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The document discusses a case study involving a strategic decision for Irene and the Airotel Hotel to either become a franchisee of Comfort Inn or continue operating independently. Based on utility values from customer data, location is the most important factor for customers at 56%, followed by brand at 24% and price at 20%. As customers value location over brand, becoming a franchisee could upset existing customers who would pay 15% higher prices for a brand they don't highly value. It would be better for profits to continue operating as an independent Airotel Hotel.

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Surendra Walikar
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104 views1 page

Conjoint

The document discusses a case study involving a strategic decision for Irene and the Airotel Hotel to either become a franchisee of Comfort Inn or continue operating independently. Based on utility values from customer data, location is the most important factor for customers at 56%, followed by brand at 24% and price at 20%. As customers value location over brand, becoming a franchisee could upset existing customers who would pay 15% higher prices for a brand they don't highly value. It would be better for profits to continue operating as an independent Airotel Hotel.

Uploaded by

Surendra Walikar
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Airotel Hotels Case Assignment

Irene has to make a Strategic decision as to whether become a franchisee or continue the existing operations of the Airotel Hotel. From the data given in the case, we consider the utility values through which we attempt to find consumer preference for Branded Hotels. After we make the decision we will try to assess the profitability for Airotel hotel as a franchisee or the Hotel Operating on its own. The Utility value attached to the location is given as 2.67. This clearly means that customers, mainly tourists, attach a very high value to location of the hotel. This is because the major chunks of customers are tourists. They prefer quality hotels which are nearby the airport. The Utility value attached to Brand of the Hotel is 1.17. This value is moderately high. Repeat Customers often attach more utility value to brand. However comparing it with the Location value, it is low and clear indication that Customers would prefer ease of travel to the Hotel and not the Brand Value. The Utility value of Price is 0.94. We can infer that customers are price insensitive. This is because the Hotels are thronged mainly by tourists who do not mind the price. The Total Utility = 2.67+1.17+.94 = 4.78 The relative importance of Location is thus 2.67/4.78 = 56% Similarly relative importance of Brand and Price are 24% and 20%. Observations This relative importance clearly indicates that customers do not attach much importance to Brand. If Irene choses to become a franchisee, Existing Customers would be unhappy due to the fact that price has been increased by 15% and in return they get a Brand name which they do not value. Also Customers who give importance to Brand value may not prefer Airotel because they may have preference towards location. They might also use the Hotel reservation system of the Choice Hotels which may further hurt the profits of Airotel Hotels. Hence we cannot conclude that customers who attach importance to Brand turn to Airotel Hotels. Conclusion Irene should not accept the Comfort Inn offer and should work with the existing Airotel Hotel.

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