The document discusses strategies to address falling room rates at Avari Ramada Hotel relative to its competitor Pearl Continental Hotel. It analyzes the hotel's clientele, existing pricing policies, facilities, and recent financial performance. Three options are proposed: 1) Raising all room rates by 10%, 2) Increasing rates for all customers except major corporate clients, 3) Introducing new rates between existing group and individual rates and adjusting select room prices. The third option of targeted pricing changes along with improved promotion is recommended to close the revenue gap with the competitor.

1. Pricing Hotel Rooms
Avari Ramada Hotel
BY
SILAMBARASAN P
PGPM FLEX (2017-19)

2. City Attraction : Monuments &
tombs
- The Lahore fort
- The Badshashi Mosque
- Shalimar Garden
- Jahangir’s Mousoleum
Shahrah-e-quaid-i-azam Mall
WHO WE ARE
• The Avari Ramada is a Five star hotel affiliated with the
Ramada Renaissance hotel chain.
• Mr. Byram Avari (Owner) took over the control of Ramada from
1984 (1978-1984 : contract to Hilton Management)
• The hotel is situated on the Mall ~ Heart of City
• Facing Zoological Gardens
• Between Alharma Arts council & WAPDA house
• Proximity to Provincial assembly
Rich architectural heritage
Lahore, Punjab province, Pakistan
• Tax free Industry Zone (30miles from Lahore) increased business
travel to the city ~ It was generally believe industrial sector
would experience an even larger growth
• The center of culture & learning has attracted tourists all
around the world
opportunity :

3. INTRODUCTION
Facilities in Avari Ramada
Total room :
190 nos
Function hall :
5 nos
Amenities
Room type Count
Suite 15
Junior Suite 12
Executive Suite 3
Presidential Suite 10
Studio room 150
10% Double bedroom,
Others are Single bedroom
Room type Count
Function room 4
Banquet hall –
Kohrshed Mahal
1
Swimming pool
Sauna
Massage parlor
Gymnasium
Stenographic
Secretarial services
Restaurant / Shopping :
Five Eating places / Coffee shop – Kims / Snack Bar -
Samovar Lounge / A barbecue - garden restaurant /
The Fort grill – garden restaurant / Pastry corner

4. BUSINESS REVIEW - RAMADA
• The Pearl Continental is the another five star hotel and threat to Ramada
• Pearl & Avari Ramada are the only Five star hotel in Lahore
Current competition
• New hotels were emerging in anticipation of the increased business activity at Lahore
• By 1992, The Sheraton hotel (Five star) & Holiday Inn would commence its operation
Future trend
Review : Dec’1988
• For the first time since operation, the average room rate had fallen below that of its main
competitor, Pearl continental hotel
Action plan : To develop a plan to remedy the situation before the beginning of new year
72%
94% 93%
71%
50%
65% 62% 63%
70%
79%
70%
80%
94% 92%
73%
52%
70%
50%
75%
68%
78% 80%
1020 1015 1051 1011 983 973 992 983 1007 1003
1000930
1009 991
955
896 899 889 873 893 902
1065
100
350
600
850
1100
0%
20%
40%
60%
80%
100%
120%
140%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
Avari Pearl Avari (88) Pearl (88)
Occupancyrate
Averageroomrate
Summer

5. AVARI CLIENTELE
• 61% of Business are coming from 2 category (VEBS, EBS)~Business people
31%
30%
11%
9%
7%
4%
3% 3%
2%
31%
61%
72%
81%
88%
92%
95% 98% 100%
0%
25%
50%
75%
100%
0%
5%
10%
15%
20%
25%
30%
35%
Volume
Executive
Business
Services
(VEBS)
Executive
Business
services (EBS)
Frequent
Individual
Traveler (FIT)
Special Airline Other Tour Summer
package
Conventions
Customer base
Tour
Business Walk-in
Others
1 2
3 4

6. PRICING POLICY - EXISTING
S.no Category Group
Rate
Discount Target people
Single Double
1
Individual Rate
(11%)
Rack Rate 1,806 1,986 FIT
Comercial Rate 1,641 1,821 10% Business client
Preferential Rate 1,478 1,658 20% Individual client
2
Contract Rate
(70%)
EBS & Group 1,165 1,345 30% Corporates
VEBS 1,020 1,200 40% Corporates
Special 725 800 45-60% Large companies
3
Garbage Rate
(10%)
Government officials 903 993 50% Pakistani government officials
Net Wholesale Rate 1,020-1,165 1,200-1,345 Tour agent (1500 night/yr.)
Journalists Rate 1,445 1,589 20% Journalists
Airline Rate 813 894 55% Crews of airlines
IATA Rate 903 993 50% Transit passengers
4
Suite
(2%)
Junior suite 3,300
Executive suite 5,500
Presidential suite 7,150
Bridal suite 1,986 complimentary
Extra person in suite 180
Floral decoration 500
5 Summer package (3%0 Rack Rate 903 1,050 50%
6 Others (4%) Others
At present, Avari uses several different types of price discrimination.
First degree price discrimination is based on customer.
• Bulk discounts to Corporate users
• Incentive discount to travel agents (Maximum 1,500 nights/year)
• Seasonal discount for Journalists, Airlines passengers, Government officials
The purpose of price discrimination is generally to capture the market’s consumer surplus
Create I Communicate I Capture I Deliver I Value I Target I Profit

7. PROMOTION & ADVERTISEMENT
Summer package (May~Sep) :
- 50% discount
- Book for Nine, Get 2 rooms free
- Complimentary breakfast
- 10% discount on meals
Current
promotion
Discount pricing
EBS & VEBS :
- Free bed tea during stay
- Free meals invite
- Upgrading to junior suite
E-mail to all hotel clients :
- Promotional leaflets
- Monthly Newsletter
Direct
Marketing
Consumer
promotion
Trade
promotion
Create I Communicate I Capture I Deliver I Value I Target I Profit

8. CURRENT SITUATION
The marketing manager has observed that Avari’s average room rate was falling below pearl’s
Major reasons for dip in revenue for Avari’s during Nov’1988 are :
- Occupancy rate for Avari is low in Nov’1988 (Especially in EBS & VEBS category) & high in Special rate
- Special rate has adverse effect on the average room rate (Average: 9% / Nov: 45%)
- The competitor Pearl has increased the room rent
- Less Brand value
Some of the strategies used to overcome the situation are :
1) To Raise the price of Rooms by 10 percent
2) Increase all rates other than the EBS & VEBS
3) Introduce another type of rate - Bridge gap between Group rate & Lease expensive
individual rate
90%
70%
80%
Nov'1987
(Hilton)
Nov'1988
(Avari)
Nov'1988
(Pearl)
8%
15% 15%
45%
5%
10%
2%
11%
30% 31%
9%
3% 7%
9%
FIT EBS VEBS Special Tour Airlines Others
Nov'88 Average

9. STRATEGIES ~ OPTION:1
To Raise the price of Rooms by 10 percent
- It is possible only if Ramada gets the same occupancy rate even after price increase
- 61% of existing business are from Business clients (EBS & VEBS). Hence It is impossible to
increase price for EBS & VEBS group since they are in ARC (Annual Rate Contract) with
hotel for a year
• EBS : Offered for corporates who takes 75 ~ 100 nights per year (Discount – 30%)
• VEBS : Offered for corporates who takes 200 nights per year (Discount – 40%)
- Flat increase will make business clients to look for alternate options.
- Flat increase is risky and it will not have any significant savings to the hotel – It may
further reduce the occupancy rate

10. STRATEGIES ~ OPTION:2
Increase all rates other than the EBS & VEBS
- The demand for EBS & VEBS are rising due to the recent formation of industry zone
(Tax free zone) and special attention to be given to maintain the EBS & VEBS clients
properly as they are the major source of income to the hotel
- There are only 39% of clients other than EBS & VEBS, Increasing others except EBS &
VEBS will have slight increase in revenue but not as per the expectation
- To give more Focus to get business clients (EBS & VEBS) from pearl to increase the
revenue of Ramada
- Hotel Management has to look for promotion and advertisement to improve the
brand value

11. STRATEGIES ~ OPTION:3
Introduce another type of rate - Bridge gap between Group rate &
Lease expensive individual rate
- When we compare the price of Avari rates with competitor, Current rate of Avari is
• High price for Single rooms (2.1% average)
• Low price for Double rooms (5.9% average)
Category Group / Discount
Avari
Pearl
(Competitor)
Difference
(Avari Vs. Pearl) Avari price compared to
competitor
Single Double Single Double Single Double
Individual Rate
(11%)
Rack Rate 1,806 1,986 1,786 2,086 1% -5% Single : 2.5% High
Double : 4.4% LowCommercial Rate (10%) 1,641 1,821 1,680 1,980 -2% -9%
Preferential Rate (20%) 1,478 1,658 1,350 1,650 9% 0%
Contract Rate
(70%)
EBS & Group (30%) 1,165 1,345 1,150 1,450 1% -8% Single : 1.6% High
Double : 8.1% LowVEBS (40%) 1,020 1,200 1,000 1,300 2% -8%
Special (45-60%) 725 800
Suite
(2%)
Junior suite 3,300 3,300
Same priceExecutive suite 5,500 5,500
Presidental suite 7,150 7,150
- Reduce the Single room rate by 2% and increase the occupancy rate
through branding & promotion to match the revenue gap
- Increase the double room rate by 6% (since the hotel has only 10% of
double rooms, it will not either increase the profit nor decrease the sales)

12. STRATEGIES ~ OPTION:3
- The average sale of Avari’s (including Room, Food, Beverage & Others)
§ Oct. : 10% high
§ Nov : -5% low
§ Dec : 31% high (Projected)
Category
Avari revenue (Rs '000) Monthly sales Comparison with Month average
Annual Month (Avg.) Oct Nov Dec Oct Nov Dec
Room 51,407 4,284 4,664 3,990 5,301 9% -6% 25%
Food 39,793 3,316 3,920 2,998 4,726 18% -8% 47%
Beverage 14,771 1,231 1,254 1,172 1,486 2% -5% 22%
Other 10,585 882 842 988 1,000 -5% 13% 12%
Total 1,16,556 9,713 10,680 9,148 12,513 10% -5% 31%
Increase
Revenue
New Corporate package(25%↓) with complimentary Breakfast
Price discrimination for Weekday & Weekend package
Bundling offers (Stay + Food)
Flat 30% discount on Food bill to EBS & VEBS
Flat 45% discount on Beverages to EBS & VEBS
- Rigorous promotion & advertisement in social media, Business magazines