You are Carlos Treviño Montemayor, the new general manager of the Hotel Gran Palacio Regio, a five-star business hotel in Monterrey. It is Monday 13 January 2025. At eight tomorrow morning your management committee expects you to decide where the first quarter of the rescue plan will concentrate.
The situation
The hotel has 312 rooms, a 1,800 m² convention centre, two restaurants, a rooftop bar and a spa. It takes in MXN 245 million a year and leaves a gross operating profit (GOP) of MXN 42 million, 17.1%, while the city's luxury business hotels run at 28% to 32%. The MXN 420 million mortgage requires MXN 68 million a year of debt service: GOP covers 61.8% and the owning family puts in about MXN 26 million every year. The board has given you sixty days to present a plan and makes MXN 18 million of investment conditional on its being credible.
The rooms. Occupancy has fallen from 78% in 2019 to 63%. The average rate sold, the ADR, is MXN 2,640, 30.5% below the published rate. Online agencies sell 22% of nights at 18% commission, and corporate contracts have sat at MXN 2,200 to 2,450 since 2021. RevPAR is MXN 1,663 against 2,043 for the three competitors. Reviews give 3.8 out of 5 against 4.4, with standard rooms not renovated for six years, and the city has 18% more rooms than before.
The kitchen. Food and beverage takes in MXN 62 million and spends MXN 71.4 million on direct costs: it loses MXN 9.4 million a year. Ingredients have risen 31% in two years and the department's staff cost well above the sector average. La Terraza, the fine-dining restaurant, is 81% full on Fridays and Saturdays and 34% full on weekdays.