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Founded in 1977, Cabo San Viejo is one of the nation’s premier spa and health resorts. Its flagship vacation resort in Palm Springs, California provides a wide range of health and wellness services. In addition to its resort, Cabo San Viejo also operates four CaboDaySpas located throughout the country. Facing mounting competition from a variety of competitors, Cabo must decide whether or not to adopt a customer loyalty rewards program.
Cabo San Viejo’s 30 years of experience, resort location, and four satellite day spas are the core strengths of the company. [Exhibit 1] Its well-trained staff, and 3.2:1 staff to guest ratio, has earned Cabo a 96% positive customer satisfaction rating. Cabo San Viejo attracts a high-end clientele, and offers a broad range of health and wellness services unique to the industry.
Cabo San Viejo is not without its challenges; the resort experiences irregular demand, which forces the it to lower prices by 35%, in order to attract customers, during the summer months. Cabo San Viejo operates an inadequate computer system, with incomplete and inaccurate customer data. This makes it difficult to efficiently market to their regular clientele. There is a lack of an integrated marketing approach between the resort and the day spas, which have independent marketing activities.
Cabo San Viejo has a reputation of treating the client like royalty, which has resulted in extremely good word of mouth advertising for the company. Once a guest visits Cabo San Viejo they are likely to recommend it to others. Sixty-five to seventy percent of guests discovered the resort from a previous guest. Cabo San Viejo, although popular with the baby boomers, has an untapped younger generation to attract. The company has failed to capitalize on the CaboDaySpas clientele, and the benefit those customers could bring to the Cabo resort.
The strongest threat Cabo San Viejo faces is competition from other resorts and...