Touramerica

TourAmerica is negotiating a master contract with Voyager Inn International (Bethesda) for hotel rooms during the 1995 tourist season. Issues under consideration include number of rooms during peak, mid-, and off-periods, room rates, breakfast prices, and the cost of ancillary services. While the hotel manager is evaluated on the basis of several criteria, including adjusted daily rates, occupancy rates, and food and beverage profitability, and is also provided with a utility scheme to facilitate trade-offs among the criteria, TourAmerica uses an effective cost per registrant (adjusted for intangibles). These two approaches provide an opportunity to contrast measurement schemes and to justify the use of utility functions. This case is a role-play exercise and must be used in conjunction with "Voyager Inn International" (UVA-QA-0463). Excerpt UVA-QA-0464 TourAmerica Karen Shepard, a TourAmerica contract negotiator, was reluctantly reviewing the Voyager Inn International folio in preparation for her negotiation with the general manager of the Bethesda property, Lionel Jackson. Because of its attractive price, Voyager Inn (Bethesda) had been one of TourAmerica's three primary hotels in the Washington area for the past several years. In recent years, however, holding the line on the price had proved to be increasingly difficult. Last year, Shepard had succeeded in avoiding price increases by arguing that the hotel needed substantial renovation and that many of TourAmerica's clients had complained about the levels of service provided by the hotel and its staff. Renovations were now complete, service levels had improved, and Jackson was expecting an opportunity to catch up. In particular, Jackson's proposal for 1995, submitted in response to Shepard's request for room commitments, sought substantial increases in room rates, breakfast charges, and luggage handling. Even though TourAmerica management recognized that some price accommodation was merited, Shepard knew that she was still under considerable pressure to hold the line on prices. TourAmerica For over 25 years, TourAmerica had led the field in budget tours to the United States. With offices in London, Madrid, Milan, Cairo, Sao Paulo, and Tokyo, TourAmerica had brought more than 320,000 visitors (couples, families, and retirees) in over 9,500 groups for guided tours of the United States. Each TourAmerica tour was guided by full-time travel professionals who coordinated every aspect of the trip (air, accommodations, meals, special events, and sightseeing experiences) to ensure that each tour was a memorable experience. TourAmerica's packages were custom designed to vary in their itineraries, features, and entertainments. Popular selections included cities such as New York, New Orleans, and San Francisco; national parks such as the Grand Canyon, Mount Rushmore, Yellowstone, and Yosemite; and Americana such as Disney parks, Graceland, and Las Vegas. The one feature common to almost all TourAmerica tours was an educational visit to Washington, D.C. . . .