Avari Ramada: Pricing Hotel Rooms

AVARI RAMADA
PRICING HOTEL ROOMS
Group-6
Praveen Kumar
Parikshit Chaudhuri
Srinath Sundar
Ramkrishnan MA
INTRODUCTION
 Avari Ramada is a five star hotel in Lahore

 1944 : Founded by Dinshaw Avari
 Byram Avari is the current CEO of Avari Lahore Hotel
 Branches in Pakistan, Dubai and Toronto
 1978 : Avari Lahore started under the patronage of Hilton chain
of hotels
 1987 : After a lawsuit, Mr. Avari took over the management and
renamed it as Avari Lahore Ramada Renaissance Hotel.
FEATURES
 190 rooms including 15 suites
 12 junior suites
 Executive
 Bridal
 Presidential suites
 5 Food & Beverage outlets
 Coffee shop – Kim's
 Snack bar - Samovar lounge,
 Barbecue restaurant- Fort Grill
 Pastry corner
 Swimming pool
 4 function rooms (Business conventions, large dinners, Social occasions like weddings)
 Other facilities included Sauna, Massage parlour, Gymnasium
 Executive Business Centre
OCCUPANCY
The above bar chart represents the month-wise occupancy in percentage at

Pearl and Avari Ramada for the year 1988.
AVERAGE ROOM TARIFF
The above bar chart represents the month-wise average room tariff at Pearl and
Avari Ramada for the year 1988.
4P's MARKETING MIX
Product- Different Types of Rooms and Suites, Produc

F&B outlets, Function Rooms, Spa t
Price- Rack Rate, Commercial Rate,

Preferential Rate, EBS & Group Rate, VEBS
Rate, Special Rates
Price Marketing Place
Place- Strategic Location, Metropolitan City,
Tourist and Business Hub Mix
Promotion- Summer Packages, Mailing
Promotional Letters, Free bed tea and
meals(EBS&VEBS)
Promotio
n
CURRENT SITUATION
 Avari International took the control of Avari Ramada Renaissance

since Oct’1,1987 from Hilton Group of Hotels.
 Every year the target for the average room rate was increased by
10%.
 Bonus of marketing employees was based on Target
Achievement. So the Marketing team calculate the average room
rate and occupancy on daily basis
 Room Rates at the Avari were increased twice a year( Jan& June)
 Avari was constantly trying to expand its guest base and
emphasised on getting business accounts from Pearl.
CONCERN
 Average Room Rate had fallen below its competitor Pearl

Continental Hotel.
 Asst. Marketing Manager felt a need to revaluate the current
pricing policy before the beginning of the New Year.
SWOT ANALYSIS
STRENGTHS
PRICING STRATEGY
PRICING STRATEGY
INDIVIDUAL RATE CONTRACT RATE GARBAGE RATE
RACK COMMERCIA PREFERENT EBS & VEBS SPECIA GOV WHOLESA JOURNALI AIRLIN IATA
RATE L RATE IAL RATE GROUP RATE L RATE OFFICIALS LE RATE -STS E RATE RATE
RATE RATE RATE
S- S- S - 1478 S - 1165 S - 1020 S- 993 S - 903 S- 1444 S- 812 S - 903

D- 1092 D - 993 B/W EBS AND D- 1588 D- 893 D - 993
1806 1641 D - 1658 D - 1345 D - 1200
(45% of (50% of VEBS(BOTHS&D (20% OF (55% OF (50% of
D- D-
RR) RR) ) RR) RR) RR)
1986 1821
1. Ten percent hike in all room
price
Annual Occupancy Revenues under Novemeber November
Clientele 10% increase
for each room each department Occupancy Revenue
in November
Revenue
Frequent Individual Traveler (FIT) 11% 5654770 8% 319200 351120
Executive Business Service (EBS) 30% 15422100
30% 1197000 1316700
Volume Executive Business Service (VEBS) 31% 15936170
Tour 3% 1542210 5% 199500 219450

Special 9% 4626630 45% 1795500 1975050
Summer Package 3% 1542210
Conventions 2% 1028140
Airline 7% 3598490 10% 399000 438900
2056280
Other2 4% 2% 79800 87780
Annual Room Sales for the year 1988 51407000 3990000 4389000
Average room rate 1000 1100
2. Ten percent hike in all rates other
than EBS and VEBS
Annual 10% increase
Revenues under November November
Clientele Occupancy for except EBS and
each department Occupancy Revenue
each room VEBS
Frequent Individual Traveler (FIT) 11% 5654770 8% 319200 351120

Executive Business Service (EBS) 30% 15422100
30% 1197000 1197000
15936170
Volume Executive Business Service (VEBS) 31%
Tour 3% 1542210 5% 199500 219450
Special 9% 4626630 45% 1795500 1975050
Summer Package 3% 1542210
Conventions 2% 1028140
Airline 7% 3598490 10% 399000 438900
Other2 4% 2056280 2% 79800 87780
Annual Room Sales for the year 1988 51407000 3990000 4269300
Average room rate 1000 1070
3. Bridge the difference between the
group rate and least expensive individual
rate
This can be done by either reducing the least expensive individual rate(impacts
revenue and profitability) or increasing the group rate (which may cause customers
to sign with the competitor, Pearl)
 So this option is not feasible

Q1. Should Raza seek to increase the occupancy rate or
Average room rate? What are the trade-offs ? What factors
should he consider?
Raza should focus on increasing the occupancy rate in the immediate future and not just increasing
the occupancy alone but profitable occupancy.
Trade-offs
 Increase in advertisement and promotion (long run)
 Training and Hiring Manpower
 Increasing guest amenities leading to expenditure
Factors
 Demand and competition
 Brand Image
 Implementing Bundling Strategy
 Increasing Banquet Sales
Q2. What other Metric could/ should Raza use to evaluate the performance of his pricing structure ? Why?
Pricing strategy should be simplified not only by keeping client type but also room
type. It should be segmented in the right manner as per our below recommendations
for inviting more guests and increasing the occupancy.
Recommendations
 They should classify the rooms as basic , deluxe and superior. The rooms should be
charged according to their classification.
 Option of upgrading the room type by paying a little extra amount.
 Emphasis more on selling of function halls.
 Promoting Hotel Facilities to incoming guests so generate more revenue.
 Develop and promote more vacation packages during lean period.
RECOMMENDATIONS
 Avari should focus in strengthening of its brand image in the

customers mind.
 Avari Ramada should concentrate on the profit oriented approach
by increasing the occupancy rate
 They can also introduce bundling strategy.
 The hotel should also concentrate to generate more revenues
from the hotels F&B outlets, Spa, Gymnasium and Banquets.
 Create more promotional packages as the summer package to
attract more tourists.
SEGMENTATION
 Segment Marketing
Business
Walk Inn
Tour Groups
Others
 Local Marketing
Local People (Marriage, Parties, Events)
 Individual Marketing
Existing customers(Newsletters, leaflets, mailing list)
TARGETING
 Corporates
 Airline Crews
 Targeting Local and Domestic Tourists during lean period.
POSITIONING
 USP : Not turning away any potential guest(s)

SERVICES CHARACTERISTICS
Intangibility
 Hospitality
 Customer Relations
 Ambience
 Aroma
 Music
Variability
 F&B order and Service
 Housekeeping and Laundry
Inseparability
Anticipating and exceeding customer expectations
Perishability
Rooms can get perished if not booked or unoccupied, moreover, in long term
they may require structural changes.
Thank You 

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AVARI RAMADA

PRICING HOTEL ROOMS

 Avari Ramada is a five star hotel in Lahore

The above bar chart represents the month-wise occupancy in percentage at

Product- Different Types of Rooms and Suites, Produc

Price- Rack Rate, Commercial Rate,

 Avari International took the control of Avari Ramada Renaissance

 Average Room Rate had fallen below its competitor Pearl

INDIVIDUAL RATE CONTRACT RATE GARBAGE RATE

S- S- S - 1478 S - 1165 S - 1020 S- 993 S - 903 S- 1444 S- 812 S - 903

Tour 3% 1542210 5% 199500 219450

Frequent Individual Traveler (FIT) 11% 5654770 8% 319200 351120

Other2 4% 2056280 2% 79800 87780

 So this option is not feasible

 Avari should focus in strengthening of its brand image in the

 USP : Not turning away any potential guest(s)

Anticipating and exceeding customer expectations

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