Coral Divers Resort Case Study
In addition to rebranding Coral Reef Resort to target families, there would be additional capital improvement expenses. Cottage renovations would be nearly $50,000. The addition of a playground is estimated at $15,000. The wages expense to hire a chef could vary based on the quality and experience of the chef. However, making use of an existing facility such as the kitchen and dining room would add an additional stream of revenue and would help to offset the additional costs.
In my opinion is it unrealistic for the resort to be at 100% capacity on a regular basis. Therefore, if we look at realistic numbers using historical Coral Reef Resort data, we can reasonably predict a 90% capacity in the high season - an improvement over the current 70%. The revenue generated from this increase is approximately $100,000.
Another factor to consider in making this decision is whether Rascal’s is worth the 30% commission. The fees for families (i.e. more people per room, etc.) when compared to the operation expenses keep the profit margin the same with the added benefit of a unique identity in the …show more content…
They can help rebrand and market the resort driving up occupancy rates. While increasing profits through occupancy and additional revenue streams are a positive move, Greywell will still need to solve his issue of high debt in order to make the renovations needed. In addition, he should already be running the business efficiently and regularly seeking out ways to maintain a high level of efficiency.
I would not recommend that Greywell enter into the Adventure Diving segment of the business under the Coral Divers Resort name. The risks of injury are too high and an accident can have a very adverse effect on the business reputation. Also, in my opinion, a family business and an adventure business would serve different segments and have different branding messages. Having both under the same resort name will dilute the message and negatively impact the more profitable business segment. Instead, if Greywell feels passionate about pursuing the adventure business, I recommend he wait until his partnership with Rascals shows results and then begin a subsidiary or a separate business with its own branding that caters to the adventure diving market. This way, his businesses can feed each other and the marketing messages for each remain clear and