Sheraton Essay

1258 Words Sep 12th, 2013 6 Pages

(Braithwaite) “I will give you my decision in about a week,” said Georges Villedary, directeur general of the Le Centre Sheraton, Montreal, as he put down the phone and looked pensively at the letter before him. The letter, dated March 15, 1994, was from Alitalia requesting a one-year contract for 40 room at $42 per night. In addition, the hotel would have to provide a crew allowance of $25,000 per day. Bills are to be paid within seven days of receipt of statement on a weekly basis. The problem facing Georges was a simple one: does he take Alitalia and fill the 40 rooms for 365 days at $42 or does he refuse the business and hope that he can sell the rooms at the full rack rate of $105.00? Last year he
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Other features of the hotel included a five-storey glassed-in atrium, a glass-enclosed year-round pool and a health club with gymnasium, sauna, whirlpool, and masseuse. There was indoor parking for 500 cars and boutiques and specialty shops on the promenade level. Other services included a multilingual staff, and audio-visual services. All meeting rooms had cable-TV outlets, audio-visual facilities, and telephone jacks.

Competition For airline crews, all hotels in the Montreal area were Sheraton’s competitors because airlines choose hotels based on price. Nevertheless, for Alitalia, the criteria for selecting a hotel were slightly different. They preferred four-star hotels located near shopping and entertainment facilities. Hence, the competition was limited to about 10 hotels located in the downtown area. Since all 10 hotels met the Alitalia criteria, the decision would be made on the basis of price and service. Georges was well aware that a number of his competitors had expressed interest in the Alitalia business. He was also aware that if he took the contract and satisfied the Alitalia crew, then he would have more negotiating power when the contract came up for renewal next year (i.e., the room rate could be increased). In the hotel business, it was always easier to renew existing room contracts than to

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