49NL Year 1 Business assignment

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Decisions on prices and costs year 1

Check the page Year 1-2-3-4. During the years you have to take several decisions

  • On prices (five decisions)
  • On costs to be made (five other decisions)

Situation

On the page operating review you can see how the Emerald Forest has been managed in the past.
The current circumstances are different and unique though, you have just developed a new hotel concept and are in the midst of establishing its business and bringing its brand alive in the market under your new chosen strategy.

Now, you get to choose the prices (five of them) which will bring revenues and the costs based on five specific choices. You will make all these decisions now for this year. After seeing the results from this year, you will eventually get to take further decisions (“new amounts”) in the years 2 and 3 respectively.

Your Team makes new decisions regarding year 1 in your Team File

Tab year 1-2-3-4 in your Team File. Just an example of the 5 decisions on prices. The same goes for decisions on costs. The 'active' year will be 'yellow', a year which has passed will be greyed-out. Mouse over in row B gives you more info on the decision. You will also get an alert if the input is not okay. Be sure to explain in depth, with sources! and arguments and preferably calculations.

Goal

Making decisions on (5) sales pries and (5) new costs groups that are in alignment with your new strategy and your new customer segment(s) and its evolving behavior.

Regarding the costs: all of the five cost groups have not been previously used: so all of these “new” costs (Team decisions) will be additional to a pre-determined fixed and variable costs from which you can begin to manage. In the end, the idea is that you focus on executing your strategy while positioning your hotel to drive and sustain business growth and profitability in the long run. So, keep your professional hat on managing a good balance between prices and its related total costs (incl. new costs). You have no grip on the fixed and variable costs, they are linked automatically to your occupancy rate.

Deliverable

Fill out all of the ten decisions in your Team File. The page Decisions give you all the details and 'boundaries'.
The most important thing is the arguments you give in your Team File, underneath every decision. Why did you choose them?

Try to find benchmarks, put URL or links in, make basic calculations, try to predict the outcome of your decisions.
Particularly, when you are looking at costs as these will be incremental:

  • Exactly what are you going to spend the money on? and,
  • What do you think it will bring your hotel? Be concrete, also share your calculations if and when necessary.

This is the first year, so you will have to envision and support the type of costs that would enable you to drive and sustain growth and profitability while learning from the market responses.

Assessed elements

  • Are all choices made and within the boundaries set?
  • Is there a clear link to the strategy?
  • Are the arguments valid?
  • Is it clear what the costs are spent on exactly?
  • Are there basic calculations done to show the effect of the choices at each choice?

• Is there a link to new business insights that you can support? • If there is a link to prior experiences, if so, why?

Help Files


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