Case Study

The hotel glut has produced a tremendous windfall for business travellers. Service
is up, but prices are not. Because of overbuilding, hotel chains are engaging in an
all out service war to pamper the business traveller. Business persons spend about
$34 billion a year at hotels and motels and account for nearly all the occupancy
except at resorts.
The number of available rooms increased 40% during the l980’s resulting in an
average occupancy rate in l989 of 63.8 percent. The break even point for the
industry is 65 percent. Thus, about 60 percent of America’s hotels lost money
in l990. To make matters worse for profit margin, corporate discounts have
become increasingly popular and the size of the discount is going up. From l985
to l990 the average corporate discount rose from l8 percent off regular rates to
25 percent.

Yet despite this difficult environment, economy hotels are thriving. When
corporations began tightening expense account for lower level employees,
demand surged for rooms priced at $40 per night and under.

The low-end segment of the market was once characterised by seedy

independents offering run down facilities on roads along by passed inter state
high-ways. The big chains like Marriott, with lower growth in their traditional
markets, moved into the economy market segment and began upgrading its
image.

Marriott’s entry into the economy market is fairfield funs for $35 pernight. The
business traveller receives a king size or two double-size beds, a large work area,
free cable TV, and a bathroom with a separate vanity area so the traveller will not
fog up the mirror with steam from the shower. When guests check out a fairfield
Inns, they can rate their stay on two computers at either end of the reception desk.
Four questions popped up on the screen dealing with cleanliness service, value for
the price, and overall rating; the guest punches a key to indicate excellent poor
or average.
Employee bonuses are pegged in the rating.
a) Would you say that the data gathered at the two computers at the reception
desk was marketing research? Why?
b) What kind of market research information do you think Marriott gathered before
it developed the Fairfield Inns concept? Would it be applied or basic
research? Why?
c) Now that fairfield Inns are viable, ongoing operation, do you see the need
for other marketing information? If yes, give some examples.