The case revolves around the Regal Carnation Hotel, located in Guam. Partly narrated by
Steve McKenzie, he described his experience with the Regal Carnation Hotel. In his
description of the situation, the fime too” approach to hotel management led to poor
service, false representation, and a pricing plan that does not match the value of the hotel.
The hotel industry in Guam has important statistical information that will lead to an
effective analysis.
Over a period of years, Guam has experienced a boost to its tourism industry. The year
1967 was the beginning of that upward trend. that includes support from the United States.
However, the decline of the Japanese economy in the 1900’s and onward severely
damaged the economy of Guam. How many of us can attest to looking up a product or
service online, seeing its respective pictures, only to find out that the actual product is
dissimilar to the original picture? The excess room inventory in the hotel industry paired
with the decline in the general tourism of Guam could only lead to failure. In other words,
supply greatly outnumbered demand. Additionally, applying a fiMe-too” approach to hotel
operations in such conditions can have limited success. Research has shown that piggy
backing on others in the industry can often lead to failure, because companies employing
this tactic rarely see the need to differentiate with a product or service. It can be assumed
that a fime too” company’s sole intention is to capitalize on the success of another
company and the upward trend of a fad. McKenzie clearly observed and often commented
on the issues he saw, like the unkempt meeting room and aged furniture. This brings out
another aspect of a fime too” company in that usually those who employ this tactic place
reinvestment in a lower priority. Could the Regal Carnation benefit from a shift in focus?
We find that the use of our gut when making decisions can have a positive effect. In
contrast, the McKenzie’s failed to follow their gut instincts when they decided on the
Regal Carnation Hotel.
We believe when the McKenzie’s decided to choose a hotel, they did not do a thorough
research and follow-up. The situation becomes more complicated by the fact that the
vacation choice was practically located in a foreign despite Guam being a United States
territory. In the beginning process of making their arrangements, there were several
situations where the McKenzie’s failed to use their gut instincts. The McKenzie’s relied
too much on the hotel’s website and failed to follow through to verify the validity of the
information on the website.
When considering one’s gut intuition, there are certain cues that can be picked up on to
hint at if there is a problem. For the sake of this analysis we equate cues with fired flags”.
One such red flag is related to how it took too long to confirm the price and room
availability. Mr. McKenzie’s uncomfortable reaction illustrates that he recognized a red
flag. The hotel’s mixed reviews can be seen as a second red flag that supported his gut
instincts to not do business with the hotel. Last but certainly not least is the fact that the
Regal Carnation required a one hundred percent non-refundable reservation fee.
Taking into account some of the practices of the Regal Carnation Hotel we thought certain
questions could clarify the situation. One question that stood out was fiWhy would a hotel
ask for such a fee if the value of the hotel matched the value depicted on their website?”
When a hotel wants all monies up front with no possibility of a refund; as is the case with
the Regal Carnation hotel, aren’t they sending a symbolic message to the potential
customer that would carry on the appearance of bait-and-switch? In this situation the
potential customer generally would have no way to verify if the price is worth the value of
the hotel. At the point of purchase, the customer is locked in to stay so once they arrive at
the hotel, whether they choose to stay at another hotel or not, Regal Carnation has made
the sale.
The second question we posed is what successful hotel would require a one hundred
percent non-refundable fee? Mr. McKenzie was immediately uncomfortable with the
policy of the hotel. In his line of business, he knew that a successful company would not
follow this procedure, when booking a customer’s reservation.
Our second question was fiDid the Regal Carnation always misrepresent itself on the
website and was this intentional.” Looking at the case, it states that the tourism industry
was in its maturity state by 2007. During this time hotels were running elaborate
campaigns to make their hotels and business stand out. But with the declining pool of
tourists, there was less profit to be made and as a result less money to reinvest into the
hotel. It is no surprise then; that given time and diminished incentive to reinvest, that the
website told a different story than reality. If the McKenzie’s would have researched a little
more, followed-up on their gut intuitions about the Regal Carnation, and considered how it
fits in with Guam’s overall economy and history perhaps they would have realized the
fallacy of deciding upon value based solely on a website.
It is commonly believed that each product in business goes through what is called a
product life cycle. It can typically be divided into four distinctive categories. Simply put,
