Question

Scenario

“What’s wrong with being first? We should be proactive, not reactive,” said Jenny Richard, the controller at the Brookshire Hotel.

              “I’m telling you, it’s simply a bad idea, at this time, in this market,” replied Margie Jackson Director of Sales and Marketing. “No one else is doing it.”

              The idea Ms. Richard had was to change hotel policy from that of allowing day-of-arrival room reservation cancellations to one that required a 24-hour notification of cancellation. The controller and the hotel’s assistant GM were proposing it, but Ms. Jackson was concerned about the effect it might have on sales and customer relations.

              “We shouldn’t allow guests to cancel their rooms right up until 5 p.m. on their day of arrival,” said Ms. Richard. “Airlines don’t let their customers cancel at the last minute, at least not without a big penalty to the party who cancels. We should do the same thing.”

              “Like I said, no one else is doing that right now,” replied Ms. Jackson. “If we change our policy, we will lose guests to other hotels. I think it is a really bad idea.”

              Amanda Larson, the hotel’s GM, listened to the discussion carefully. Ultimately, it would be the GM’s decision to change, or not change the hotel’s cancellation policy.

Questions

1. If you were Ms. Larson, the hotel’s GM, what are the sales-related factors that would influence your final decision?

2. Would it be important to know how other hotels in your market area were thinking about this issue? If so, how would you find out?

Answer 1

Answer = The different sales-related factors that can influence the final decision are=

The effect on sales of the proposed policy change

Whether the customers will find it suitable to book the hotel room if the new policy is changed

What loss of gain is expected in sales once the policy is implemented?

Are there any chances that the hotel can lose its sales to competing hotels?

Answer =Yes, it is important to take the opinion of other hotels in the area about the proposed policy change as if the other hotels continue to implement the earlier policy for cancellation, there are greater chances that the hotel will lose its sales to these rival hotels as customers would prefer to book in these hotels.

In order to find out the opinion of the other hotels, the management can invite the management of the nearby hotels for the discussion. Other methods can be to email to these hotels and ask their opinion to have the uniform policy change about reservation cancellation