Sleepy Inn Motel Eng Huang bought Sleepy Inn Motel, a 60-room motel located at the edge of a small town about one-half mile off the interstate highway. Even though Sleepy Inn Motel is 10 miles from a tourist area, the only promotion near the motel is two large signs advertising the name of the area. Over the past two years that Eng has owned and operated Sleepy Inn Motel, its occupancy has been far below the average for other motels with his classification. Eng must make a strategic business decision about how to operate Sleepy Inn Motel.
Should he join a national chain such as Days Inn or Holiday Inn, or should he stay independent and make changes to Sleepy Inn Motel to make it more appealing to customers. Currently, Sleepy Inn Motel is able to offer motel rooms at a very modest price of $45 per night since the motel does not have amenities such as a pool, a restaurant, or a fitness center. After reviewing results from a study conducted by the tourist bureau, Huang began to seriously consider joining a national chain.
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The two he considered, Days Inn and Holiday Inn, both have advantages and disadvantages of joining their national chains. In order to attract more customers and stay protected from the increased competition, I believe that Eng Huang should join the Days Inn national motel chain. I believe that this option is the most reasonable option given the current state of Sleepy Inn Motel. First off, Days Inn would not require Huang to make a large capital investment. This is what Huang seems to prefer since Huang wanted to avoid direct competition with full-service motels.
If Huang joined forces with Holiday Inn, he would be required to upgrade his facilities and make a major capital investment. In order to increase customers and maintain lower lodging rates, Days Inn would be the fit for Sleepy Inn Motel. In addition, Huang would benefit from Days Inn central reservation system. According to the study conducted by the regional tourist bureau, 40 percent of visitors plan their vacations and reserve rooms more than 60 days in advance. Days Inn has toll-free reservation lines and offers a website for customers to reserve hotel rooms.
Since 40 percent of tourists in this area book their reservations before they travel, a toll-free reservation line and website are essential in earning these customers. Also, Days Inn uses sales promotions to increase its customer base. Since 13 percent of tourists to this area have family incomes of less than $27,000 per year, sales promotions will likely attract these families to the Days Inn. For example, the Days Inn had a sales promotion in which customers could bring in a Blue Bonnet margarine proof-of-purchase seal for a free night stay at the Days Inn.
Moreover, according to the tourist bureau study, 66 percent of the visitors stay more than three days in the area and at the same location. Having promotions such as the Blue Bonnet promotion attracts customers to the Days Inn, and in turn, could increase sales if the customers buy two additional nights. In addition, Days Inn offers membership programs such as its InnCentives loyalty club, Corporate Rate programs, Days Business Place hotels, and September Days Club. All in all, I believe that Eng Huang should make the strategic business decision to join with Days Inn in order to increase his customer base.
Days Inn is a well-known, national chain of motels that has many loyal customers. This seems to be the most appropriate option for Sleepy Inn Motel since it does not require a major capital investment from Huang. In addition, Huang would benefit from Days Inn’s online website as well as their toll-free reservation lines. Finally, Days Inn uses sales promotions that I believe would be successful in the area that Sleepy Inn is currently located. In conclusion, I believe that joining Days Inn would be the best option for Eng Huang in order to make the most of his investment.