Sales and Revenue Management

2016-2017

Level 7

44-7730-00S

Sheffield Business School

Module Leader - Natalie Haynes

CASE STUDY SUPPORT MATERIALS

Contents

1. Hotel Description and Background

2. Local Area Information

3. Background on New Competitor Opening

4. Nashville Hospitality and Tourism Statistics

Important note for students - please note that this is support material for assessment tasks 1 and 2 for this module. It is not exhaustive and we will expect you to do your own research in addition to this case study material.

Hotel Description and Background - The Nashville Airport Hotel

As a premier, independent hotel near the Nashville Airport (BNA), the Nashville Airport Hotel caters to guests looking for convenience and stress-free travel. Located minutes away from top attractions like the Grand Ole Opry, Country Music Hall of Fame and Nissan Stadium (formerly LP Field), this Nashville airport hotel reflects the unique charm of Music City. Retreat to one of 380 modern rooms or 12 suites with contemporary furnishings, and then stop by our newly updated health club complete with state-of-the-art equipment and an indoor/outdoor pool and whirlpool. The outdoor pool is season dependent. Visitors can indulge in a delicious menu and cheer on their favourite team at Champions, the on-site restaurant and sports bar. Our Nashville airport hotel boasts over 25,000 square feet of renovated event space, conveniently located on one level. Celebrate a social event or hold a meeting in the elegant ballroom which seats up to 900. Serving the business and leisure traveller, this Nashville hotel near the airport provides comfort, convenience and easy access to all that Music City has to offer.

All hotel bedrooms included 32" flat screen TVs, luxurious down bedding and granite features in the bathrooms. Free high-speed internet is also available for all guests. The hotel is also set in 16 acres of beautiful landscaped gardens.

Breakfast can be taken daily in the form of an American buffet from 15.95 USD or a continental breakfast starts at 13.95 USD. The hotel restaurant is called Champions and serves American style food in a Nashville-theme sports bar and restaurant. Lunch is also served in Champions. Dress code is casual.Champions Sports Bar is one of the most fun and lively sports bars in Nashville! Located inside the Nashville Airport Marriott hotel, Champions features nightly sports games on numerous flat-screen televisions and a delicious menu. From halibut with crab vinaigrette and grilled bone-in ribeye steak to chicken wings and hamburgers, we have it all. As one of the premier Nashville sports bars, everything at Champions is Nashville-themed, making this an ideal place to watch a game and celebrate with friends.

The hotel also has its very own Starbucks! Choose your favourite Starbucks beverage, variety of soft drinks, pastries and snacks.

Please see the map on the next page for the location of the hotel in relation to the airport. Nashville International provides nonstop service to more than 50 markets. See all markets on the map below: With more than 12.2 million passengers visiting each year, Nashville International Airport (BNA) is the fourth fastest growing airport among the top 50 airports in North America. BNA serves 440 flights daily in more than 50 nonstop markets. It is now the 33rd busiest airport in the U.S.

Nashville Direct Flight Locations

Local Area Information - Nashville

Statistics and Demographics

History

  • Nashville was settled on Christmas Day in 1779, and Tennessee became a state in 1796.
  • Nashville became the Tennessee state capital from 1812-1815 and then permanently in 1843.

Statistics

  • Elevation: 550 feet (168 meters) at the lowest point; 1,100 feet (336 meters) at the highest point of the rim around the Nashville basin
  • Time: Central Standard (CST) early November – mid-March; Central Daylight (CDT): mid-March – November.
  • Nashville has the second largest land mass in the nation, totaling 533 square miles.
  • Metropolitan Statistical Area (MSA) is comprised of 14 counties: Cannon, Cheatham, Davidson, Dickson, Hickman, Macon, Maury, Robertson, Rutherford, Smith, Sumner, Trousdale, Williamson, and Wilson.
  • Nashville/Davidson County has a metropolitan government based on a 1963 plan that has become a national model. The county is largely urbanized with extensive residential areas, and population growth continues to increase due to transportation advantages, labor supply, and development opportunities.
  • 2014 Population:
  • Nashville MSA = 1,792,649
  • Davidson County = 668,347
  • Downtown Nashville Residential Population Growth (based on new units added downtown):
    2006 Residents: 2,280
    2007 Residents: 3,219
    2008 Residents: 4,142
    2009 Residents: 4,986
    2010 Residents: 5,155
    2011 Residents: 5,754
    2012 Residents: 6,320
    2013 Residents: 7,286
    2014 Residents: 8,736 (expected)
  • 2013 Median Nashville Household Income: $49,906
  • 2014 Nashville MSA Unemployment Rate: 5.4%

Business Climate
Major industries in Nashville include: Automobile Production, Finance, Health Care Management, Higher Education, Insurance, Music Production, Printing & Publishing, Technology Manufacturing, and Tourism.
Industry breakdown:

  • Education & Health Services = 23.3%
  • Trade, Transportation & Utilities = 19.6%
  • Professional & Business Services = 11.1%
  • Leisure & Hospitality = 10.7%
  • Government = 10.0%
  • Manufacturing = 8.1%
  • Financial Activities 7.2%
  • Construction 6.4%
  • Information 3.6%

Source: US Census Bureau, 2006-2010 American Community Survey

Major companies and facilities headquartered in Nashville:

  • AIM Healthcare Services Inc. (HQ)
  • American General Life & Accident Insurance/AIG (HG)
  • AmSurg (HQ)
  • ASCAP
  • Asurion (HQ)
  • AT&T
  • Back Yard Burgers (HQ)
  • BellSouth
  • Big Idea Inc. (HQ)
  • Broadcast Music Inc.- BMI (HQ)
  • Bridgestone/Firestone Americas (HQ)
  • Capitol Records
  • Caremark (HQ)
  • Caterpillar Financial (HQ)
  • CBRL Group Inc. (Cracker Barrel Old Country Stores and Logan’s Roadhouse) (HQ)
  • Central Parking Corp. (HQ)
  • Century II Staffing, Inc. (HQ)
  • Cigna Government Services
  • CLARCOR (HQ)
  • ClientLogic Corp. (HQ)
  • CNA Insurance (Life & Long-term Care HQ)
  • Cokesbury (HQ)
  • Community Health Systems Inc. (HQ)
  • Corrections Corporation of America (HQ)
  • Country Music Association (HQ)
  • Country Music Television (HQ)
  • Cumberland Swan Holdings Inc. (HQ)
  • Cumberland Pharmaceuticals (HQ)
  • Doane Pet Care Co. (HQ)
  • Dell Computer Corporation
  • Dollar General Corp. (HQ)
  • DSI Renal (HQ)
  • Emdeon
  • Firestone Tire and Rubber Company (HQ)
  • Genesco Inc. (HQ)
  • Gibson Guitar Corp./Baldwin Pianos (HQ)
  • Gideons International (HQ)
  • Great American Country
  • Griffin Technology (HQ)
  • HCA (HQ)
  • Healthways (HQ)
  • Ingram Industries Inc. (HQ)
  • Jackson National Life (HQ)
  • Jonas Brothers Construction Co. (HQ)
  • Keystone Education & Youth Services (HQ)
  • Lifeway Christian Resources (HQ)
  • Louisiana Pacific (HQ)
  • Mars Petcare (HQ)
  • Nashville Wire Products Manufacturing Co. Inc. (HQ)
  • National Federation of Independent Businesses (HQ)
  • National Healthcare Corp. (HQ)
  • Nissan Motor Manufacturing USA (HQ)
  • O’Charley’s Inc. (HS)
  • Ozburn-Hessey Logistics (HQ)
  • Quanta Computer
  • Pinnacle Financial (HQ)
  • Primus Automotive Financial Services (HQ)
  • Purity Diaries (HQ)
  • Randall House Publications (HQ)
  • Renal Care Group (HQ)
  • Ryman Hospitality Properties (HQ)
  • Saint Thomas Health (HQ)
  • Services Corporation Central Parking (HQ)
  • ServiceSource
  • Shoney’s Inc. (HQ)
  • Star Transportation Inc. (HQ)
  • State Farm Insurance
  • Tennsco Corp. (HQ)
  • Thomas Nelson Inc. (HQ)
  • Tractor Supply Co. (HQ)
  • TRG Customer Solutions
  • United Methodist Publishing House (HQ)
  • Universal Music (HQ)
  • Vanguard Health Systems (HQ)
  • Verizon Wireless
  • Willis North America (HQ)

Cost of Living
Nashville consistently ranks among the lowest for cost-of-living in comparable cities across the nation, ranking more cost-efficient than Atlanta, Austin, Tampa, and Cleveland. The overall cost of living is 12.4% less than the national average. All components (groceries, housing, utilities, etc.) of cost-of-living are typically below the national average.

Transportation

  • Air — The Nashville International Airport has 11 airlines serving 89 markets and sees 380 daily airport arrivals and departures. The following is a list of the airlines with gates at the Nashville Airport: Air Canada, American, American Eagle, Delta, Frontier, Southwest Airlines®, United, US Airways, Seaport, Aeromexico, and Miami Air International.
  • Road — Nashville is intersected by three major interstate highways: I-40, I-24, and I-65. I-440 is an inner beltway circling the city, and I-840 is a Southern outer beltway between I-40E and I-24E and between 1-24E and I-65S.
  • Rail — The Music City Star Rail opened its East Corridor route in late 2005. With service Monday through Friday, three daily morning and afternoon trains connect Donelson, Hermitage, Mt. Juliet, and Lebanon to downtown Nashville. The East Corridor route covers 32 miles and service between stops peaks at 60 miles per hour.

Hospitality Industry

  • 57,400 jobs are directly related to the hospitality industry.
  • Nashville hosted more than 13.5 million visitors in 2015 resulting in more than $5.4 billion in direct visitor spending.
  • Nashville has 27,100 hotel rooms in the city and 39,700 in Nashville MSA.
  • Gaylord Opryland® Resort & Convention Center is now the largest non-gaming hotel property in the United States with 2,881 rooms and 288,999 square feet of exhibit space.
  • The Music City Center, Nashville’s new downtown convention facility, opened in May 2013. The 1.2 million-square-foot Music City Center features more than 375,000 square feet of exhibit space, 128,000 square feet of meeting space, two ballrooms, a business center, and a 2,500-seat theater.

Average Weather/Climate
Nashville typically enjoys a mild and pleasant climate with only a few days of the year having either very hot or very cold conditions. Most of the city’s rain is confined to the spring months, but a shower throughout the year is not unusual.
Spring is a delightful time in Middle Tennessee as the rolling hills are a lush, vibrant green. Because of the mild climate found here, many plants are well suited for the area including tulips, azaleas, irises, magnolias, and dogwoods. Days are warm while evenings can be chilly.
Summer is ablaze with many concert festivals in Music City. Several nights during the week have live outdoor concerts scattered around town. Midday can be very warm as the humidity tends to be higher in the summer months. Light clothing and sunscreen is recommended for the full season.
Fall is a celebrated time throughout Tennessee. Visitors come from all over to see the annual changing of the leaves in mid-October. Days are warm and pleasant. Evenings require a sweater or light jacket. Since the weather is changeable, layered clothing is a good idea to accommodate sunny days and cooler nights.
Winter is a great time to visit the city’s many attractions decked out in their holiday finery as Nashville truly shines throughout the winter with millions of twinkling lights. Although the climate is mild, winter temperatures do range from cool to cold. If a snowfall occurs, it is usually in January or February and is seldom heavy.

Background on New Competitor Opening

A developer plans two hotels by Nashville International Airport, one of which is the latest "boutique" brand to debut in what is the nation's hottest growth market for those in the hospitality business.

Demand for hotel rooms so far outstrips supply that hotel owners continue to bask in sizzling growth in room rates and the city's newfound national profile — both of which are demanding the attention of an array of hoteliers looking to pounce on the boom.

Increasingly, those hotel companies are aiming to make their mark with boutique concepts. There isn't a neat-and-tidy definition of 'boutique hotel.' They tend to be smaller but offer higher levels of service. The goal is to be stylish and achieve a "cool" factor, in part by trying to be unique with the services offered and/or artwork and other design features distinct to a particular city. The boutique hotels headed for downtown are expected to fetch some of the highest rates in the city.

In this case, we're talking about a roughly $18 million to $20 million development on Glastonbury Road, just off of Briley Parkway, east of downtown. One hotel will be 95-100 rooms under the flag Glo, which is the new boutique brand from Best Western Hotels & Resorts — showing that boutiques are so popular and on-trend now that they're not just pursued by high-end brands.

A second hotel planned on the same property, containing 100 rooms, will be an upper-midscale brand (think Comfort Inn, Hampton Inn, Holiday Inn, etc.).

The man behind both is Vishal "Victor" Banker, a hotel investor and developer who owns six hotels, three locally and three in Kentucky. Banker said he was drawn to the site for its proximity to the airport, Gaylord Opryland and downtown, which is about five miles away.

"The beauty of it is that you're in a central triangle of everything," Banker told me.

Banker said Glo (stylized as GLō) will charge daily rates starting at about $100. The hotel will include up to 3,000 square feet of meeting space, adding to the offerings in that area.

Banker said he is weighing financing offers from two banks, which he declined to identify. He said he expects to start construction on the Glo hotel in mid-June. Banker said he is in negotiations for the second hotel brand; he expects work on that hotel to begin in spring 2017.

Nashville Tourism and Hospitality Statistics (courtesy of Nashville Tourist Board

Hotel & Convention Performance

Hotel & Convention Performance
2008 / 2009 / 2010* / 2011 / 2012 / 2013 / 2014 / 2015
Hotel Occupancy Tax (5% local) / $25,611,084 / $22,026,626 / $20,970,507 / $26,246,146 / $29,206,742 / $33,503,743 / $41,568,995 / $47,523,412
State Sales Tax Rate / 7% / 7% / 7% / 7% / 7% / 7% / 7% / 7%
Local Sales Tax Rate / 2.25% / 2.25% / 2.25% / 2.25% / 2.25% / 2.25% / 2.25% / 2.25%
Hotel Occupancy Rate / 63% / 57% / 59% / 63% / 66% / 69% / 73% / 74%
Airline Deplanements / 4,703,477 / 4,454,289 / 4,534,462 / 4,796,077 / 4,878,501 / 4,748,770 / 5,518,203 / 5,842,120
Conventions Held / 342 / 357 / 288 / 406 / 419 / 537 / 610 / 638
Convention Delegates / 476,411 / 491,087 / 354,193 / 462,323 / 469,114 / 551,267 / 633,594 / 747,404
Hotel Rooms Sold / 5,526,803 / 5,080,592 / 4,985,412 / 5,626,326 / 6,023,309 / 6,429,423 / 6,935,329 / 7,098,791
*Flood in May 2010. Gaylord Opryland & Convention Center closed May-November.

Visitor Intercept Survey

Research Highlights from Visitor Intercept Surveys
2001 / 2007-08 / 2011-12 / 2015
Avg. Size of Party / 3.9 / 3.5 / 3.0 / 2.6
Avg. Length of Stay (# of nights) / 3.7 / 3.5 / 3.8 / 3.7
Avg. Spending per Party / $608 / $1,593* / $1,103 / $1,475
Avg. Spending per Person per Room Night / $42.13 / $130.04* / $96.73 / $153.35
Avg. Age of Visitor / n/a / 50.3 / 46.5 / 46.1
Avg. Income of Visitor / n/a / $91.6K / $81.8K / $92.1K
Nashville Met Expectations / 99% / 94%** / 96% / 96%
Likely to Return to Nashville / 72% / 92% / 92% / 94%
"Music City" Lives Up to its Name / n/a / n/a / 89% / 92%
No. of Live Music Venues Visited / n/a / n/a / 3.2 / 3.3
Sources of Info for Trip (internet) / 15% / 54% / 52% / 50%
Accommodations in Nashville
Hotel/Motel
Family/Friends
Home Rental
Other /
72%
20%
n/a
8% /
84%
11%
n/a
5% /
84%
12%
n/a
4% /
88%
6%
4%
2%
Number of Visits to Nashville (past 5 years)
First Visit
Repeat Visit /
58%
42% /
51%
49% /
61%
39% /
52%
48%
Primary Form of Transportation
Personal Vehicle
Commercial Airline
Rental Vehicle
Tour Bus
Other /
49%
36%
n/a
n/a
15% /
50%
36%
5%
5%
4% /
45%
41%
5%
5%
4% /
43%
39%
10%
4%
4%
Purpose of Visit
See Sights/Attractions/Events
Attend Conference/Business Meeting
Visit Family/Friends
Other /
n/a
n/a
n/a
n/a /
50%
26%
19%
5% /
48%
35%
14%
3% /
38%
45%
10%
7%

*Included Airfare in the spending averages. Airfare is not included in the following years.
**Only asked in first round of 2007-08 Intercept Survey.