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![]() Auberge de La Fontaine – E-Business Case StudyPublication Date: June 2004
IntroductionThe Auberge de La Fontaine (Auberge) is a medium-sized inn with fewer than 25 rooms. It is located opposite Parc Lafontaine in Montréal. It has enjoyed real success as a result of adopting an electronic business (e-business) strategy, which has enabled it to increase its business volume by 30 percent. Its founder and current owner, Jean Lamothe, who worked for several years in real estate development, felt that they had not made the most of the inn's location. In 1989 and 1990, the Auberge underwent an important expansion when two former triplexes were combined. Tourisme Montréal has given an honourable mention to the Auberge for its use of yield management, which is based on mathematical modeling that makes it possible to establish a pricing policy that takes several variables into account. Yield management is a practice widely used by airlines to adjust prices to demand. Mr. Lamothe attended several conferences, one of them organized by the Groupe d'intervention en tourisme at the Université du Québec à Montréal. This triggered his decision to adopt an e-business strategy. During a symposium on e-business, Mr. Lamothe also met several Americans, who made him aware of the potential of an e-business model, which would enable him to attract new customers, mainly Americans, interested in visiting Canada as tourists. Context and Favourable ConditionsThe e-business strategy relies on several favourable conditions, indicated below.
Development PhasesSince 1996, the Auberge's owner has been interested in the Internet as a means of broadening his clientele. In 1998, a Web site was designed for the Auberge, followed in the summer of 2000 by a second site offering more complete information. At the same time, two important initiatives were undertaken, i.e. the development of a database and the elaboration of a pricing system based on yield management. These two initiatives are the pillars in the development of the Auberge's e-business strategy. Strategic Scope1. Scope of Functionalities and ServicesExtensive strategic researching of Web sites made it possible to ensure that the Auberge's site provides the most complete information among the sites in its category and that it helps users to make a purchase decision. The site is also very user-friendly. Its developers sought to design a site that is usable by individuals who have no computer knowledge. Among its functionalities, the site features complete information, including:
The functionalities are aimed at providing simple tools that facilitate decision-making. It is the links to the information on tourist and cultural activities in Montréal that have enjoyed the greatest success and are enhancing the site's value. However, it should be noted that reservations are not made online but rather by means of a form that the customer must send to the inn. 2. Market ScopeFrom a marketing standpoint, the objective is to find a way of attracting tourists to the 21-room inn when there are 21,000 rooms available in Montréal. Quiet, fairly trendy urban baby boomers are the target clientele, since the Auberge is located in the heart of the Plateau Mont-Royal district. It should be noted that the Auberge receives secondary bookings stemming from the overall demand for Montréal. It is the demand for Montréal that significantly influences the demand for the Auberge. The market strategy relies on cross-referrals to the Auberge Web site, through of 380 links. More specifically, the inn uses four cross-referral portals with similar levels of traffic, i.e. Bonjour Québec.com, B&B Select, Band &.com and Worldres. It is worth noting, however, that search engines provide the Auberge with most of its traffic. 3. Geographic ScopeFrom a geographic standpoint, everything is centralized on a single
Web site (the Auberge has only one service outlet). In order to better
serve a North American clientele, the site is trilingual, i.e. French,
English and Spanish. A series of e-mails have already been translated into
Spanish to ensure a prompt response to requests submitted in that language. 4. Scope of SkillsAn in-house team comprised of the owner, the director of marketing and an Auberge employee with a basic knowledge of programming was entirely responsible for designing and developing the site. Key Success Factors
Barriers to AdoptionThe Auberge faced few barriers to the adoption of an e-business strategy. One of the barriers, which is indeed a consideration, was the delay in recovering the Auberge's investment in this endeavour. Creating Value1. NoveltyA key novelty was the ability to more readily sell the product by allowing customers to see the rooms. Providing access to the site presenting tourist and cultural activities in Montréal reduces the time spent on the telephone with customers. Moreover, the very high promotional costs stemming from the production of brochures has decreased. E-business makes it possible to reduce the number of discounted rooms and to offer last-minute discounts. 2. Lock-inThe business model adopted had little effect on lock-in since leisure travellers from outside Quebec usually visit Montréal only once or stay at a specific inn. However, lock-in did occur as a result of the numerous cross-referrals to the Auberge that potential customers obtained during the buying process. This enhances the inn's credibility and reputation with potential buyers. 3. ComplementaritiesOne of the key benefits of the e-business strategy stems from the ability to attract the best customers through the Internet. These travellers plan their vacations and make reservations in advance, pay in strong currencies and are the least sensitive to pricing (e.g., American customers). It should be noted that the average room rate is higher on the Internet. Performance Measurements
Future ProspectsThe Auberge de La Fontaine developed a customized (one-to-one) marketing system aimed at grouping together independent hotels throughout Quebec. This initiative sought to generate Web traffic and to assemble a common database that would allow for customized offers. An initial approach led to the grouping of 15 hotels, although only two of them were truly ready and possessed a database and a Web site that allowed them to receive customized electronic offers. Implications for E-business Development
Published in PartnershipThis case study was prepared by CEFRIO as part of the project
The research team included Mrs. Louise Côté, Professor from HEC Montréal, Mr. Vincent Sabourin, Professor from the Université du Québec à Montréal, and Mr. Michel Vézina, Professor from HEC Montréal. The research team completed this case study at the end of January 2004. The opinions expressed in this case study do not necessarily reflect those of Industry Canada and/or Canadian Heritage. For more information, please go to the CEFRIO Web site — The Authority on Information Technology Appropriation — at: www.cefrio.qc.ca/english/indexAccueil.cfm. |
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Created: 2004-04-05 Updated: 2004-10-19 ![]() |
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