Case Study: Amber Inns, Inc.
Introduction
The Amber Inns & Suites, Inc. is a 250 property hotel chain in the western and Rocky Mountain states. Amber Inn & Suites, Inc. was established in 1979 and is made up of 250 hotel chain properties each consisting an average of 120 individual guest rooms or suite units. Amber Inn & Suites, Inc. can be found in locations among ten western and Rocky Mountain States with two hundred fifty different property hotel chains. On average, each property consists of one hundred twenty individual guest rooms or suite units. Amber Inn & Suites Inc. locates its properties on premium sites on major highways close to suburban industrial and office complexes, airports, and large regional shopping centers.
Industry Analysis
The U.S. hotel industry
recorded revenue of $113.7 billion and grossed $16.7 billion in pretax profit in 2004. As of December 31, 2004, there were 4.4 million hotel rooms in the United States. Approximately two-thirds of all U.S. hotel rooms were affiliated with a brand; the remaining one-third was independently owned and not brand-affiliated. Although companies such as Cendant Corporation, Marriott International, Inc., Hilton Hotels Corporation, Inter-Continental Hotel Group, and Choice Hotels International, Inc leads the industry in having the most hotel rooms in the United States, the...
Problem Delineation Fiscal year 2005 was projected to be the fifth consecutive unprofitable year for Amber Inn & Suites Inc. The company projected lodging revenues of $422.6 million for fiscal 2005 and a net loss of $15.7 million. The company’s new president and chief executive officer, Joseph James, wants an hour presentation that described (1) initiatives, expenditures, and outcomes for the past two fiscal years, and (2) planned initiatives and budgetary needs for fiscal 2006, starting June 1, 2005. Based on this direction, the V.P. of Sales and Marketing, Kelly Elizabeth, and the V.P. of Advertising, Catherine Grace, have to work together to decide on the proper allocation of their respective budgets. Mr. James announced that the company would use growth in Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) as a corporate performance measure. Also,
his goal for the company was to achieve a seven percent annual increase in the EBITDA over the next two fiscal years.
The Amber Inns & Suites, Inc. is a 250 property hotel chain in the western and Rocky Mountain states. Amber Inn & Suites, Inc. was established in 1979 and is made up of 250 hotel chain properties each consisting an average of 120 individual guest rooms or suite units. Amber Inn & Suites, Inc. can be found in locations among ten western and Rocky Mountain States with two hundred fifty different property hotel chains. On average, each property consists of one hundred twenty individual guest rooms or suite units. Amber Inn & Suites Inc. locates its properties on premium sites on major highways close to suburban industrial and office complexes, airports, and large regional shopping centers.
Industry Analysis
The U.S. hotel industry
recorded revenue of $113.7 billion and grossed $16.7 billion in pretax profit in 2004. As of December 31, 2004, there were 4.4 million hotel rooms in the United States. Approximately two-thirds of all U.S. hotel rooms were affiliated with a brand; the remaining one-third was independently owned and not brand-affiliated. Although companies such as Cendant Corporation, Marriott International, Inc., Hilton Hotels Corporation, Inter-Continental Hotel Group, and Choice Hotels International, Inc leads the industry in having the most hotel rooms in the United States, the...
Problem Delineation Fiscal year 2005 was projected to be the fifth consecutive unprofitable year for Amber Inn & Suites Inc. The company projected lodging revenues of $422.6 million for fiscal 2005 and a net loss of $15.7 million. The company’s new president and chief executive officer, Joseph James, wants an hour presentation that described (1) initiatives, expenditures, and outcomes for the past two fiscal years, and (2) planned initiatives and budgetary needs for fiscal 2006, starting June 1, 2005. Based on this direction, the V.P. of Sales and Marketing, Kelly Elizabeth, and the V.P. of Advertising, Catherine Grace, have to work together to decide on the proper allocation of their respective budgets. Mr. James announced that the company would use growth in Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) as a corporate performance measure. Also,
his goal for the company was to achieve a seven percent annual increase in the EBITDA over the next two fiscal years.