Waysideinn

1. Wayside Inn’s Strategy

As a single industry firm, Wayside Inns concentrated its operation in motel business. The company’s fundamental strategy was to cater to those business travelers who were generally not interested in elaborate settings. Thus, this motel chain had no common areas such as lobbies, convention rooms, bars, or restaurants. Instead it emphasized on clean rooms and dependable services. Through this strategy Wayside Inns could achieve cost leadership by lowered down its rates by 15 to 20 percent compared to other national motel chains. Also its targeted market segment (the business traveler) was generally unaffected by seasonal or environmental factors. With these competitive advantages, Wayside’s average occupancy rate was 10 to 20 percent higher than competitors and the firm had grown substantially.

Most of Wayside motels were located near interstate highways or major arteries convenient to commercial districts, airports, and industrial or shopping facilities. The strategy was to have a total of 600 rooms in fine or six locations within one city rather than have one large hotel with 600 rooms. On the various strategic locations, the Wayside inns were usually constructed in one of three sizes-76rooms, 116 rooms, or 156 rooms.

The company’s expansion strategy had evolved into a three-tiered.

1. Management actively pursued the construction of new motels seeking an ever- widening geographical distribution.

2. Properties were expanded if they were operating near or at full capacity.

3. Old properties that became a financial burden of did not contribute the required rate of return were sold.

This aggressive expansion with reduction of construction costs and completion times due to standardization were significant strength of the company.

May1992, the Memphis Airport Wayside Inn concerned about its expansion. Memphis Airport Wayside Inn turned away significant number of customers and it expected that the market will be growing...