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 and sports teams. From the case study answer the following questions

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 and sports teams. From the case study answer the following questions

1.2 List two (2) micro-environmental factors that Hotel Effectiveness faced. Motivate your answer from the case study.

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

Answer 1

1.2 Two micro-environmental factors that Hotel Effectiveness faced are:

- Tight labor market issues: This factor is mentioned in the case study as contributing to the increase in overtime hours. The hotel is facing difficulties in finding and hiring enough staff to meet the increased occupancy demand. This tight labor market is affecting the hotel's ability to manage labor costs effectively.
- Rising fuel prices: This factor is mentioned as causing an increase in guest collection and dropping costs at various locations. The increase in fuel prices is directly impacting the hotel's distribution expenses and posing a challenge for the management company.

1.3.1 One recommendation for Hotel Effectiveness to make use of technological innovations is to implement an automated workforce management system. This system could help in optimizing staff scheduling, tracking and managing overtime hours, and forecasting labor needs based on occupancy levels. It could also assist in streamlining communication between staff and management, ensuring efficient coordination and reducing labor inefficiencies.

1.3.2 The possible benefit derived from implementing an automated workforce management system is improved labor cost control and optimization. By accurately forecasting labor needs and scheduling staff accordingly, the hotel can reduce the reliance on overtime hours and significantly decrease labor costs. Additionally, the system can help in improving staff productivity and reducing scheduling errors, ultimately leading to better operating performance by the hotel and improved gross operating profit margins.

Answer 2

1.2 Two micro-environmental factors that Hotel Effectiveness faced are:

- Increased overtime hours: The case study mentions that the hotel experienced a steady escalation in overtime hours due to increased occupancy. This increased demand for labor indicates a micro-environmental factor affecting the hotel's operations and costs.
- Rising fuel prices: The case study states that guest collection and dropping costs at various locations have been on the rise due to rising fuel prices. This external factor impacts the distribution expenses of the hotel.

1.3.1 One recommendation for Hotel Effectiveness to make use of technological innovations is to implement an automated workforce management system. This system can help optimize labor scheduling, track attendance, and manage overtime more efficiently. By using AI-powered algorithms, the system can predict peak demand periods and distribute the workforce accordingly, reducing the need for excessive overtime.

1.3.2 The possible benefits of implementing an automated workforce management system include:
- Improved labor cost control: The system can help identify areas of unnecessary overtime and optimize staffing levels, resulting in reduced labor costs.
- Enhanced employee satisfaction: By ensuring fair and balanced shifts, the system can improve work-life balance for employees and reduce burnout.
- Increased productivity: Real-time data and analytics provided by the system can help management make informed decisions, leading to productivity improvements and better operational performance.
- Better guest experience: By having the right staff at the right time, the hotel can provide better service to its guests, resulting in higher guest satisfaction and potentially increased customer loyalty.

Answer 3

1.2 Two micro-environmental factors that Hotel Effectiveness faced are:

1. Escalation in overtime hours: Due to increased occupancy and tight labor market issues, the hotel experienced a steady increase in overtime hours. This factor directly impacts labor costs and profitability as overtime pay is typically higher than regular wages.

2. Rising fuel prices: The hotel faced increasing guest collection and dropping costs at various locations due to rising fuel prices. This factor affects distribution expenses and can put pressure on the hotel's gross operating profit margins.

Motivation: These factors are mentioned in the case study as challenges that Hotel Effectiveness is dealing with, impacting their profitability and operational efficiency.

1.3.1 One recommendation for Hotel Effectiveness to make use of technological innovations and improve performance is to implement an automated scheduling and labor management system. This system can help optimize labor allocation, reduce overtime hours, and streamline the scheduling process.

1.3.2 The possible benefit of implementing an automated scheduling and labor management system is improved labor cost control. By optimizing labor allocation and reducing overtime, the hotel can lower labor costs and increase gross operating profit margins. This system can also enhance efficiency and productivity by providing real-time insights into staff availability, skills, and labor requirements, leading to better staffing decisions and improved guest service.