Case study

The Mandalay Bay Conundrum

Background

Mandalay Bay Resort and Casino in Las Vegas, Nevada promotes itself as a 39-story luxury hotel offering unmatched luxury, fine dining, renowned entertainment, and personal service. The main hotel boasts over 3,300 rooms, a 135,000 square foot casino, a variety of water attractions including a wave pool and a lazy river, nongaming entertainment options such as the House of Blues, and 24 restaurants and cafes. Mandalay Bay is owned by MGM Mirage and is connected by a free tram service to its sister properties, Excalibur and Luxor. Professor Taylor (ironically, a services marketing professor) and his wife were looking forward to spending four nights at the resort and casino and spending some time with his sister and brother and their respective spouses who live across the countrya mini-family reunion was the purpose of the trip. Professor Taylor's brother, Ted, had received a direct mail piece from Mandalay Bay months earlier that offered a promotional rate of $69.99 a night (a discount of $30 a night off the regular room rate). After contacting his siblings and agreeing on a date, Ted immediately booked three rooms for each of the three couples, and the mini family reunion was set. On checking into the hotel in August, Ted and his brother-in-law, Bill, renegotiated all three couples' accommodations. The deal resulted in a double upgraded room for each couple consisting of a 765 square foot mini-suite, a Jacuzzi bathtub, and views of the Vegas strip. The additional cost for these upgrades was $25 a nighta price everyone agreed was a very good deal. Professor Taylor and his wife arrived at the hotel a day later than the other two couples who had rooms on the 10th floor. Due to availability constraints, the professor and his wife were given a room on the penthouse level (floors 35-39) of the hotel that are uniquely numbered as floors 60-64. This room was the same size as the other two couples' rooms; however, the penthouse floors came with the added advantages of an express elevator and enhanced views of the Vegas strip due to being placed at a higher elevation. Everyone was very pleased with their rooms and all the accommodations available at the Mandalay Bay Resort and Casino. The couples attended shows, laid out by the pools, walked the strip, enjoyed dining together, and dabbled in the various hotels' casinos many of which are owned by the MGM Mirage. The days passed quickly, and the couples often found themselves returning to their hotel rooms around 3 a.m. each night.

The Situation

On the second night of their stay at Mandalay Bay, the professor and his wife returned to their room, 60201, and noticed a slightly foul smell present in their room that had not been there earlier in the day. The couple went to sleep that night and never thought about it the next day because the smell was no longer present in the morning. Upon returning to their room at around 3 a.m. on the third night, the foul smell had returned. By 3:30 a.m. the smell had so greatly intensified, the couple was nearly overcome with nausea and called security to investigate. A young security employee noted that the smell was not present anywhere else in the hallway except for directly outside of Room 60201. Not sure what to do, the young security employee, covering her nose (the smell was really bad), called her manager to help investigate further. The security manager, with finger under nose, entered the room and immediately called for the hotel's engineering staff (maintenance). The security manager briefly apologized, then called the front desk to arrange for another room for the professor and his wife. Engineering entered the room with spray deodorizers in hand and attempted at least to mask the odor. Engineering believed that a gas bubble had built up in the hotel's sanitation system, and the smell was the result of a "burp" that was directly venting into Room 60201. A new room was provided for the couple, and a bellman helped pack up their belongings around 3:45 to 4 a.m. Other security guards were now present in the hallway, with hands covering their noses and mouths as they attempted to get "upwind" (their words) of "the smell." The new accommodations for the professor and his wife were located one floor above their existing room (still on the penthouse floors) and were quite nice. In fact, the room was no longer a roomit was now a five-room suite. The new accommodation was approximately 1,700 to 2,000 square feet, consisting of a full dining room, wet bar, living room, entertainment options including a large plasma television and enhanced audio capabilities such as docking station for an iPod with speakers located throughout, a four poster bed, electronic curtains, two bathrooms (including a steam room), etc. The regular price for the room ranged from $350 to $500 per night (the professor and his wife were not charged the additional price). The professor and his wife spent their last two nights at Mandalay Bay in this suite. No one from the hotel initiated contact with the couple after they were placed in their new accommodations.

Other Notable Considerations

Although nice Las Vegas hotel rooms can be obtained at reasonable rates, guests spend the majority of their "Vegas budget" on airfare, child and/or pet care, meals, entertainment (including gambling and show tickets), car rental and/or taxi fees, and retail shopping. The vast majority of meal and entertainment dollars are spent on property. It would not be unreasonable to assume that a couple could easily spend $1,500 to $2,000 for a five day/four night stay.

The professor and his wife vacation in Las Vegas approximately once or twice every five years.

The professor's brother-in-law talked to the manager on duty the next morning who had no idea the situation had taken place. The manager advised that the guests affected should file a formal report with security. Security was contacted, and took a formal report, but were visibly confused as to why they were involved.

The professor's wife complained of nausea and a headache that lasted for approximately 12 hours after the incident.

The professor's wife called the front desk to inquire about the cause of the foul odor and was instructed to contact the Risk Management Office. Risk Management offered to compensate the couple with two free nights at Mandalay Bay that could be used anytime in the next two years. When asked if they could provide accommodations that were similar to the couple's original room (765 square feet), the Risk Management Office noted that they could not guarantee similar accommodations.

Mandalay Bay was to send the vouchers for the two-night stay to the home of the professor and his wife. Several weeks have past, and the couple received no mail from Mandalay Bay

Question 1.

Should Mandalay Bay Resort and Casino and other Vegas hotel destinations be concerned with service marketing concepts such as customer loyalty and retention? Please explain your answer.

Question2. As a guest of Mandalay Bay that experienced this situation, what would be a reasonable expectation for the hotel's service recovery efforts?

Question3. Evaluate Mandalay Bay's service recovery efforts from the perspectives of distributive justice, procedural justice, and interactional justice.

Question4. What recommendations would you provide the management of Mandalay Bay to handle future situations such as the one described in this case?