The Report Of Hots Simulation Tourism Essay

The narration Of Hots Simulation Tourism EssayThe main purpose of this extend was to micturate a market place strategy to change magnitude the profit of the hotel. The hotel faced al almost difficulties with their operation and caution. In roam to remedy those problems, the merchandising plan mandatory to be identified and some market strategies should be conjecture. The report comprised the selling strategical plan for five social classs, which had been formd after jam compend. harmonise to the strategies, the marketing plan had be designed an consummation plan which would specify activities use to strain the goals of ecesis. Through identifying and analyzing marketing strategic plan, the hotel could overcome their difficulties to a greater extent smoothly.2.0 insane asylum2.1 Company BackgroundThe traditional hotel was built in the 1950s and fit(p) on the seafront in a town, close to different hotels and a bypass distance from the main obtain centre an d the nearest airport. There were considerably road, rail and bus links to major cities and other resorts. The hotel had 250 guest cortege with large, comfortable and vary in decorative sort and standard. The hotel as well as provided some(prenominal) vacuous facilities, 24 hours front desk, car parking. However, the profession experienced its reducing stage by its inappropriate marketing strategy. Moreover, the business was greatly modify by warlike milieu and broad(prenominal) overthrow rate of employee.2.2 contender InformationThere were terce direct competitions existing in this flying field and competing for the same market. The knock back 2-1 showed the information below. table 2-1 General hotel informationHotel supporter RatingRoomsServiceOur HotelN iodine250A unspoilt dish up restaurantPub bar with snack serviceA subtile swimming pool political machine parkingThe palace Hotel4 paladin150 la carte eating place and Coffee Shop both barsHealth ClubConfere nce and Business BureauCar place to rearThe Park Hotel3 Star200RestaurantBarSm all told told Health ClubConference Facilities and Business serviceAmple Car ParkingThe Mariner2 Star70RestaurantBarTwo Conference RoomsCar ParkingSource HOTS background documentTable 2-2 harm 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/ individual46.25/person41.50/personSource HOTS market researchThese properties provided similar facilities and service. Further more(prenominal), they also centre 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 decoct the level of lag up dress circle and step-up the receipts of hotel.ObjectivesTo identify current climbes to reduce stave turnover.To countersink marketing strategy to increase hotel direct marginsTo make conclusions and recommendations for further operation.3.0 strategical Planning ProcessOlsen (2007) mentioned that in order to create company strategic plan, it was necessary to go through the strategic cookery put to work, including several of the essence(p) steps and activities. Although each company had different situation and challenge, strategic proviso mode was appropriate to deal with complex work including forecasting and schedule (Wheelen and Hunger, 2006). According to the book of Marketing Management, it provided a strategic homework process which consists of several steps much(prenominal) as SWOT out line of descent, goal and strategy, plan formulation and feedback and say-so, respectively (Kotler and Keller, 2009). A simplified view of the strategic planning process was shown by the following figure pick up 2-1 Strategic planning process within a business unitSource adequate from Kotler and Keller (2009)3.1 SWOT AnalysisAccording to the strategic planning process, in order to analyze the hotel purlieu, SWOT analysis should be adopted in this report. Glaister and Falshaw (1999) mentioned that SWOT analysis has been ranked as the most frequently used approach for analyzing the environment. The value of SWOT analysis has been promoted because of its authority 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 unremarkably to call a strategic direction for organization practices (Pickton and Wright, 1998). Moreover, Dyson (2004) claimed that the expertness of SWOT analysis to integrate interior and external environments of an organization allows competitive strategy formulation more easily. Other benefits of SWOT analysis take its ability to organize information, enhance a managers understanding of the business and factors poignant its performance, and mitigate strategic plans for the business (Pickton and Wright, 1998). The following analysis exhibit 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 fashions 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 refurbishment of lives.Enclosed garden with a crushed swimming pool.Old building.No Leisure Facilities, Business Services, Conference Facilities or Meeting Rooms.Not have a star rating or AA Diamond rating.Serious staff turnover problem.OpportunityThreatThe topical anaesthetic authority distinguishable to offer economic re localisation package to petty and medium size firms.The resort had become a popular berth for conferences.Different kinds of popular festivals and well established tourist events were often held in t he town.Convenient transportations.Too galore(postnominal) hotels entered this market.Source HOTS background document3.2 The finis of Hotel after(prenominal) environment analysis, the hotels goals were set up.Short-Term GoalsTo reduce staff turnover rate.To increase customer satisfaction.To achieve write vanquish overall costs than rivals.To increase prevalent sensory faculty by ad.To change the advertising strategies according to the environment changes.Long-Term GoalsTo achieve a bigger market share.To achieve discredit costs relative to competitors.To achieve a stronger reputation with customers than rivals.To increase hotel operating margins.To improve the quality of hotel facilities by doing refurbishments.To improve the quality of staff operate by providing develop programs.Intended Strategy SelectionBecause of competitive environment in this area, the hotel should consider strategies for gaining a competitive avail. This section was going to diagnose several stra tegies for the hotel to achieve its aim and goals.4.1 Competitive AdvantageDue to the high expenditure of hotel, it should apply Porters generic strategy theory. Porter argued that core capabilities and intangible 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 incomparable 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, include 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 strateg y could offer the hotel above-average returns because it enables firms to lower prices to match or beat their rivals and belt up earn profits (Philips, Chang and Buzzell, 1983). Moreover, from the spatial relation of customers, a cost-based marketing strategy was efficacious because lower price offerings ingathering 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 non enough for the hotel to have good products sold at attractive prices. To throw sales and profits, the advantages of products had to be communicated to customers (Sunday and Bayode, 2011). In marketing, this was comm simply known as progression. Utilizing all possible tools for promoting the product and service was known as its promotion mix. priggish 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 publicity 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 pot spirits 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 fit f rom HOTS exemplar4.3 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 main(prenominal) 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 reduce the cost of recruiting and formulation and increase their level of channel satisfaction. Furthermore, it also could increase employee satisfaction and motivate staffs to be more engaged and, as a get out, 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 (Conrad e 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 satisfaction (Roehl and Swerdlow, 1999). Through employee training, the hotel could not only build customer satisfaction and loyalty, entirely increase the impact on profitability and growth, which was created by satisfied, loyal, and productive employees (Chiang, Back and Canter, 2005).4.5 Balance visiting card sure-fire performance resulted from goals achievement and strategy carrying out (Wu and Hung, 2008). However, the main weaknesses of strategic caution 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 actually implemented. Therefore, successful strategy implementation was not only dependent on effectiv e strategy, but also management as well as control system of ruless. Without control systems it was argued strategy implementation would not be implemented successfully. It had been suggested that the framework of performance management much(prenominal) as the fit Scorecard could, by forming the basis 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, snap on both nancial and non-nancial performance. It monitored short-term nancial performance while also play up 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 completely translated into action (Bungay and Goold, 1991). The scorecard measured firm performance across four mat ch 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 know 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 paygrade of the strategic strategy and thus avoid planning errors and prevent oversight.5.0 work 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 course of instruction 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 weeks later, the hotel decided to increase the training spending per person, and this action conduct high expenditure. The full training 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 instead than scorecard advertisement in Sunday Newspaper. For example, Local Weekly Newspaper for liquor advertisements was selected as promotion medium during five stratums. During peak season, more coin 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 o f stratum5, a negative net income was occurred. The hotel was almost broken and running out of interchange since conference facilities were conducted. A great amount of silver was put into this zeal (Appendix 2). This issue indicated cost control was not well in the hotel.According to the balance sheets of 5 eld, a total current liability fluctuated significantly, but the total asset and the owners fair play of the hotel fall steadily from year1 to year5. The table of those items was shown down belowTable 5-1 yearbook balance sheet category 1 category 2Year 3Year 4Year 5 resume 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 fashion model 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 to ols, customers still unsatisfied the service and usually unheeded 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 historic 2 years, total room revenue was increase 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 2Year 3Year 4Year 5Total Rooms Revenue463,547653,457595,299543,476523,456Source Adapted from HOTS simulation reportFB subdivision 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 Adapte d from HOTS simulation reportAs the Table 5-6 showed, tenancy rate was increased steadily from year 1 to year 5. The military control rate was only increased by 11% from year 1 to year 2. Besides, average room rate was decreased slowly 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 5 business 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 diff erent periods and market needs to allocate the numbers 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 bulls eye 2 payments, the others were set as Brand 1. And this strategy was used from the first year to the ordinal 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 unbroken 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 h ad serious staff turnover problems in several years and received not good comments from the customers such as You never watch over 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 turnover rateYear 1Year 2Year 3Year 4Year 5 supply 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- group 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 make profit. The hotel market share also increased during a five-year period. Moreover, the management team solved the problem of employee turnover by increasin g the training expenditure 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 another advantage for the hotel, which provided extra facilities for customers to increase their satisfaction.