Playa Dorada Tennis

Club
Expansion strategy

Paras jain | Jagrut Nemade | Shweta Verma | Swati Sitha

Capacity Planning
Define and get clear understanding of quantifying guest nights
- Number of invited guests and visitors to participate in
resort activities
- Number of guest-night is directly related to revenue
generated
- Benchmark to analyse and predict other variables
- Gives the clear image of capacity utilization of resort
Capacity Planning
Forecast the demand based on the capacity requirements and
user ratio

● Using regression analysis to forecast demand as court hours

used are dependent on guest nights.
● Time series predicted value of guest nights given.
● Regression fit = 80%
● Equation -
Y = -1724.34 + 20.98sqrt(guest-nights)
● Taking sqrt relation predicted the higher bracket values with
better fit { x and sqrt(x) had ~same R^2 }
 Scatter plot
&
Regression result
- Maximum utilization will be 92% (in
feb-08)
- Minimum utilization will be 18%( in
sept-07)
- As per the analysis no need of extra
court.
- From exhibit 2 : calculated court
capacity.( hours available)
- Number of courts required - 23
Economics of
Tennis Court To expand or not to expand?

Additions
Analysis of Exhibits
Exhibit 2 and 3, Table A: In spite of the fact that the utility has
been expanding, still the overall capacity utilization at present
is beneath 50%, however since the demand changes
according to season just as the time of day, it may be
reflective of a very high utilization rate per existing schedules.
The increase in overall demand for Nov, Dec and Jan is 140%
from 2005-06 to 2006-07.

Exhibit 4: The Net Profit by 18 courts is just $177,800 which

is insignificant in comparison to the sale of real estate. Thus,
revenue from courts shall not be a factor of consideration
while thinking about building new courts.
Scenario 1: Build more clay courts

Peak Demand = 140%

Capacity utilization = 50%

Excess Demand = 40%

Number of additional courts required = 18 x 40% = 7.2

Therefore 8 more courts are required.

Scenario 2: No expansion

Uncertainty in Demand as seasonal industry

Economic conditions may change

Only 50 % capacity is utilized

The first sector to be affected by economic change is real

estate hence any investment shall be always conservative

There is a scope to manipulate demand

Scenario 3: Convert hard courts to
clay courts
Only a single segment of youth who prefer hard courts will be
affected and it is not the target clientele of real estate sales.

It will cater to most variations in demands, since by

calculation 8 more courts will be needed.

Increase in conversions and maintenance assumed to be of

insignificant costs compared to long terms returns from real
estate.
 Douglas Hall should not expand to
build more courts as in current land
space, only 4 courts can be built and
the required number is 8.
Suggestion
Instead, pricing structure can be
Scenario 2 is preferred changed which is suggested in next
section. This shall suit both the
customers and the organisation.
Demand management strategies
Would you recommend some of the demand management
strategies perhaps using pricing methods?
- Price discrimination for day and night - less price for
customers at night (open courts in late night and early
morning by installing overhead lights)
- Pre- booking discount (before 3 days).
- Urgent booking - $5 extra charges.
- Organise Tennis competition in off season.
- Segmented pricing - students and guests
Thank you