Hotel Effectiveness, a 120-room select service hotel with a strong ambience, was having issues with its gross operating profit (GOP) margins including overtime, labour costs and distribution expenses. Two years ago, the hotel began experiencing a steady escalation in overtime hours due to increased occupancy combined with tight labour market issues. The significant increase in hourly wages created a challenge—some roles were up by 25%+. And, guest collection and dropping costs at various locations have been on the rise due to rising fuel prices. All these cost increases posed a problem for the hotel’s management company. The staff comprises of 40 people, blending longtime employees with newer hires. The hotel has ten different job positions, including supervisory roles. Since opening 15 years ago, the hotel has welcomed a balanced mix of leisure and business travellers—with particularly healthy weekend bookings, which include room-only guests, and small groups for social events . 2List two (2) micro-environmental factors that Hotel Effectiveness faced. Motivate your answer from the case study.

Question

Hotel Effectiveness, a 120-room select service hotel with a strong ambience, was having issues with its gross operating profit (GOP) margins including overtime, labour costs and distribution expenses. Two years ago, the hotel began experiencing a steady escalation in overtime hours due to increased occupancy combined with tight labour market issues. The significant increase in hourly wages created a challenge—some roles were up by 25%+. And, guest collection and dropping costs at various locations have been on the rise due to rising fuel prices. All these cost increases posed a problem for the hotel’s management company. The staff comprises of 40 people, blending longtime employees with newer hires. The hotel has ten different job positions, including supervisory roles. Since opening 15 years ago, the hotel has welcomed a balanced mix of leisure and business travellers—with particularly healthy weekend bookings, which include room-only guests, and small groups for social events . 2List two (2) micro-environmental factors that Hotel Effectiveness faced. Motivate your answer from the case study.

[2 x 2 = 4]

1.3.1Provide one (1) recommendation to Hotel Effectiveness on how they can make use of technological innovations to deliver better performance by the hotel.
1.3.2Indicate the possible benefit that could be derived from your recommendation.
[1 + 1 = 2]

1.4Planning can be divided into practical steps, irrespective of the level of management, and irrespective of the complexity of the situation. Write a report of 200 – 300 words on how you would explain the steps in the planning process to the hotel.
HINT: This cannot only be theory. You should use the theory and apply it to the hotel.
[7 x 2 = 14]

Answer 1

1. Two micro-environmental factors that Hotel Effectiveness faced are:

- Tight labor market issues: This factor refers to the difficulty of finding and retaining qualified employees in a competitive job market. The hotel experienced a steady escalation in overtime hours due to increased occupancy, which can be attributed to the challenge of finding enough staff to meet the demand. This factor affects the hotel's ability to efficiently manage labor costs and maintain optimal staffing levels.
- Rising fuel prices: This factor relates to the increasing costs of guest collection and dropping at various locations. As fuel prices rise, the expenses associated with transporting guests or delivering services and amenities also increase. This factor adds to the hotel's overall distribution expenses and can impact profitability.

1.3.1 Recommendation: Hotel Effectiveness can make use of technological innovations by implementing a workforce management system. This system can help optimize staffing levels, manage overtime, and streamline scheduling processes.

1.3.2 Benefit: By using a workforce management system, the hotel can improve labor cost control by accurately forecasting staffing needs based on occupancy levels and other factors. It can also automate the scheduling process, ensuring efficient allocation of resources and reducing the need for overtime. This will help improve gross operating profit (GOP) margins by minimizing unnecessary labor costs.

1.4 The planning process can be explained to the hotel using the following practical steps:

Step 1: Set objectives and goals - The hotel management should identify the specific objectives and goals they want to achieve, such as improving GOP margins and optimizing labor costs. They should consider the current challenges they are facing, including the tight labor market and rising fuel prices.

Step 2: Assess the current situation - The hotel should analyze its current operations, including reviewing financial data, evaluating staffing levels and performance, and identifying areas where costs can be reduced or efficiencies can be improved. This assessment will provide a clear understanding of the hotel's strengths, weaknesses, opportunities, and threats.

Step 3: Develop a plan - Based on the objectives and assessment, the hotel management should develop a comprehensive plan that outlines specific actions and strategies to address the identified challenges. This plan should include cost control measures, such as implementing a workforce management system, as well as strategies to attract and retain qualified employees.

Step 4: Allocate resources - The hotel management should allocate the necessary resources, including financial resources, technology, and human capital, to execute the plan effectively. This may involve investing in technology solutions, training staff on new systems, or reallocating budget to prioritize cost control measures.

Step 5: Implement the plan - The hotel should put the plan into action, ensuring that all stakeholders are informed and involved in the process. This may involve making changes to staffing levels, implementing new systems, and monitoring and analyzing data to measure the effectiveness of the plan.

Step 6: Evaluate and adjust - The hotel management should continuously monitor and evaluate the results of the plan, comparing actual outcomes with the set objectives and making adjustments as needed. This evaluation process should be ongoing to ensure that the hotel remains responsive to changes in the market and can adapt its strategies accordingly.

By following these steps, Hotel Effectiveness can effectively plan and implement strategies to address its challenges and improve its performance.

Answer 2

1. Two micro-environmental factors that Hotel Effectiveness faced are:

a) Tight labor market issues: The case study mentions that the hotel started experiencing a steady escalation in overtime hours due to increased occupancy combined with tight labor market issues. This means that it became challenging for the hotel to find qualified employees and retain them, resulting in increased staffing costs and overtime hours.
b) Rising fuel prices: The case study also states that guest collection and dropping costs at various locations have been on the rise due to rising fuel prices. This means that the hotel had to incur higher expenses for transportation services, which affected their overall distribution costs.

1.3.1 One recommendation for Hotel Effectiveness on how they can make use of technological innovations to deliver better performance is to implement an automated workforce management system. This system can help optimize labor costs, monitor and schedule staff efficiently, and minimize overtime. The system can use data analysis to forecast occupancy rates, peak periods, and staff requirements, allowing the hotel to align their workforce accordingly.

1.3.2 The possible benefit derived from this recommendation is a significant reduction in labor costs and overtime expenses. By implementing an automated workforce management system, the hotel can accurately forecast staffing needs and adjust schedules accordingly. This can help eliminate unnecessary overtime hours, optimize staffing levels during peak periods, and improve overall labor efficiency. Additionally, the system can provide real-time data and analytics, enabling the management team to make informed decisions about labor allocation, scheduling, and resource optimization.

1.4 Planning Process for Hotel Effectiveness:

Step 1: Define Objectives - The hotel should clearly define its objectives, such as increasing profitability by reducing labor costs and improving efficiency in distribution expenses.

Step 2: Conduct a Situation Analysis - The hotel should assess its current situation by analyzing factors like labor market conditions, rising fuel prices, and overtime hours. This analysis will help identify the challenges and areas requiring improvement.

Step 3: Formulate Strategies - Based on the situation analysis, the hotel should develop strategies to address the identified challenges. For example, implementing an automated workforce management system can be a strategy to optimize labor costs and minimize overtime.

Step 4: Develop Action Plans - The hotel should break down the strategies into actionable steps. For instance, the action plan may include researching and selecting the most suitable automated workforce management system, training staff on its usage, and implementing it within a specific timeframe.

Step 5: Implement and Monitor - The hotel should execute the action plans and closely monitor their implementation. This can involve regular communication with staff, ensuring proper utilization of the technology, and tracking key performance indicators related to labor costs and distribution expenses.

Step 6: Evaluate and Adjust - The hotel should regularly evaluate the effectiveness of the strategies and action plans. This step involves analyzing the impact of the automated workforce management system on labor costs and overtime reduction. Based on the results, adjustments may be required to optimize the system and improve overall performance.

Step 7: Review and Improve - The hotel should continuously review its planning process and seek areas of improvement. This step includes incorporating feedback from staff, staying updated on technological advancements, and adapting strategies to changing market conditions.

By following these steps, Hotel Effectiveness can effectively plan and implement strategies to address their cost-related challenges and deliver better performance.