1. HOTEL SIMULATION Dogan Gursoy, Ph.D. dgursoy@wsu.edu
Dogan Gursoy, Ph.D.

2. WHAT IS HOTEL SIMULATION GAME?
Is a virtual management training game
Participants are divided into teams
Assigned the task of running 500-room hotels in a competitive virtual marketplace.
Each 500-room hotel competes against other 500-room hotels located in the same destination that are managed by other participants.

3. WHAT IS HOTEL SIMULATION GAME?
Just like in the real world, hotels compete against each other to attract customers from different market segments
to maximize their revenue and profit
to reach the financial and operational objectives set by the management team 

4. WHAT IS HOTEL SIMULATION GAME?
Demand and revenue for each hotel is determined by the operational decisions made by
the management team for their hotel
the management team of the competing hotels
the demand level set by the instructor
market conditions

5. WHAT IS HOTEL SIMULATION GAME?
Operational decisions include:
capital investments,
operating expenditures,
marketing expenditures
pricing strategies.
The external factors such as day of the week, demand patterns, etc. are also factored in the simulation.

6. MANAGERIAL ROLES AND RESPONSIBILITIES IN THE HOTEL SIMULATION

7. Directors and their Responsibilities
Director of Food and Beverage
Restaurants
Bars
Room Service
Banquet & Catering
Meeting Rooms
Entertainment
Courtesy
 Director of Rooms
Guest Rooms
Reservations
Guest Check in/Guest Check out
Concierge
Housekeeping
Maintenance and security
Building
Management/Sales Attention
Room allocation
General Manager
Responsible for everything
Director of Retail/Other operations
Spa
Fitness Center
Business Center
Golf Course
Other Recreation Facilities - Pools, game rooms, tennis courts, ect
 Director of Marketing
All Marketing decisions
 Revenue Manager
All pricing decisions

8. PERFORMANCE MEASURES USED IN THIS SIMULATION
Occupancy
Rooms Revenue
Total Revenue
Market Share based on Number of Rooms Sold  
Market Share based on Revenues
Revenue Per Available Room (REVPAR)
Average Daily Rate (ADR)  
Yield Management  
Operating Efficiency Ratio  
Profit Margin

9. Market Segments There are eight market segments Business
Small Business
Corporate contract
Families
Affluent Mature Travelers
International leisure travelers
Corporate/Business Meetings
Association Meetings

10. Market Segments Each of these segments has their own needs and wants
Students are expected to establish a strategy of which segment(s) to target
as primary, secondary or tertiary segments
make a set of decisions to entice each of those specific target market.

11. Importance of Hotel Attributes and Amenities for Association Meetings Segment
Importance of Hotel Attributes and Amenities for International Travelers Segment

12. Hotel Simulation
The challenge is to develop and implement a competitive business strategy that results in a competitive positioning in the marketplace and produces good financial performance as measured by market share, occupancy, RevPAR, ADR, total revenues, net operating earnings and net profits

13. HOTEL SIMULATION
At the beginning of each month (round of simulation), each hotel management team must first
determine their objectives
determine specific strategies
And then
take actions to accomplish those objectives

15. HOTEL SIMULATION Each decision period, students will
determine room allocations for each segment,
determine their marketing budget
establish room rates
determine capital and operating expenditure budgets.

18. Hotel Attributes and Amenities Decisions
Budgeting decisions on 20 attributes and amenities are made by
Director of Rooms
Director of Food and Beverage
Director of Retail/Other operations

19. Hotel Attributes and Amenities Decisions
Each manager makes the following decisions for the attributes and amenities they are responsible for
Capital investment decisions
Long term investments
Operating expenditure decisions
Allocation of the budget needed to operate the hotel in the upcoming business period
These decisions determines
Overall quality level of the hotel
Quality perception in each segment

21. Marketing decisions
Director of Marketing determines the labor and other operating expenditure budgets for
Advertising
Sales force
Promotions
Public relations
These marketing decisions are made for each segment

23. Room Rate Decisions
Revenue Manager sets the weekday and weekend room rates for each segment for each distribution channel
Direct
Travel Agent
Online Travel Agent (OTA)
Opaque
Cost of distribution varies by channel

25. Results and Reports The decisions come back with results of
how pleased/ displeased each segment is
quantified by
attribute scores,
occupancy percentage,
overall demand,
REVPAR
Profits, etc.
Hotel simulation will generate a total of 18 reports

29. Income Statement

34. QUALITY PERCEPTIONS
REPORT

36. Results and Reports
Results and all reports are made available to all management teams
so that they can see how their actions and their competitors’ actions impact the performance of their businesses.

37. Results and Reports
Just like in the real world, each management team must analyze
their previous months’ decisions and the outcomes of those decisions,
competitors’ actions and strategies in the previous months,
market and demand conditions for each segment

38. Results and Reports Students are expected to analyze the reports to:
determine where their weaknesses as an operating team lie (identify performance gaps),
identify why they have those weaknesses (causes of performance gaps), and
establish action plans that will solve their biggest problems (Business Action Plans).

39. Results and Reports
In order to be successful, decisions must be rational and logical based on thorough analysis of data from previous months and projections (forecast) for the future.

40. In other words…
Students are expected to go through a three step process
Identification of performance gaps
Identification of causes of those performance gaps
Determining action steps.
Managers develop solutions for the performance gaps utilizing the identified causes of those performance gaps.

41. Decisions for new round
After determining their business action plans, students will make their decisions for the upcoming month
Room allocation decisions
Capital and operating expenditure decisions
Marketing expenditure decisions
Pricing decisions
Results will show them if their decisions were effective in solving their problems.

42. Hotel Simulation No limit on the number of groups
No limit on the number of cycles
No limit on the number of classes
Very flexible
Instructor determines the demand (expected occupancy) levels
Students are allowed to borrow additional funds for capital improvements
Students compete against each other, not against the computer
Very easy to run

43. Questions????