Triston Knous, owner of the Peaceful Rest Motor Lodge, must decide whether to make minor changes to grow the business independently or join a national motel chain, as the current operation is losing money. Remaining independent would take longer to become profitable but would allow Triston to keep all revenue. Joining Days Inn or Holiday Inn as a franchise would provide benefits like brand recognition and reservations but require fees and potential facility upgrades. After analyzing strengths, weaknesses, opportunities, and threats, the best option is remaining independent and investing in national brand marketing over time.

1. 2014
Texas A&M University –Commerce
MKT 521-MBA
Stephen Warren
[CASE ANALYSIS I:
PEACEFUL REST MOTOR
LODGE]

2. For the owner of the Peaceful Rest Motor Lodge—Triston Knous—it has been an
arduous task of growing his business beyond the initial startup stage and into the stage of
profitability. A lack of marketing the property as well as a lack of promoting the motel’s service
offerings, have led him to a crossroad–one that requires a crucial decision regarding the future of
the business—a decision for which its effects have long-term implications: to make minor
changes in the way he operates the motel or to give up his independence in which to join a
national motel chain. A decision must be made soon as his current operation is losing money.
Critical Issues
1. Implementation of E-commerce site: Seeking out ways in which to encourage “direct
bookings will be one of the most important parts of a marketing director’s job in 2014;” that
is, “travelers are increasingly taking their transactions online,” and a motel’s own website
“needs to become the most important avenue for bookings to gain the highest ROI” (Rauch,
2013).
2. Creation of a content marketing strategy: Rapidly losing value are traditional means of
advertising, with effective content marketing strategies filling the void: “Marketing’s new
mantra, ‘Brands must now act as publishers,’” has surfaced due to social media’s
communication characteristics (Rauch, 2013).
a) Penetration into target markets
Utilizing effective content marketing “drastically reduces investments in traditional paid
media,” thereby implementing such media tools “as blogs, social media, newsletters,
webinars, eBooks, photo or video sharing and shared media” in its place: “Simply put,
[companies] need to create and share content while engaging people if [they] want to be
recognized moving forward” (Rauch, 2013).
3. Customer Relationship Management (CRM)

3. 4. Monitoring Social Media & Blog Contents (Online Reviews): The ways in which
consumers make purchasing decisions have drastically changed; “with the advent of social
media and constant updates, image sharing and online peer recommendations,” it is no
surprise that “61 percent of customers read online reviews before making a purchase
decisions [and] …online consumer reviews are already the second most trusted source of
brand information and messaging, with 70 percent of global consumers” (Tagrin, 2014). The
value that reviews offer the consumer will only increase in weight going forward, and
businesses must devote more time and attention resolving issues and engaging such
customers—or face extinction. Currently, “only about 13 percent of small-business owners
actively invest in online reviews” (Tagrin, 2014).
5. Elimination of budget deficits: Effective content marketing decreases costs while increase
revenue over the long-term; thus, the combination reduces the budget deficit.
Strengths:
 Cost Structure—avoiding all unnecessary expenses of the full-service resort motels, price
is 40% below the full-service resort motels and comparable to the lowest-priced resort
area motels.
 Highly qualified workforce—Triston, the owner, has previous successes as a production
manager for large producer as well as management expertise within a large-scale
corporation.
 Family owned and operated from a customer centric angle; garnered from the owner’s
many years of traveling and staying at countless motels, of which gave him a definite
idea of what travelers look for in a motel, giving the motel a unique ability to think like
their customers.
 Recently completed 60-room motel with modern rooms with comfortable beds, fluffy
pillows, standard but modern bath facilities, and free cable TV.

4.  Good Reputation and positive reviews.
Weaknesses:
 Currently lacking strong contacts within the hospitality industry—consumer and
Business-to-Business.
 Decreases in revenue garnered, in part, from the socio-cultural marketing segments
strategy have fostered an environment of fewer resources with which to develop
strategies in new markets.
 Due to the lack of marketing expertise, the motel has been relying upon people to find the
motel as they travel towards the resort area upon exiting the interstate highway, as there
are no signs for the Peaceful Rest Motor Lodge until one have reached the motel
property.
 Presently lacking Brand Awareness—or “named brand” such as Days Inn or Holiday
Inn—of which many customers are familiar with and trust.
 Limited financial resources
 Currently lacking an online presence with which to engage in customer feedback and
respond to potential customers, in real time, managing the motel’s reputation, and to
respond to comments posted on online blogs as well as other websites, such as
TripAdvisor and Yelp.
 Currently lacking an E-commerce site, of which allows customers to search service
offerings, to make online reservations, checking room availability, and to make online
payments as well as viewable slideshows: pictures of the motel property and different
rooms offered, which would include rates and special promotional offerings. Further, it
is a venue that stores customer information, tracking customer characteristics and online
behavioral patterns using keywords and cookies, all managed within Google Analytics, in
which to track website pages visited, how long each customer viewed such pages,

5. bounce rates, and conversion rates, all of which is used to track the success or failure of
marketing campaigns.
Opportunities:
 Capture the attention of the high traffic of potential customers coming off the interstate
highway as they head towards the resort area, subsequently garnering a potential for high
rates of customer turnover.
 Changing customer tastes as “Millennials become the core customer within the hospitality
and travel industries over the next five to ten years” (Rauch, 2013).
 There will be a continued growth in demand for lodging in the coming years, due to the
rapidly expanding resort area, increasing the overall customer base.
 Opportunity to join a strategic alliance with a national motel chain—either Days Inn or
Holiday Inn—with a potential to increase overall bookings by 40%.
 Move into market segments offering the potential for greatly improved profits for which
Sixty-eight percent of visitors to the area have disposable income: young couples and
older couples without children; 87% with family incomes over $27,000
 Expectation of more international visitors
 “Average rates and occupancy levels in the U.S. are likely to increase over the
next few years, influenced by a very new market. ‘Leisure demand from abroad,
fueled in part by the new Discover America campaign, will stimulate a new
demand’ according to Arne Sorenson, President and CEO of Marriott Hotels &
Resorts.” (Rauch, 2013)
Threats:
 Increasing competition in the near future, given credence by constant rumors of more
motels planned for the area.

6.  Companies that create innovative technologies that garner the competitive advantage,
such as social/mobile applications.
 Some competitors have the ability of intercepting potential customers by offering
incentives, such as loyalty programs, which can potentially hinder expansion into new
marketing segments.
 Economic downturns could have negative impacts on consumer traveling habits, such as
scaling back the frequency of travel, shortening the duration of stay, or the possibility of
deciding to eliminate their travel all together.
Evaluation of Alternatives
By making minor changes in the operations of the motel, it is possible to turn around the
motel to where it can profitable without losing its independence; however, the time it would take
to do so would be greater than if the motel were to be franchised with either national chain.
However, joining Days Inn, which is growing rapidly and is willing to take on new franchises,
offers advantages as well. A major advantage is that it would not require a major capital
investment. The national chain is looking for lower priced motels, such as the Peaceful Rest
Motor Lodge. Further, joining Holiday Inn as a franchise would require some of the Peaceful
Rest Motor Lodge’s facilities to be upgraded, including adding a pool. Total new capital
investment would between $300,000 and $500,000, depending upon the type of upgrades
performed; however, once these upgrades are completed, room rates at the Peaceful Rest Motor
Lodge would garner $75 per day, an increase of $30 per day/per room. Although, these additions
do not guarantee such higher margins; that is, “hotel occupancy rates and room prices have
rebounded since the economic downturn, other revenues, particularly from meetings, restaurants
and other services, such as spa, golf and retail, are still depressed” (O'Neill & Mattila, 2006).
There are advantages to joining either chain, such as central reservation systems, national
name recognition, nationwide-toll-free reservation lines—of which produces about 40 percent of

7. all bookings in affiliated motels—as well as offering a website. Although, with little initial
capital, comparable features can be realized without giving up the motel’s independence or the
8% of every dollar; however, acquiring national name recognition as an independent motel
would take significant time and money to achieve.
There are differentiating factors between the two chains, however. Days Inn uses little
TV advertisements and less print advertisements than does Holiday Inn. Days Inn emphasizes
sales promotions. For example, in one campaign, “Blue Bonnet margarine users could exchange
proof-of-purchase seals for a free night’s stay,” of which the promotion “led to selling an
additional 10,000 rooms” (Perreault, Cannon, & McCarthy, 2014). Moreover, Days Inn operates
a September Days Club for travelers 50 years of age and older who receive such benefits as
discount rates and a quarterly travel magazine. However, joining either motel chain requires
sacrifices from the franchisee. Both firms charge 8% of gross room revenues, which works out to
be $8 out of every 5100 of gross room revenue in perpetuity. Further, franchise members must
agree to maintain their facilities and make repairs and improvements; thus, failure to do so would
result in the surrender of the franchise. Thus, monitoring compliance would require unannounced
visits from representatives of either Days Inn or Holiday Inn.
Support of Recommendations
Thus, taking into account all of the aforementioned factors, remaining independent is the best
scenario. Though it will take longer for higher revenues, remaining independent allows Triston
to keep 100% of gross room revenue rather than 92%, which such savings can be invested in
national brand marketing later down the road.

8. Works Cited
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O'Neill, J. W., & Mattila, A. S. (2006, May). Strategic Hotel Development and Positioning.
Cornell Hotel and Restaurant Administration Quarterly, 47(2), 146-154. Retrieved
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Perreault, W. D., Cannon, J. P., & McCarthy, E. J. (2014). Basic Marketing: A Marketing
Strategy Planning Approach (19th ed.). New York, New York, United States of America:
McGraw-Hill Irwin.
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http://online.wsj.com/news/articles/SB10001424127887324879504578597631652815320
Rauch, R. A. (2013, December 6). Top 10 Hospitality Industry Trends. Hospitalitynet. San
Diego, California, United States of America. Retrieved September 19, 2014, from
http://www.hospitalitynet.org/news/4063217.html
Tagrin, T. (2014, August 28). 5 Predictions About the Growing Power of Online Customer
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from http://www.entrepreneur.com/article/236891