The Hotel Business Management Training Simulation is a virtual management training game where participants are divided into teams and assigned the task of running 500-room hotels in a competitive virtual marketplace. Each 500-room hotel competes against other 500-room hotels located in the same destination that are managed by other participants. Just like in the real world, hotels compete against each other to attract customers from their target markets that will generate the most revenue and enable the management team to reach their monthly and annual financial and operational objectives. The Hotel Business Management Training Simulation utilizes both operational decisions made by the management team for their hotel and operational decisions made by competing hotels to determine demand and revenue for each hotel. Operational decisions include, but are not limited to, capital investment, operating expenditures, marketing expenditures and pricing strategies. The external factors such as day of the week, demand patterns, etc. are also factored in the simulation. At the beginning of each month (round of simulation), the expected average market occupancy percentage for the month will be provided by the instructor. Based on this expected average market occupancy percentage, each hotel management team must determine their objectives and primary and secondary market segments from eight market segments included in the simulation. Afterwards, just like in the real world, the management team must make decisions relating to hotel operations, marketing, distribution, pricing, operational and capital investments, and financing to fund capital and operational expenditures. The challenge is to develop and implement a competitive business strategy that results in a competitive positioning in the marketplace and produces good financial performance as measured by market share, occupancy, RevPAR, ADR, total revenues, net operating earnings and net profits After making decisions for each month, results are made available to all management teams so that they can see how their actions and their competitors’ actions impact the performance of their businesses. Just like in the real world, each management team must analyze their previous months’ decisions and the outcomes of those decisions, competitors’ actions and strategies in the previous months, market and demand conditions for each segment before making their decisions. In order to be successful, decisions must be rational and logical based on thorough analysis of data from previous months and projections (forecast) for the future. The Hotel Business Management Training Simulation game provides invaluable training opportunities for managers and management trainees to improve their managerial and operational skills and efficiencies. It also provides great learning opportunities to students who are studying hospitality business management.

1. Dogan Gursoy, Ph.D.
dgursoy@wsu.edu
HOTEL SIMULATION
http://www.hotelsimulation.com/

2. WHAT IS HOTEL SIMULATION GAME?
• Is a virtual management training game
– Participants are divided into teams
– Assigned the task of running 500-room hotels in a
competitive virtual marketplace.
– Each 500-room hotel competes against other 500-
room hotels located in the same destination that
are managed by other participants.

3. • Just like in the real world, hotels compete
against each other to attract customers from
different market segments
– to maximize their revenue and profit
– to reach the financial and operational objectives
set by the management team
WHAT IS HOTEL SIMULATION GAME?

4. WHAT IS HOTEL SIMULATION GAME?
• Demand and revenue for each hotel is
determined by the operational decisions
made by
– the management team for their hotel
– the management team of the competing hotels
– the demand level set by the instructor
– market conditions

5. WHAT IS HOTEL SIMULATION GAME?
• Operational decisions include:
– capital investments,
– operating expenditures,
– marketing expenditures
– pricing strategies.
• The external factors such as day of the week,
demand patterns, etc. are also factored in the
simulation.

6. MANAGERIAL ROLES AND
RESPONSIBILITIES IN THE HOTEL
SIMULATION

7. Directors and their Responsibilities
• General Manager
– Responsible for everything
• Director of Retail/Other
operations
– Spa
– Fitness Center
– Business Center
– Golf Course
– Other Recreation Facilities
- Pools, game rooms,
tennis courts, ect
• Director of Marketing
– All Marketing decisions
• Revenue Manager
– All pricing decisions
• Director of Food and Beverage
– Restaurants
– Bars
– Room Service
– Banquet & Catering
– Meeting Rooms
– Entertainment
– Courtesy
• Director of Rooms
– Guest Rooms
– Reservations
– Guest Check in/Guest Check out
– Concierge
– Housekeeping
– Maintenance and security
– Building
– Management/Sales Attention
– Room allocation

8. PERFORMANCE MEASURES USED IN
THIS SIMULATION
• Occupancy
• Rooms Revenue
• Total Revenue
• Market Share based on Number of Rooms Sold
• Market Share based on Revenues
• Revenue Per Available Room (REVPAR)
• Average Daily Rate (ADR)
• Yield Management
• Operating Efficiency Ratio
• Profit Margin

9. Market Segments
• There are eight market segments
– Business
– Small Business
– Corporate contract
– Families
– Affluent Mature Travelers
– International leisure travelers
– Corporate/Business Meetings
– Association Meetings

10. Market Segments
• Each of these segments has their own needs
and wants
• Students are expected to establish a strategy
of which segment(s) to target
– as primary, secondary or tertiary segments
– make a set of decisions to entice each of those
specific target market.

11. Importance of Hotel Attributes and
Amenities for International Travelers
Segment
Importance of Hotel Attributes and
Amenities for Association Meetings
Segment

12. Hotel Simulation
• The challenge is to develop and implement a
competitive business strategy that results in a
competitive positioning in the marketplace
and produces good financial performance as
measured by market share, occupancy,
RevPAR, ADR, total revenues, net operating
earnings and net profits

13. HOTEL SIMULATION
• At the beginning of each month (round of
simulation), each hotel management team
must first
– determine their objectives
– determine specific strategies
• And then
– take actions to accomplish those objectives

15. HOTEL SIMULATION
• Each decision period, students will
– determine room allocations for each segment,
– determine their marketing budget
– establish room rates
– determine capital and operating expenditure
budgets.

18. Hotel Attributes and Amenities
Decisions
• Budgeting decisions on 20 attributes and
amenities are made by
– Director of Rooms
– Director of Food and Beverage
– Director of Retail/Other operations

19. Hotel Attributes and Amenities
Decisions
• Each manager makes the following decisions for
the attributes and amenities they are responsible
for
– Capital investment decisions
• Long term investments
– Operating expenditure decisions
• Allocation of the budget needed to operate the hotel in the
upcoming business period
• These decisions determines
– Overall quality level of the hotel
– Quality perception in each segment

21. Marketing decisions
• Director of Marketing determines the labor
and other operating expenditure budgets for
– Advertising
– Sales force
– Promotions
– Public relations
• These marketing decisions are made for each
segment

23. Room Rate Decisions
• Revenue Manager sets the weekday and
weekend room rates for each segment for
each distribution channel
– Direct
– Travel Agent
– Online Travel Agent (OTA)
– Opaque
• Cost of distribution varies by channel

25. Results and Reports
• The decisions come back with results of
– how pleased/ displeased each segment is
– quantified by
• attribute scores,
• occupancy percentage,
• overall demand,
• REVPAR
• Profits, etc.
• Hotel simulation will generate a total of 18
reports

29. Income Statement

34. QUALITY PERCEPTIONS
REPORT

36. Results and Reports
• Results and all reports are made available to
all management teams
– so that they can see how their actions and their
competitors’ actions impact the performance of
their businesses.

37. Results and Reports
• Just like in the real world, each management
team must analyze
– their previous months’ decisions and the
outcomes of those decisions,
– competitors’ actions and strategies in the previous
months,
– market and demand conditions for each segment

38. Results and Reports
• Students are expected to analyze the reports
to:
– determine where their weaknesses as an
operating team lie (identify performance gaps),
– identify why they have those weaknesses (causes
of performance gaps), and
– establish action plans that will solve their biggest
problems (Business Action Plans).

39. Results and Reports
• In order to be successful, decisions must be rational
and logical based on thorough analysis of data from
previous months and projections (forecast) for the
future.

40. In other words…
• Students are expected to go through a three
step process
1. Identification of performance gaps
2. Identification of causes of those performance
gaps
3. Determining action steps.
– Managers develop solutions for the performance
gaps utilizing the identified causes of those
performance gaps.

41. Decisions for new round
• After determining their business action plans,
students will make their decisions for the
upcoming month
– Room allocation decisions
– Capital and operating expenditure decisions
– Marketing expenditure decisions
– Pricing decisions
• Results will show them if their decisions were
effective in solving their problems.

42. Hotel Simulation
• No limit on the number of groups
• No limit on the number of cycles
• No limit on the number of classes
• Very flexible
– Instructor determines the demand (expected occupancy)
levels
– Students are allowed to borrow additional funds for capital
improvements
• Students compete against each other, not against the
computer
• Very easy to run

43. Questions????
dgursoy@wsu.edu