Description of the Problem

One of the most popular tourist destinations in the United States is Niagara Falls, located on theU.S.–Canada border in northern New York. An estimated 12 million tourists visit Niagara Falls eachyear. However, while its attractiveness has not changed, environmental factors have recentlythreatened to significantly decrease these numbers. At least three factors are at work:

(1) a sluggishly recovering national economy,

(2) the substantial weakening of the global economy, and

(3) increased competition by beefed-up marketing efforts of other tourist attractions that are experiencing declines due to the first two factors.A large majority of Niagara Falls visitors are Americans who drive to the location, so family financial worries have the Niagara Falls Tourism Association especially concerned.

The association represents all types of businesses in the greater Niagara area that rely on tourism. Among their members are 80 hotels that account for approximately 16,000 rooms. The hotels have anywhere from 20 to 600 rooms, with a large majority (about 80%, accounting for 30% of the rooms) being local and smaller, and the larger ones (the remaining 20%, accounting for 70% of the rooms) being national chains and larger. For all hotels in the area, occupancy at peak season (June 15–September 15)averages around 90%.

The association wants to conduct a survey of current visitors to evaluate their overall satisfaction with their visit to the Niagara area and their intentions to tell friends, relatives, and coworkers (WOM) to visit Niagara Falls. The association has designed a face-to-face interview questionnaire, and it has issued a request for proposals for sample design. It has received three bids,each of which is described here.

Bid 1.

The Maid of the Mist union—employees of the company that operates the boats that take tourists on the Niagara River to view and experience the falls—proposes to do the interviews with tourists who are waiting for the Maid boats to return and load up. Union employees will conduct interviews with 1,000 adult American tourists (one per family group) during a one-week period in July at $3 per completed interview.

Bid 2.

The Simpson Research Company, a local marketing research company, proposes to take a sample of the five largest association member hotels and conduct 200 interviews in the lobbies of these hotels with American tourists (one per family) during the months of July and August at a cost of$5 per completed interview.

Bid 3.

The SUNY-Niagara Marketing Department, an academic unit in the local university,proposes to randomly select 20 hotels from all hotels in the area (not just those belonging to the Tourism Association) and to then select a proportional random sample of rooms, using room numbers,from each selected hotel based on hotel room capacities. It will interview 750 American tourists (one per family) in their rooms during the period of June 15–September 15 at a cost of $10 per completed interview.

Questions/Tasks

1. What is the sample frame in each bid?

2. Identify the type of sample method in each bid and assess the representativeness of the sample with respect to American tourists visiting the Niagara Falls area.

3. Evaluate the accuracy (sample error) with each bid.4. The Niagara Falls Tourism Association has budgeted $5,000 for data collection in this survey.

Using information from your answers to questions 1 to 3 and further considering the total cost of data collection, which one of the proposals do you recommend that the Niagara Falls Tourist Association accept? Justify your recommendation.

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