The Report Of Hots Simulation Tourism Essay

The Report Of Hots Simulation Tourism EssayThe main purpose of this give kayoed was to crap a market dodging to change magnitude the amplification of the hotel. The hotel faced some difficulties with their operation and management. In order to rectify those problems, the marketing plan needed to be identified and some market strategies should be formulated. The report comprised the marketing strategic plan for five years, which had been created after SWOT analysis. consort to the strategies, the marketing plan had be designed an action plan which would specify activities apply to accomplish the goals of giving medication. Through identifying and analyzing marketing strategic plan, the hotel could overcome their difficulties more smoothly.2.0 Introduction2.1 Company BackgroundThe traditional hotel was built in the 1950s and located on the sea anterior in a town, close to other hotels and a short distance from the main shopping centre and the ne arest airport. There were goo d road, rail and mound links to major cities and other resorts. The hotel had 250 guest rooms with large, comfortable and vary in decorative style and standard. The hotel overly fork outd several(prenominal) leisure facilities, 24 hours front desk, car parking. However, the care experienced its reduction stage by its inappropriate marketing strategy. Moreover, the business was greatly affected by war-ridden environment and juicy derangement rate of employee.2.2 Competition InformationThere were three direct competitions existing in this area and competing for the same market. The accede 2-1 showed the information below. put off 2-1 customary hotel informationHotelStar Rating rooms goodOur HotelNone250A sound service restaurantPub bar with snack serviceA small swimming poolCar parkingThe Palace Hotel4 Star150 la carte Restaurant and Coffee Shop 2 barsHealth ClubConference and Business BureauCar Parking to rearThe Park Hotel3 Star200Restaurant parrySmall Health ClubConferenc e Facilities and Business ServicesAmple Car ParkingThe Mariner2 Star70Restaurant measuring rodTwo Conference RoomsCar Parking blood line HOTS background documentTable 2-2 Price informationThe Palace HotelThe Park HotelThe MarinerWeekday Room Price125.0089.0069.50Weekend Room Price90.0042.5065.00Lunch Price33.0025.0019.75Dinner Price59.7543.5036.75Tours Price67.50/person46.25/person41.50/personSource HOTS market inquiryThese properties provided similar facilities and service. Furthermore, they also focused on business needs providing conference facilities, and incorporate more leisure facilities than our hotel provided.2.3 Aims and ObjectivesAim The aim of this report was to reduce the train of staff riseover and join on the receipts of hotel.ObjectivesTo identify current approaches to reduce staff turnover.To determine marketing strategy to increase hotel operating marginsTo make conclusions and recommendations for move on operation.3.0 Strategic Planning ProcessOlsen (2007) m entioned that in order to create company strategic plan, it was necessary to go through the strategic planning process, including several definitive steps and activities. Although each company had different situation and challenge, strategic planning mode was appropriate to deal with complex work including forecasting and scheduling (Wheelen and Hunger, 2006). According to the book of Marketing Management, it provided a strategic planning process which consists of several steps such as SWOT analysis, goal and strategy, programme formulation and feedback and meet, severally (Kotler and Keller, 2009). A simplified view of the strategic planning process was shown by the spare-time activity figureFigure 2-1 Strategic planning process within a business unitSource accommodate from Kotler and Keller (2009)3.1 SWOT AnalysisAccording to the strategic planning process, in order to analyze the hotel environment, SWOT analysis should be adopted in this report. Glaister and Falshaw (1999) m entioned that SWOT analysis has been ranked as the nigh frequently used approach for analyzing the environment. The value of SWOT analysis has been promoted because of its effectiveness in identifying the main problems concerning the organization and the simplicity of its execution (Hill and Westbrook, 1997). The main purpose of implementing a SWOT analysis was usually to offer a strategic direction for organization practices (Pickton and Wright, 1998). Moreover, Dyson (2004) claimed that the ability of SWOT analysis to integrate infixed and external environments of an organization awards competitive strategy formulation more easily. Other benefits of SWOT analysis take on its ability to organize information, enhance a managers understanding of the business and factors affecting its performance, and improve strategic plans for the business (Pickton and Wright, 1998). The following analysis demonstrated the internal strengths and weaknesses of the hotel and the opportunities and threats facing the organization in the external environment.Table 3-1 SWOT analysisStrengthWeaknessA short distance from the main shopping centre.The rooms are large, comfortable and vary in decorative style and standard.Near airport.Good road, rail and bus links to major cities and other resorts.Good conditions on renovation of rooms.Enclosed garden with a small swimming pool.Old bring ining.No Leisure Facilities, Business Services, Conference Facilities or Meeting Rooms.Not have a star rating or AA Diamond rating.Serious staff turnover problem.OpportunityThreatThe local authority decided to offer economic movement package to small and medium size firms.The resort had become a popular location for conferences.Different kinds of popular festivals and substantially established tourist events were oftentimes held in the town.Convenient transportations.Too many hotels entered this market.Source HOTS background document3.2 The Goal of HotelAfter environment analysis, the hotels go als were set up.Short-Term GoalsTo reduce staff turnover rate.To increase customer satisfaction.To achieve lower overall woos than rivals.To increase public ken by advertising.To change the advertising strategies according to the environment changes. long-run GoalsTo achieve a bigger market share.To achieve lower costs relative to competitors.To achieve a stronger re orderation with customers than rivals.To increase hotel operating margins.To improve the role of hotel facilities by doing refurbishments.To improve the eccentric of staff services by providing pro mass programs.Intended Strategy SelectionBecause of competitive environment in this area, the hotel should consider strategies for gaining a competitive advantage. This section was going to list several strategies for the hotel to achieve its aim and goals.4.1 Competitive AdvantageDue to the luxuriously expenditure of hotel, it should apply Porters generic strategy theory. Porter argued that core capabilities and intang ible asset resources could formulate exhilarating competitive advantage for companies (Poter, 1980). Hofer and Schendel (1978) suggested that at the business level, the most vital component of strategy was competitive advantage, which was dened as the unique positions an organization develops vis-a-vis its competitors through its pattern of resource deployment and decisions of scope. Porter introduced three types of generic strategy for creating a defensible position and outperforming competitors in a given industry, included overall cost leadership, dierentiation, and focus. After SWOT analysis and competition information, the hotel should eectively utilize overall cost leadership to create defensible positions against other competitor forces. A cost-leadership strategy could offer the hotel above-average returns because it enables firms to lower prices to match or beat their rivals and still earn profits (Philips, Chang and Buzzell, 1983). Moreover, from the perspective of custome rs, a cost-based marketing strategy was effective because lower price offerings appeal to customers in competitive environment (Li and Li, 2008). Through the influence on a hotels competitive advantage, it could allow hotel to reach its goals (Amit, 2006).4.2 PromotionBut, how do customers choose the hotel? It was not enough for the hotel to have good products sold at attractive prices. To generate sales and profits, the advantages of products had to be communicated to customers (Sunday and Bayode, 2011). In marketing, this was commonly known as progress. Utilizing all possible tools for promoting the product and service was known as its promotion mix. Proper implement of promotional mix could increase the market share and improve organisation growth in the face of strong competition. (Sunday and Bayode, 2011) also claimed that the promotion mixes had a stage at which it would be most effective and advertising as well as forwarding were usually suitable for all stages. Considering customer requirement in different quarter, advertising and publicity were usually adopted. Through market research, the information regarding seasonal demand and advertising effectiveness were obtained. The advertising campaign was changed which was based on these two pieces of information. When there were high requirements on a particular item, the campaign would be focused on this particular item in order to draw more public awareness since there were several choices existed in the market. For instance, conference business, meal and liquor would be the hotel main advertisements during from Quarter 1 to Quarter 1 since it was one of the peak periods for business traveler (Figure 4-1).Figure 4-1 The hotel advertising decisionsSource change from HOTS simulation4.3 Internal MarketingHigh employee turnover was one of the most serious phenomena in the hotel. Arnett, Laverie and McLane (2002) pointed out that successful internal marketing strategy could lead to important payoffs for an organization. The value of internal marketing stem included low employee turnover rates, an increase in service quality, and high levels of employee satisfaction. The reduction in employee turnover could come down the cost of recruiting and information and increase their level of job satisfaction. Furthermore, it also could increase employee satisfaction and strike staffs to be more engaged and, as a result, they were more likely to take actions that result in improved customer satisfaction and hotel profitability.4.4 Employee TrainingEmployee training also could improve this problem and provide other benefits. The positive relationship among employee training, job satisfaction and intention to stay had been established (Conrade and Woods, 1994 Heskett et al., 1994 Roehl and Swerdlow, 1999). Training had been linked to improve self-esteem, reduce turnover, better product and service consistency, higher satisfaction of customer, reduce cost of business, and greater job satisfacti on (Roehl and Swerdlow, 1999). Through employee training, the hotel could not only build customer satisfaction and loyalty, but increase the impact on profitability and growth, which was created by satisfied, loyal, and productive employees (Chiang, Back and Canter, 2005).4.5 Balance ScorecardSuccessful performance resulted from goals performance and strategy implementation (Wu and Hung, 2008). However, the main weaknesses of strategic management practice were usually associated with the stage of implementation. Actually, Mintzberg (1994) asserted that more than half of the strategies formulated by organizations were never truly implemented. Therefore, successful strategy implementation was not only dependent on effective strategy, but also management as well as control systems. Without control systems it was argued strategy implementation would not be implemented successfully. It had been suggested that the framework of performance management such as the Balanced Scorecard could , by forming the prat of strategic control systems and offering an important link between strategy and action, assist companies to accomplish effective strategic implementation.The Balanced Scorecard took into consideration the vision and strategies of company, focusing on both nancial and non-nancial performance. It monitored short-term nancial performance while also highlighting the benefit of long-term nancial metrics and competitiveness (Kaplan and Norton, 1992, 1996, 2001).This strategic control system ensured that the hotel effort put into preparing lengthy and detailed strategic plans was wholly translated into action (Bungay and Goold, 1991). The scorecard measured firm performance across four balanced perspectives financial, customers, internal business processes, and learning and growth (Atkinson, 2006).Figure 4-2 The Balanced Scorecard four main perspectivesSource Adapted from Atkinson (2006)The Balanced Scorecard could offer specific targets so that the hotel could kno w what to do (Corboy and OCorrbui, 1999) could motivate down the line leadership (Beer and Eisenstat, 2000 Alexander, 1985) and could clarify strategic intent into clear managerial actions (Reed and Buckley, 1988). If the Balanced Scorecard was executed completely itself, it could implement management in an evaluation of the strategic strategy and thus avoid planning errors and prevent oversight.5.0 Performance Measures5.1 Financial PerformanceFirst of all, training cost was one of the important elements for the hotel bankrupt. A wrong decision was do as mentioned. High training cost had been spent in year 2 because employees always complained such as The training here is worse than the last place I worked. After increasing this cost, it did not take a turn for the better. Employees still unsatisfied and turnover rate were still high, so several hebdomads later, the hotel decided to increase the training spending per person, and this action leaded high expenditure. The full traini ng spend was shown in Appendix 1. Second, advertising cost was a major expenditure in the hotel. A large amount of coin was put into sales and marketing for the purpose of advertising. In low seasons, a cost control was conducted strictly. A cheaper advertising media was preferred rather than posting advertisement in Sunday Newspaper. For example, Local Weekly Newspaper for liquor advertisements was selected as promotion medium during five years. During peak season, more money was allocated in order to increase business traveler awareness. The most effective and efficient medium with higher costs would be chosen, such as Business Press for weekday and weekend room. Final, in the first week of family5, a negative net income was occurred. The hotel was almost broken and running out of cash since conference facilities were conducted. A great amount of money was put into this facility (Appendix 2). This issue indicated cost control was not well in the hotel.According to the balance sh eets of 5 years, a essence current indebtedness fluctuated significantly, but the total asset and the owners equity of the hotel decreased steadily from year1 to year5. The table of those items was shown down belowTable 5-1 Annual balance sheetYear 1Year 2Year 3Year 4Year 5 quantity asset3,611,4713,125,1942,568,5021,883,0811,011,426Total current liabilities85,464106,92984,000104,69364,390Total owners equity3,526,0073,018,2652,484,5021,778,388947,036Source Adapted from HOTS simulation reportThe Table 5-2 and Figure 5-1 showed that the revenue was declining from year 1 to year 5. It was because after the hotel spent lots of money in the hotel rooms, facilities and promotion tools, customers still unsatisfied the service and usually ignored it. It was hard for the hotel to build up customer loyalty and receive more revenue.Table 5-2 Annual total revenueYear 1Year 2Year 3Year 4Year 5Total Revenue1,839,5801,238,8931,097,280949,309910,448Source Adapted from HOTS simulation reportFigure 5 -1 Annual revenue and profitSource Adapted from HOTS simulation reportFor net income, due to the increase in cost of sales, marketing, net income was decreased from year 1 to year 5. Moreover, the hotel had built many facilities to fulfill the market demands, a great amount of maintenance fees occurred. It caused a decrease in the hotel net income. It also conveyed that the hotel did not perform as well as previous, the profitability was decreasing.Table 5-3 Annual net incomeYear 1Year 2Year 3Year 4Year 5Net Income341,988-507,742-487,182-706,114-831,352Source Adapted from HOTS simulation reportIn the past 2 years, total room revenue was increased by 189,910 from year 1 to year 2. It indicated that the hotel could attract more customers successfully. However, between year 3 and year 5 the revenue was decreased (Table 5-4). It conveyed that there were several problems existed such as customer had walked past it but they had never noticed it.Table 5-4 Annual room revenueYear 1Year 2Yea r 3Year 4Year 5Total Rooms Revenue463,547653,457595,299543,476523,456Source Adapted from HOTS simulation reportFB department was the second largest revenue generator. It contributed almost 50% of total revenue of the hotel from year 1 to year 5. The table demonstrated a big increase from year 1 to year 2 as cost leadership strategy was adopted in year 1. However, in the following 3 year, no new strategies were applied and FB department revenue was decreased continually as the same as room department revenue (Table 5-5).Table 5-5 Annual food and beverage revenueYear 1Year 2Year 3Year 4Year 5Total Food and Beverage Revenue349,009542,118459,638365,980348,745Source Adapted from HOTS simulation reportAs the Table 5-6 showed, occupancy rate was increased steadily from year 1 to year 5. The occupancy rate was only increased by 11% from year 1 to year 2. Besides, average room rate was decreased easily from year 1 to year 5 since environment became more competitive. In order to compete with our competitors and increase occupancy rate, declining room rate was a must. Moreover, REVPAR had also increased slowly from 15.9 to 17.9, and the main reason was the effect of the competitive environment. What the hotel could do was to adjust the average room rate in order to control the hotel business.Table 5-6 Annual occupancy rate, average room rate and REVPARYear 1Year 2Year 3Year 4Year 5Occupancy rate27.1%38.2%37.0%34.5%32.7%Average Room Rate58.7658.7455.3154.1654.82REVPAR15.922.420.418.717.9Source Adapted from HOTS simulation report5.2 None-Financial PerformanceTraining was an important section in the hotel operation. Decisions were made according to different periods and market needs to allocate the fleshs of staff in each department. And the range between the increase or decrease number of employee was 3. To the payroll of the employee, except the department heads were Brand 2 payments, the others were set as Brand 1. And this strategy was used from the first year to the fifth year. However, in week 62, all Brand 1 payments were changed in to Brand 2 in order to increase the employee satisfaction and reduce staff turnover. Training affected the employee quality in terms of the input of the training cost. Overall the five years operation time, training cost kept increasing each year. The hotel wanted to provide excellent service to their customer by increasing the staff quality. Better qualities of staff and service leaded to have positive feedbacks from hotel customers such like Service could not be improved much. Therefore, more positive feedbacks leaded to greater market awareness and share (Appendix 3).The hotel had serious staff turnover problems in several years and received not good comments from the customers such as You never see the same member of staff twice. However, after the hotel implemented the internal marketing and training, the staff turnover rate decreased significantly from 123.8% to 54.2% (Table 5-7).Table 5-7 Annual staff turno ver rateYear 1Year 2Year 3Year 4Year 5Staff Turnover123.8%65.0%76.5%118.2%54.2%Source Adapted from HOTS simulation report6.0 Conclusion and RecommendationsAfter spending 5 years to run the hotel, it was realized that there were many unpredictable incidents coming up, the management-team lacked flexible response to the upcoming challenges. Although the hotel finally bankrupted, the statistics demonstrated that the strategies had ever helped the hotel performance well in Year 2 and earned profit. The hotel market share also increased during a five-year period. Moreover, the management team solved the problem of employee turnover by increasing the training expense and salary. For future action, it suggested that due to the town had become a popular location for conferences, conference room should be built at first rather than the last year. This strategy could attract more businessmen and increased hotel competitiveness in this area. Furthermore, building conference room also had some other advantage for the hotel, which provided extra facilities for customers to increase their satisfaction.