Competition Problems (Exemplified Through Golden Shores Hotel)

In the capitalistic system that currently empowers the American financial system, there
are a plethora of positive attributes. Capitalism is an economic system characterized by private
or corporate ownership of capital goods, by investments that are determined by private decision,
and by prices, production, and the distribution of goods that are determined mainly by
competition in a free market (N/A Capitalism). Basically, capitalism is an economy where
private citizens are capable to create and maintain a business. The United States government is a
large supporter of capitalism. In fact, the United States believes in capitalism so much that we
have fought in over 25 wars (Southey Coups and), including the cold war, to share it with
the world. Unfortunately, like most everything, the good comes with the bad. There are a few
negatives with capitalism that can plague an economy or industry. Capitalism encourages
competition in the open market. Competition is one of the strongest driving force behind our
advancement as a society. Small business is the backbone behind that advancement, because the
creation of new products, or services, are most commonly conceived by individuals, not large
corporations. Capitalism is formatted so that small businesses can be created relatively simply.
This easier creation strengthens an economy. The problem occurs when capitalism allows for
large companies to mass product their product. Mass production lowers marginal cost. In turn,
larger companies are able to offer their product for less, because it cost them less to produce their
product. This isnt necessarily a bad thing, except for that these advantages that large companies
receive are leading to a market takeover by top fortune companies. In 2000, small businesses
accounted for 50.5% of the united states GDP. By 2010, that number fell to 44.7% (Kobe Small
Bus). A 5.8% decrease does not seem like an enormous problem, but 5.8% of 15 trillion
dollars is defiantly a more attention grabbing statistic. 870 billion dollars a year are being

embezzled from small businesses by large corporations. If the United States wants to protect its
economical backbone while keeping true to their capitalistic beliefs, they will need to rely on the
novelty of small business owners. This is the innovation that built this country and has faded
from modern small business.
One industry that has seen large corporate takeover is the hotel industry. Family owned
small business hotels are far and few between nowadays. Most small business hotels are facing
financial ruin, because larger chains are able to out price, out advertise, or out market their less
equipped counterparts. This paper is going to focus on a case study that exemplifies the struggles
experienced by a small business hotel while facing larger invasive competition. This family
owned small business is a hotel named Golden Shores. The American economy now relies on
small businesses to take action instead of closing their doors. In this example Golden Shores will
draw up several solutions to their specific scenario in an attempt to combat the problem of
competition.
Since 1935 the Rizzoti family has owned the Golden Shores hotel and resort in beautiful
southern Tennessee. We began as a small mom and pop four room hotel on Lake Cumberland.
Each room was decorated differently with a different theme, while still maintaining their own
unique homey feel. At that time there was The BlackBoard Room, The Lovers Room, The
Travelers Room and The Cottage Room. These unique rooms catapulted Golden Shores from an
idea to a fully functional business. Golden Shores did very well when it first started. In 1942,
Golden Shores was voted one of the finest hotels to visit for a weekend getaway.
In 1972 the Jamestown Marina was built (Jamestown About). Lake Cumberland is an
immense lake with light waves and no tide. These qualities in a lake allow for large boats to
maneuver easily through the water. Since Lake Cumberland presents such ideal conditions for

large boats, the Jamestown Marina naturally focused on renting house boats. In less than a year,
the house boats became so popular, the marina decided to expand. The Jamestown Marinas
success brought in oodles of new customers for Golden Shores. This fresh crop of customers
demand was to spend a single night at a hotel, before or after they started their vacation house
boating. This mandated Golden Shores to reevaluate its business plan. After contemplating
altering our business strategies, Golden Shores decided to build an additional building which
would add 100 more rooms. This addition was completed in 1973, and features 3 stories which
hold 100 15x20 rooms. This allowed us to have more economical pricing and to key in on the
new market of house boaters. This building cost us 4 million dollars to build after it was all
completed (Fixr Build a). The building was purchased with a 30 year mortgage, meaning it
has been paid off for just under 15 years now. Each room is equipped with 2 full beds, a pull out
couch, 2 arm chairs, a table and chairs, a TV with a stand, a medium sized refrigerator, and two
dressers (ThePointsGuy Top 12). These rooms dont necessarily represent the ideals that we
founded our hotel on, but it was a required action to remain profitable.
For the last eighty years Golden Shores has been the only place to stay if you are visiting
Lake Cumberland. This has remained true, up until today. On the other side of the lake, a large
hotel chain will be breaking ground. Their hotel will do sever damage to Golden Shores sales.
This large hotel company will be targeting customers that would otherwise be renting a room
with Golden Shores. We are not financially capable of taking the type of blow that splitting their
market would create if no action is taken. This happens way too often in todays free market
economy. Large chain companys force dwindling small businesses out of business by offering a
lower deal than the other small business can possibly afford. This drives the small business out of
business. Once the small business is gone, the chain companies can raise their prices to make up

for the difference. This time, it is happening to the Rizzoti family business the Golden Shores
Hotel.
Golden Shores current market plan is relatively small. Lake Cumberland is a rather large
lake that is popular for house boaters. When house boaters get sea sick, they head straight to a
hotel, and that is exactly where Golden Shores has been spending its current marketing budget
on. We have a poster on the bulletin board at the marina where family rent their house boats. We
also have a pamphlet that highlights the quality stay that Golden Shores offers. This has been
enough advertising in the past, but with a large chain moving in with a huge advertising budget,
this much may not be enough. We have a few posters that where drawn up a few years back.
There are three kinds of poster that were made. One that featured a woman looking out the
window of a hotel overlooking Lake Cumberland. It says For a Stay to Remember across the
bottom. The second is a man eating breakfast in our lounge, and it reads Comforts of Home.
The third and final poster is a picture of a person that is obviously not feeling well. It has Just
Incase scrolled across the bottom. These signs have digital copies made of them, and Golden
Shores owns the rights to use them.
Golden Shores selling point has always been a Quality Stay. We have found that using
the sales pitch of quality, we are able to charge more for our rooms. This gave use a higher profit
margin, but as the market for a quaint hotel that offers a Quality Stay decreases, so does
Golden Shores market. It has gotten to the point where Golden Shores has started to sell to a
niche market, and not the general customer. The Golden Shores hotel has sold to this market for
years. Even when we transitioned into the larger building, we maintained that ideal. The
competitions new slogan is Cheaper is better. The A cheap hotel technique will typically do

better in a drowning market than the A Quality Stay technique will. This eliminates the
possibility of Golden Shores sticking with its current slogan.
In the past years we have seen a decline in sales and in turn profits. With competition
that can and will offer rooms at a lower rate, which appeals to a larger target market, the Golden
Shores resort may be looking down the barrel of financial ruin. While Golden Shores remains
profitable, it will surely not continue once our competition moves in. We need to make some
executive decisions about the future direction of the company. Below are several options that
may be used to protect Golden Shores from the economical invasion of our target market, and
lake, by a large hotel chain.
Solution #1: To increase advertising/marketing
With having competition moving so close to Golden Shores, changing our target market
will be a shrewd plan of action for us so we have more of an advantage over our competition. We
will be focusing more on families with adding different entertainment to our hotel. It is important
to have a competitive edge with the other hotels so we will be able to bring in more business.
With adding different types entertainments, we will bring in more families because we will have
things to offer that the other hotels do not. We will be adding Jet Ski rentals so people can ride jet
skis throughout the lake nearby the hotel. The Jet Ski rentals will help to bring in a lot of money
since we can charge around $95 for half hour rides or $175 for a full hour ride. We will also be
having an instructor giving lessons for first time riders so everybody will be able to ride safely.
The jet skis will give us a competitive edge to the Jamestown Marina and their houseboats as
well as the new hotel across the lake. Many families are seeking physical activities to maintain a
healthy lifestyle. The addition of the jet skis will create an avenue for families to spend time

together outdoors while being active. The jet skis will attract a wide variety of customers seeking
alternative thrills that are not available at other local hotels.
Aside from the Jet Ski rentals, we will also be adding an indoor and outdoor themed
waterpark. Although we are located on Lake Cumberland, there are a number of boats and jet
skis out on the lake, making it hard to swim sometimes. The waterpark will have a real home
type of feel to it just as the rest of the hotel does. We will be reserving a part of the lake just for
the waterpark. We will be adding different slides to the lake for families to be able to enjoy some
fun in the sun, while we will also have the indoor waterpark for the colder months. The
waterparks will attract a lot more families because it will give us something more than just being
a hotel. Waterparks within the hotel industry have proven to be advantageous to the hotels profit
margins. While the businessman is having meetings in our conference rooms, his family can be
enjoying the waterpark on the beach. This could turn the everyday boring business trip into an
enjoyable family vacation. We will have different room packages for families who would enjoy
to buy wristbands for the waterpark. These packages will cost a little bit more than just the room
packages but it will help to bring in a lot of revenue. We will also offer day passes for families
that want to come visit the waterpark for just a day trip. So overall the waterpark will help to
bring in a lot of revenue by bringing in a lot of families.
We will also be adding an arcade where kids can go and play the classic arcade games
such as Pac-Man and pinball. We will also have a bunch of new games as well for people of all
ages. By having our state of the art arcade room with the highest quality arcade games will place
our hotel at the top of the list for the multigenerational craze that gaming has become. Gaming is
a worldwide phenomenon that is popular throughout many cultures and socioeconomic
backgrounds. We will have special tokens the families can buy for the games. We will sell tokens

four for one dollar. The families can receive tickets from playing a good majority of the games
and then they can turn the tickets in for prizes that will consist of different toys and candy for
small prizes and greater prizes for more tickets. The prizes will make a lot of the kids want to
play games and so the parents will buy the kids tokens. The arcade will bring in a lot of money
overall.
With changing our target market and adding all of these new activities, we will bring in a
lot more families to stay in our special family suites. The family suites will give corporations the
perfect opportunity to hold their business conventions at our hotel while also being able to spend
quality time with their families. Our family suites will have bunk beds for their kids to sleep in
and a separate room for the parents to stay in. Our family suites will cost a little bit more due to
the sizes of the rooms, but it will be well worth it for the kids. Having families as our main target
market, we will have a lot more opportunities to make more money..
Solution #2: To readdress our pricing and sales tactics
Another way to keep up with our competition will be to look at the other hotels prices.
This is going to be our most critical part of our marketing tactics, is insuring our prices remain
competitive based upon the offerings of other various hotels. Keeping our prices similar to other
hotels will give our customers the chance to see what works best for their families. Having sales
on certain rooms will help to attract more people because a lot of people dont prefer staying in
hotels since they are so expensive. So, if we lower our prices all together or have sales on certain
rooms, people will become more attracted to our hotel.
Another idea we have will be giving families cheaper upgrades when they buy rooms and
waterpark passes they could upgrade to the bigger room for an incredibly low price. It will be

easier for the families to stay in the family suits since they will have more room for their kids
and they will get it for cheaper. We will come up with a number of different package deals for
people that could include waterpark passes and room upgrades. We will contact our past guests
and offer them special coupons with reduced rates for rooms because they have stayed with us
before and we want to reward them for being a loyal customer. It will be a good way for us to get
some of our previous customers to come back again and stay with us.
Solution #3: To change our target market
Marketing is a huge difference maker when it comes to setting yourself apart from the
competition. Deals, specials, advertisements on web browsers and T.V. ads, among others are
crucial. For example, Disney has specials and deals all the time. The reason for this is that they
are trying to entice more people who may not be able to go because of money issues or things
along that line. According to the Disney website, there are 7 specials being offered right now,
they range from 25% off a hotel stay to discounts for U.S. military members (Disney.com). An
idea listed as a top tier strategy is to create a loyalty program (hyken.com). The idea for us
would be to virtually do the same exact thing except adding a loyalty rewards program. Of
course we are not the same as Disney but we would entice the customers with discounts on the
hotel stays, free tickets to shows nearby and possible entry into surrounding attractions based on
how often they return to us. The idea here is to continue offering specials to our existing and
returning customers, yet continuing to build a bigger customer base with deals and prizes people
cannot turn down. The way we can get the word out for our loyalty program is through
advertising. Advertising and marketing are essentially the key elements in a companys success
and one cannot be used without the other (streetdirectory.com). A great way for us to utilize the
advertising and marketing process is to really emphasize the fact that we are different than our

competitor due to the specialty of our program. The best places for us to advertise are on the
television due to the incredibly high amount of people that watch it and also internet ads. Virtual
tours can be used in addition to the internet ads. Douglas Aurand, who is a virtual tour creator for
multiple types of business says that one of the best ways to advertise is to use online hotel
indexes. This could also be taken as an ad on the side of a travel page or any page and when you
click on it you are taken to our website where you are given a virtual tour of everything offered
(hotelexecutive.com, Aurand). This would not only give the customers an inside view of our
hotel, it would also divert attention away from competitors due to the fact that they may not
possibly have the same type of marketing. This information on marketing not only pertains to our
hotel but to every business as a whole. Any business will want to do the marketing steps Ive
discussed because it will give them an upper hand against the competition
At the end of the day, larger chains are always going to impact small, family owned
businesses. Whether that be restaurants, sales companies, or hotels like in our case, the bigger
chains will always try to knock out the smaller businesses and own the whole market. When
looking at the different tactics to help improve a business and beat the competition we have
examined how businesses can market differently, how businesses can change their sales and
pricing to better acclimate to the other business and attract more customers. We also examined
how businesses and our hotel can change their target market to produce more revenue and further
their business strategy. The keys to out competing bigger chains are examined for our hotel, and
at the same time any other business can implement the same type of ideas and effectively
outcompete their competitors while at the same time improving their revenue.

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