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LUX* Resorts & HotelsOptimal Room Mix Marketing Decision
By Team 8Master of Business Analytics
Data OptimizationCohort FiDi — Module B, 2019
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Context
Luxury hotel chainEBITA goal of € 38m from foreign guestsCSR projects of € 250k from local guests in Mauritius
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LUX* Resorts & Hotels
Description of Model for Room OptimizationObjective function: maximize EBITA
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Capacity per hotel per season95% maximum occupancy rateSeasonal room priceMinimum demand for foreign and domestic guests50% discount for domestic guests
Optimal Solution that meets EBITA/CSR requirement
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AMOUNT OF ROOMS FOR FOREIGNERS
Location Hotel Peak High Shoulder Shoulder Low Low
MAURITIUS A 5,124 15,233 18,498 11,011 7,031MAURITIUS B 3,995 11,876 14,420 6,984 3,381MAURITIUS C 5,179 15,397 18,697 11,130 7,106MAURITIUS D 6,061 18,018 21,879 13,024 8,316MAURITIUS E (pre-renovation) 1,995 2,898 12,032 0 0MAURITIUS E (post-renovation) 1,463 6,332 736 0 0CHINA F 415 2,738 1,901 1,382 1,098CHINA G 380 2,510 1,742 1,267 1,007REUNION H 3,402 10,046 12,271 7,148 4,844REUNION I 3,205 9,464 11,560 6,734 4,563MALDIVES J 5,179 15,215 18,673 11,248 6,977
95% 94.44% 92.46% 93.03% 90.96%Occupancy Rate:
EBITA: € 38, 885, 216 incl. € 250k CSR
Min. Avg. Occupancy Rate : 92%
Scenario planning depending on economic outlook
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Occupancy Rate : 95%
Bull Scenario
EBITA: € 39, 135, 217
No CSR budget
Bear Scenario
Occupancy Rate : 81%
EBITA: € 33, 133, 546
Undefined CSR budget
Optimal Scenario
Occupancy Rate : 92%
EBITA: € 38, 885, 216
CSR: € 250k
€ 6, 000, 000
Slow economic outlook contingency plan and recommendations
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§ Implement stringent cost-cutting programs & Six Sigma strategies in Mauritius to boost ARR by 5%§ € 1,043,000 increase
§ Increase Room Prices by 20% for our cheapest hotel in Reunion§ Even a 10% drop in demand would still translate
into 939,000 increase in revenue§ Room price would still be lower than other LUX*
hotels
1m
1m
Room mixARR 5%
20% Reu.
Target
Bull scenario loss mitigation, fiscal year 2016
~ € 2m
33m
39m
Deloitte 2019 | ICSA
CSR Project Selection to reflect LUX* values to build a sustainable CSR strategy
Mauritius is the most highly developed country in Africa in terms of HDI (0.79). Our CSR projects need to reflect local circumstances.
§ High educational attainment across genders
§ Low female labor force participation§ 32% lower than male participation
§ Significant private sector gender wage gap§ Women paid avg. 30% less than men
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Early Career Coaching
Female Entrepreneurship Programs
Micro Loans
UNDP | World Bank
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§ EBITA targets will be challenging to achieve, but feasible based on case data
§ Profits can be increased by increasing room prices in Reunion as well through cost-cutting for the hotels in Mauritius
§ An economic downturn would strongly affect the EBITA goals
§ Our CSR project tackles significant current challenges of Mauritius
Executive Summary
Thank you!Any questions?
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References
§ Deloitte. (2019). 2019 Travel and Hospitality Outlook. https://www2.deloitte.com/content/dam/Deloitte/nl/Documents/consumer-business/deloitte-cip-ths-
travel-hospitality-outlook-2019.pdf. Retrieved 9. MAR 2019.
§ Mahmoud S. Abou Kamar. (2014). Six-Sigma Application in the Hotel Industry: Is It Effective for Performance Improvement?. Research Journal of Management
Sciences. Vol. 3(12), 1-14, December (2014) . http://www.isca.in/IJMS/Archive/v3/i12/1.ISCA-RJMS-2014-096.pdf
§ National Tourism Administration. (2017). Five-star hotels have the highest occupancy rate in Q3 2016. Retrieved 7 March 2019, from
https://www.chinatravelnews.com/article/110397
§ UNDP. (2018). Human development indices and indicators: 2018 statistical update. (:Unav). https://doi.org/10.18356/9a42b856-en
§ World Bank. (2018, June 4). Country Overview: Mauritius [Text/HTML]. Retrieved 7 March 2019, from
http://www.worldbank.org/en/country/mauritius/overview
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