Peer-graded Assignment: HOTEL IPSUM´S MARKETING STRATEGY

Market Analysis

There is growth in GDP of 10% annually and there is a very positive trend in the number of visitors to
Bogotà from other countries and from Colombia (both for leisure and for business). The demand for
hotel rooms had increased 67% in the last 5 years. During the same period, the offer has increased
89%, increasing pressure on room prices. The occupancy levels were maintained while average
pricing increased slightly overall.

Competitors Analysis

There is 4 competitors in terms of location (around Parque 93) and customer target segment
(business travelers).

- HOTEL ESTELAR CALLE 93 - 5 star hotels with an average price of 260 $/night.
- CITÉ HOTEL - 5 star hotels with an average price of 240 $/night.
Best direct competitor. It is similar for business facilities but having more leisure elements like a
swimming pool at the terrace.
- HOTEL PAVILLON ROYAL - 5 star hotels with an average price of 199 $/night.
- HOTEL BH PARQUE 93 - 4 star hotels with an average price of 150 $/night.

Customer Analysis

61% of the customers are foreing clients and the 90% of clients travel for business reasons. Clients
are looking for luxury and comfortable rooms in a hotel next restaurant, bar and nightlife.
The average weekdays occupancy is 75% and on the weekends is 20%. The average stay is 2.2
nights and with July and December being lower and May and November higher occupancy months.

Internal Analysis

Elements of differentiation are a more affordable luxury, location, minimalistic, boutique hotel,
personalized service, sense of place.

SWOT Matrix

Strength : luxury with lower price, personalized service (few rooms) and minimalistic, boutique hotel
Weakness : less leisure elements and low customer rating in Tripadvisor.
Opportunities : demand is growing and no budget for marketing before
Tread : supply is growing

Marketing Strategy
Financial Objectives

The property was owned by a group of investors that have invested around US$14,400,000 in the
hotel and expected a return on their investment of 6%.
The financial objectives are to improve both sales and profitability in the short period, and the
expected EBITDA should be above US$864,000 annually.

Non-financial Objectives

The Non-financial objectives are to improve reputation in websites like TripAdvisor and increase
brand awareness through social media and improve the average occupancy rate from 58% to 71%.

Customer objectives

The Customer objectives is a mix of:

● Attracting new customers, focusing on national and international both leisure travelers
especially on the weekends and business travelers.
● Retaining existing customers both, corporate accounts and individual business travelers.

Strategic Objectives.

Positioning for Attracting new customers:

The target group here is national and international both leisure and business travelers . The point of
differentiation is offering a luxury service, a great location with a not really high price and giving them
some particular sightseeing (this would be an extra compared to the current situation).

Positioning for retaining new customers:

The target group is both corporate account and individual business travelers (both international and
locals) and the point of differentiation is not only offering a luxury service for their business with a
great location and minimalistic decor but also recreational activities for after work and weekends

Marketing Mix

Product
Hotel Ipsum is a modern, luxury 5 stars hotel offering 80 fully equipped rooms in the heart of Bogotá.
With a great location (around Parque 93) and a minimalist relaxing décor style, Hotel Ipsum offered
personalized services to its customers, who had at their disposal an extensive range of
comprehensive business facilities with high-level gastronomy.

The attributes that sets it apart from competitors are:

● A boutique hotel environment, difficult to find at other larger, more impersonal competitors.
● A better value for money due to a better price.
● An up-to-date technical business facilities, high speed Wi-Fi Internet connection and
conference facilities to hold business meetings.
● A better personalized service due to a lower number of rooms.

Price

The average price of the Hotel is $168, lower than 3 of 4 competitors. The current pricing policy was
flexible/adaptive to demand and all 80 rooms at Hotel Ipsum were identical, simplifying pricing
structure.

The new Pricing Strategy should be:

● Reducing the price during weekends in order to attract new leisure travelers (same price as
BH Parque since we got a better customer`s rating)
● Increasing slightly the price during weekdays in order to increase profits (same price as
Royal P since we got a better functionally and a lower price) from business travelers
● Offering a special price to retain customers

Distribution

Hotel Ipsum has basically been selling directly through its own reservation system (a majority being
direct sales with no distribution channel involved.) The only external channel they have been using
are some local travel agencies such as Aviatur.

New strategy:

● increase Direct Sales Force to attract new corporate clients and increase sales
● Online Travel Agencies to attract new leisure travels and increase sales
● Drop “Traditional” Travel Agencies" (too expensive and obsolete) to increase profits

Communication

Hotel Ipsum has never done a real marketing campaign and has had 0 marketing budget allocated.
The communication strategy is aimed to attract new customers.

Some of the new communication tools should be:

 ● Social Networking Marketing
● Online SEM Campaign
● Web Development
● Web Maintenance
● Public Relations Agency
● Print Media Campaign

Expected Results

This is an itemised budget listing the cost of recommended marketing activities (value in $).

● Social Networking Marketing (part time community manager) 600 x 12 months = 6.800
● Online SEM Campaign (Minimum 3 months) 1.500 x 12 months = 18.000
● Web Development (outsourced including professional photograph) 7.000
● Web Maintenance (outsourced) $400 x 12 months = 4.800
● Public Relations Agency (Minimum 6 months) 1.200 x 12 months = 14.400
● Print Media Campaign (airline magazine, minimum 3 months) 2.300 x 4 months = 9.200
● Direct Sales Force (hiring a Junior salesperson) 900 x 12 months = 10.800
● Online Travel Agencies (25% commissions of sales) = 23.000

This is a Profit and Loss account prospect (Value in $)

● Gross sales.
3.512.000
● Selling cost.
98.000 (Channel Commissions)
1.390.000 (COGS)
1.050.000 (Fixed Costs)
● Net sales.
3.496.000
● Less: cost of sales.
- 2.538.000
● Gross margin.
974.000
● Marketing Budget. (3% of Gross Sales)
94.000 (see above)
● Net contribution................................................864.000

Also remember to include the metrics for the different aspects of the Marketing Strategy:
● Financial Objective: Sales 3.512.000 $ and Net contribution 864.000 $
● Non Financial Objective: Increasing of 5% of unique visitors in the web site (Brand
Awareness) and Increasing of 10% of Likes in Facebook, Twitter and Instagram (Brand
Preference).
● Customer Objective: Increasing of 10% of new clients (attraction) and increasing of 5% of
loyalty client (retention)
● Strategic Objective: None