Client is a prominent European hospitality company, operating a chain of over 18+ hostels and hotels across more than 10+ countries. The company focuses on providing budget-friendly yet stylish, safe, and inclusive accommodations, catering to a diverse clientele including backpackers, families, and digital nomads. Client's core business revolves around developing and managing high-quality properties that blend affordability with consistent service standards and a welcoming atmosphere, while respecting local culture. The company's mission is to offer secure, social, and enjoyable spaces, emphasizing service excellence and comfort across all its European locations. Post-COVID, client has demonstrated impressive recovery and growth, with revenues increasing from £18 million in 2019 to nearly £23 million in 2023, showcasing strategic improvements and a commitment to customer needs.

Despite a strong overall performance trajectory and consistent year-on-year growth post-COVID, client identified an underlying issue: some individual branches were underperforming, masked by the positive aggregate results. This lack of granular insight posed a risk, as unaddressed underperformance in specific locations could eventually impact the company's overall momentum. Client sought to pinpoint these constrained locations to enable targeted interventions and sustain its growth trend. The objective was to identify the specific branches performing below expectations, allowing for focused improvement efforts rather than a broad, undifferentiated approach.

To address the challenge, AEM Consulting initiated a comprehensive analysis focusing on key performance indicators (KPIs) from January 2022 to June 2025 across all 18 properties. The chosen KPIs included Occupancy Rate, Average Bed Price (ADR), Revenue Per Available Room (RevPAR), Revenue per Room Type (ReRTI), Customer Reviews, and Market Penetration Index (MPI).

Key Observations and Root Causes:

1. Uniform Pricing Strategy: A critical finding was that average bed prices remained nearly identical across all 18 branches. While this simplified pricing, it failed to account for local market dynamics, seasonal events, or diverse customer expectations. This 'central pricing system' was identified as a primary constraint.

Underperforming Branches Identified:

The analysis revealed that the York Micklegate, York, UK and Warsaw Old Town, Poland branches consistently underperformed, showing a 5-6% lower occupancy compared to other locations.

Local Market Unawareness & Staff Unprofessionalism: Deeper investigation into these underperforming branches pinpointed specific root causes:

• Lack of Dynamic Pricing: The central pricing system prevented these locations from adjusting prices based on local demand fluctuations, special events, or concerts.

• Staff Inefficiency in Booking Management: Management at these two locations failed to effectively manage bookings in anticipation of local events and trends. This included not canceling unpaid reservations in a timely manner (e.g., blocking beds for more than two weeks), which led to a loss of potential bookings from paying guests during high-demand periods.

• Staff Professionalism: Issues related to staff professionalism, likely impacting guest experience and review scores, contributed to the underperformance.

Implemented Actions:

Following the root cause analysis, client's central management implemented targeted interventions:

1. Localized Dynamic Pricing: Empowered local management at York Micklegate and Warsaw Old Town to implement dynamic pricing strategies, allowing them to adjust average bed rates based on local demand, events, and seasonal variations.

2. Enhanced Management Training: Provided specialized training to the management teams at the underperforming branches, focusing on:

   • Market intelligence: Understanding and leveraging local trends, events, and seasonal demand.

   • Booking management best practices: Emphasizing the importance of promptly canceling unpaid reservations and optimizing inventory for peak periods.

3. Staffing and Hiring Changes: Initiated reviews and made necessary changes in hiring practices to ensure a higher level of professionalism and customer service at the identified branches.

The initial monitoring of the implemented solutions over a two-month period has shown promising early results:

• 2% Performance Improvement: The combined efforts, particularly the proactive cancellation of unpaid reservations and making beds available for new bookings, led to a 2% improvement in performance at the York Micklegate and Warsaw Old Town branches. This indicates increased occupancy and revenue from previously blocked inventory.

• Increased Booking Efficiency: The changes in booking management led to more efficient utilization of available beds, especially during peak local events.

• Foundation for Sustained Growth: While a long-term impact analysis is ongoing, these initial results confirm the effectiveness of targeted interventions based on data-driven insights. The strategic shift towards localized decision-making and improved operational efficiency at specific branches is critical for client to sustain its overall growth trajectory.