Assessment Brief: Luzern Townhouse Hotel Case Study

The aim of this assessment is to explore the theoretical constructs and frameworks available to hospitality managers by interpreting key financial data from a hospitality business and to apply effective revenue management techniques to resources in this hospitality business. 

1.Critically appraise the elements that contribute to measuring business performance in hospitality enterprises. 

2.Critically evaluate processes involved in the management of revenue in hospitality enterprises. 

3.Design a revenue management strategy for a hospitality enterprise. 

The Luzern Townhouse Hotel Case Study

The Luzern Townhouse Hotel is a budget boutique hotel located in the proximity of the railway station and theatre in the Hirshchengraben area of Luzern. The hotel falls into the 3 star category with 60 well appointed and stylish, twin studio type rooms.  The property was converted from office buildings in 2010 and was acquired by its present owners 3 years ago. 

The hotel is open throughout the year and currently offers two tariffs on a per room basis: Monday to Thursday nights for primarily a business market and Friday to Sunday nights for a tourist market. The mixed market approach shows the guest mix as tourists 58%; business customers 37% and conference 5%.  The average length of stay is approximately 2.5 nights. The tariff and occupancy statistics are shown in Appendix 1.

The hotel operates a 50 cover French style brasserie and bar on the ground floor of the property, the brasserie benefits from a separate street level entrance and is popular with local residents as well as hotel guests. Whilst the brasserie operates independently of the hotel and has its own manager it also provides breakfast service for hotel guests as well as service of light snacks and drinks in the hotel lobby.

The hotel is currently managed by the owners.  They also employ a permanent team to service the rooms who are employed on a full and part time basis.  The owners have good relations with their staff and labour turnover is minimal. 

The hotel owners have recently purchased a 15 year lease on another office building for SFr 2,500,000 with the intention of converting it into a further 20 hotel studios, this property is adjacent to the hotel property. Both the hotel and the new acquisition are in a good state of decoration and repair and whilst the owners have limited financial resources at this stage, it is envisaged that a limited capital budget of SFr 1,500,000 will be available for refurbishment of the property.  The SFr 4 million development is to be funded by a SFr 2 million investment from the owners and a bank loan of SFr 2 million at 6% interest.

Assessed Learning Outcomes

The owners have employed you, a hotel school graduate, as assistant manager since their recent acquisition.  They have developed the hotel over the past three years and are happy with their current life style but believe their expertise is limited, in particular when considering the poor rooms performance of the past year, the need to expand the business and the implications of the acquisition of the new property. 

Prepare a report for the owners to advise them on the current and future financial situation of the hotel, the report should include the implications and possibilities through the acquisition of the new property and your proposals to improve room sales and profitability over the coming year 

An analysis and evaluation of the current financial and market position of The Luzern TownHouse Hotel. (800 – 1000 words)

Your evaluation should be in the form of a SWOT analysis and focus on:

(1) identifying any strengths and weaknesses the hotel accommodation operation has in its sales and market environment

(2) identifying any strengths and weaknesses from expected operating and financial bench marks for this type of hospitality operation and its location

(3) identifying any opportunities and threats by this new acquisition

1.An outline of a new revenue management strategy to include a pricing structure and room packages for The Luzern TownHouse Hotel.  (1500 – 2000 words)

This outline should focus on:

(1)  A review of current room rates

(2)  Increasing accommodation revenue through developing existing markets 

(3)  Identifying new accommodation markets e.g. conference and leisure

(4)  Other sources of possible revenue.

2.Present a budget proposal for the coming year 2019, the budget should be prepared by using and adapting the template used in the case study data file.

The proposal should include:

a.New sales forecasts incorporating any changes in demand that may be influenced by your pricing strategies outlined in response to question 1 of this case study.

b.An operating budget for 2019 incorporating any new cost targets that you have recommended through your SWOT analysis in response to question 1 of this case study.

c.A forecasted balance sheet of the business at 31 December 2019

3.The owners are considering taking over the restaurant once the current outsourcing arrangement ends. To support this strategy you should carry out an evaluation of the restaurant operation  using Menu Engineering techniques and propose to the owners a revenue management strategy.

a.Classify each dish according the menu engineering matrix

b.Make recommendations for alternative dishes / menus

c.Review the pricing strategy so as to maximise profit contribution for the brasserie.

d.Recommend a range of strategies for the brasserie to maximise cover turnover.

e.Recommend possible closer synergies with the hotel operation with the intention of increasing both hotel occupancy and revenue generation for the whole operation.

4.Using the budget you have prepared above, analyse and evaluate the data by using standard hospitality and business ratios and identify any strengths and weaknesses.