it was seasonal; demand based and economy downturn played a major role. Promotional packages and discounts were provided to attract a larger section.

* Contracted Rates - These were the rates that were offered to organizers and wholesalers. Pricing was done on a relatively lower scale to ensure a steady volume of business.

* Negotiated Rates - Quotes or bids given to meeting organizers or planners. Prices were set based on competitive pricing, economic conditions and current market prices. The focus would be to have a lucrative package for corporates, US and Canadian Associations.

Further CLL utilized discounts, packages and promotions to attract customers to maintain a steady demand during low seasons. Focus would be to attract local people closer to CLL with the help of advertising campaigns in geographically located close areas.

CLL was surrounded by a number of resorts that belonged to the luxury category of hotels, however with environmental restrictions of on new hotel constructions in national parks, its competitors were limited. Most of the hotels focused on attracting business and independent travellers.