LUX* Resorts & Hotels Optimal Room Mix Marketing Decision By Team 8 Master of Business Analytics Data Optimization Cohort FiDi — Module B, 2019 1
LUX* Resorts & Hotels Context Luxury hotel chain EBITA goal of € 38m from foreign guests CSR projects of € 250k from local guests in Mauritius 2
Description of Model for Room Optimization Objective function: maximize EBITA Capacity per hotel per season 95% maximum occupancy rate Seasonal room price Minimum demand for foreign and domestic guests 50% discount for domestic guests 3
Optimal Solution that meets EBITA/CSR requirement AMOUNT OF ROOMS FOR FOREIGNERS Location Hotel Peak High Shoulder Shoulder Low Low MAURITIUS A 5,124 15,233 18,498 11,011 7,031 MAURITIUS B 3,995 11,876 14,420 6,984 3,381 MAURITIUS C 5,179 15,397 18,697 11,130 7,106 MAURITIUS D 6,061 18,018 21,879 13,024 8,316 MAURITIUS E (pre-renovation) 1,995 2,898 12,032 0 0 MAURITIUS E (post-renovation) 1,463 6,332 736 0 0 CHINA F 415 2,738 1,901 1,382 1,098 CHINA G 380 2,510 1,742 1,267 1,007 REUNION H 3,402 10,046 12,271 7,148 4,844 REUNION I 3,205 9,464 11,560 6,734 4,563 MALDIVES J 5,179 15,215 18,673 11,248 6,977 Occupancy Rate: 95% 94.44% 92.46% 93.03% 90.96% EBITA: € 38, 885, 216 incl. € 250k CSR Min. Avg. Occupancy Rate : 92% 4
Scenario planning depending on economic outlook Bear Scenario Optimal Scenario Bull Scenario Occupancy Rate : 95% Occupancy Rate : 81% Occupancy Rate : 92% No CSR budget Undefined CSR budget CSR: € 250k EBITA: € 33, 133, 546 EBITA: € 39, 135, 217 EBITA: € 38, 885, 216 € 6, 000, 000 5
Slow economic outlook contingency plan and recommendations Target § Implement stringent cost-cutting programs & Six Sigma strategies in Mauritius to boost ARR by 5% 39m § € 1,043,000 increase 20% Reu. ARR 5% 1m ~ € 2m Room mix 1m § Increase Room Prices by 20% for our cheapest hotel in Reunion Even a 10% drop in demand would still translate § 33m into 939,000 increase in revenue Room price would still be lower than other LUX* § hotels Bull scenario loss mitigation, fiscal year 2016 Deloitte 2019 | ICSA 6
CSR Project Selection to reflect LUX* values to build a sustainable CSR strategy Mauritius is the most highly developed country in Africa in terms of HDI (0.79). Our CSR projects need to reflect local circumstances. Micro Loans § High educational attainment across genders Early Career Coaching § Low female labor force participation § 32% lower than male participation Female Entrepreneurship § Significant private sector gender wage gap Programs § Women paid avg. 30% less than men UNDP | World Bank 7
Executive Summary § EBITA targets will be challenging to achieve, but feasible based on case data § Profits can be increased by increasing room prices in Reunion as well through cost-cutting for the hotels in Mauritius § An economic downturn would strongly affect the EBITA goals § Our CSR project tackles significant current challenges of Mauritius 8
Thank you! Any questions? 9
References § Deloitte . (2019). 2019 Travel and Hospitality Outlook. https://www2.deloitte.com/content/dam/Deloitte/nl/Documents/consumer-business/deloitte-cip-ths- travel-hospitality-outlook-2019.pdf. Retrieved 9. MAR 2019. § Mahmoud S. Abou Kamar. (2014). Six-Sigma Application in the Hotel Industry: Is It Effective for Performance Improvement?. Research Journal of Management Sciences. Vol. 3(12), 1-14, December (2014) . http://www.isca.in/IJMS/Archive/v3/i12/1.ISCA-RJMS-2014-096.pdf § National Tourism Administration. (2017). Five-star hotels have the highest occupancy rate in Q3 2016. Retrieved 7 March 2019, from https://www.chinatravelnews.com/article/110397 § UNDP. (2018). Human development indices and indicators: 2018 statistical update. (:Unav). https://doi.org/10.18356/9a42b856-en § World Bank. (2018, June 4). Country Overview: Mauritius [Text/HTML]. Retrieved 7 March 2019, from http://www.worldbank.org/en/country/mauritius/overview 10
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