Operations Case2 Playa Group A4

Group A4: Hirak Suryavanshi (129278077), Sushant Thakur (129278020), Debjeet Swain (129278004), Vinay Acharya (129278071) PLAYA DORADA TENNIS CLUB The tennis courts of Playa Dorada Tennis Club are very famous and they are one of the main attractions for tourists. But, since the past year, (Table 1) the courts have been approaching maximum capacity, if we consider that most of the guests want to play during the prime playing hours. The value of “Court Hours used/ Guest Night (here on we will denote it as ‘k’)” has been increasing continuously. Now, we have been given the predicted value of k for the next 2 years. If we look at the increasing trend of k for the past 2 years, k will be equal to at least 0.1 in the next 2 years. The current capacity is not at all capable of serving this load and the resulting revenue losses are quantified in Table 2. Similarly, if k value increases more, no. of playing hours wanted will be more (Table 3) and the revenue losses will be even greater. So, there is a need to make some big infrastructure decisions for better customer service and better business. Recommendation 1: Install flood lights at all tennis courts for night-playing which will result in more court utilization. Let’s assume that installing flood lights will allow an additional 4 hours of play-time during night. As seen from Table 4, this will result in less loss of revenue but this is still not enough. Additional courts are required to be built. Recommendation 2: Build 4 tennis courts in the available space. As seen from Table 5, the combination of recommendations 1 and 2, will cover the demand for the next 2 years, assuming k= 0.1. If the number of guests increases at a faster pace or the popularity of tennis rises much faster than anticipated, then k can assume a greater value which will result in demand of more playing hours. So, for the long run, installation of a new tennis court complex at new place with all the facilities is required. Recommendation 3: Increase playing time. From Exhibit 2 we see that the current maintenance timings are from 7-8 am. Hence the current average playing time is limited to 8 am to 7pm which reduces the playing hours. The maintenance work can be shifted to an earlier time of the day to accommodate early risers and hence increase the overall number of hours available for playing. Recommendation 4: From Exhibit 3 we see that the correlation between total court hours on tennis court and guest nights is highly positive. On calculation the obtained figure is 0.89 which explains the fact that with steady increase in guest occupancy the court usage will also increase in the same proportion. Hence applying this to the demand forecast we can see that the occupancy will be very good for most of the months (Exhibit 5).But for the months where the demand will be less due to seasonality effect in

order to offset this certain price reductions schemes can be used to encourage greater time spent on courts. This will take care of months like July, august and September where expected footfall is expected to be in the range of 20000. Recommendation 5 (For the long run): Installation of a new tennis court complex with all facilities and capacity of more number of tennis courts. Recommendation 6: Removal/Modification of trade promotions The demand for tennis court hours is already very high. So, keeping trade promotions is a bad idea. Charges per hour should be made uniform at 20$ no matter the number of hours played or age. If this had been done, then revenues for 2006 could have been increased to $ 392,980 just for court hours used. But instead it was, $ 436,000 which included everything i.e. playing hours fees, equipment rental, machinery rental, etc. Bulk offers for booking tennis courts for the entire week should be scrapped. Under-18 should be encouraged to use the hard courts, as they will not tire on it, by giving them discounts on hard courts and not on clay courts. If promotion is done, it should be to encourage doubles play. This would increase court utilization and guest satisfaction. Recommendation 7: Incremental Extra charges for continuous usage beyond 2 hours. This will allow all guests a chance to play tennis as well as increase revenues for Playa Dorada Tennis Club. The projected revenue generation in the peak months of the years 2007 and 2008 if the flood lights are installed and 4 additional courts are built will be $ 1,166,400.

Recommendation 6: (For Long Term) Vertical expansion: Assuming regulatory clearances won’t be a problem, build a multi-storey tennis facility in the space available for building 4 new courts. This would serve two purposes viz. 1. Land required would be lesser, thus reducing the opportunity cost of expansion. 2. Facilities and service staff would be common to the newer facilities as well, thus bypassing the problem of facilities and staff redundancy and saving cost.

NOTE: All analysis is done for the months November to April i.e. the peak months and the maximum number of guests are assumed to be wanting to play in the peak hours. TABLES Table 1: (Total peak court hours per day is 92 hours) Peak Months Court hours used Peak hours available Dec-05 1797 2852 Jan-06 938 2852 Feb-06 1506 2576 Mar-06 2824 2760

Apr-06 Nov-06 Dec-06 Jan-07

2885 2416 3409 2825

2852 2760 2852 2852

Table 2:

Month Feb-07 Mar-07 Apr-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08

Playing hours required at k = 0.1 At current capacity, peak hours available Revenue lost ($) 5995 2576 68380 8388 2760 112560 8647 2852 115900 5774 2760 60280 6646 2852 75880 5399 2852 50940 9562 2576 139720 13069 2760 206180 12912 2852 201200

Table 3: Playing hours required at different ‘k’ values k=0.12 k=0.15 7194 8992.5 10065.6 12582 10376.4 12970.5 6928.8 8661 7975.2 9969 6478.8 8098.5 11474.4 14343 15682.8 19603.5 15494.4 19368

Table 4: Flood lights have been added, so additional 4 hours of playing time available

Month Playing hours required at k=0.1 Feb-07 5995 Mar-07 8388 Apr-07 8647 Nov-07 5774 Dec-07 6646 Jan-08 5399 Feb-08 9562 Mar-08 13069 Apr-08 12912

Playing hours available after adding flood lights Revenue lost 5152 16860 5520 57360 5704 58860 5520 5080 5704 18840 5704 -6100 5152 88200 5520 150980 5704 144160

NOTE: Figures in –ve for revenue lost indicate no revenue is lost and access playing capacity worth that much is available. Table 5: 4 new courts are added along with the flood lights. Hours available after adding Month Playing hours required at k=0.1 flood lights and 4 courts Revenue lost Feb-07 5995 6048 -1060 Mar-07 8388 6480 38160 Apr-07 8647 6696 39020 Nov-07 5774 6480 -14120 Dec-07 6646 6696 -1000 Jan-08 5399 6696 -25940 Feb-08 9562 6048 70280 Mar-08 13069 6480 131780 Apr-08 12912 6696 124320 NOTE: Figures in –ve for revenue lost indicate no revenue is lost and access playing capacity worth that much is available.