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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