Business Health Check for the Brighton Beach Hotel - Essay Example

Business Health Check for the Brighton Beach Hotel December 2006 ID: List of Contents CHAPTER PAGE Introduction 3 Background 4 Methodology 5 Type of Business 6 Factors that Impact on the Business 8 Definition of Products and Services 9 Effectiveness of the Business 10 Conclusions 14 References 15 Appendix on PEST Analysis 16 Introduction This document is the outcome of a business management evaluation of the organization for which I work. The aims have been to assess the economic health of the enterprise, and to develop recommendations for improvement in its business performance. It has been an overall attempt to use my academic learning in a real life commercial situation with which I am familiar. I trust that my employers will also find it useful, and that they will implement my suggestions. This report starts with a study of the environment in which the business operates. It considers the main management processes used by the organization, and compares the functioning of its major departments. The analysis considers how the resources and assets deployed in the business can be more productively deployed, and the quality of the company’s strategy, in view of its strengths and the threats it faces as well. The report attempts to take a long term perspective, considering the future values and relevance of today’s practices. PEST Analysis is a term integral to this report, which deserves a special description. This method considers the political, social, economic, and technological factors that have significant impacts on the fortunes of the company. The results of this analysis are appended to this report, after the list of references. This report also refers to the concept of a Mission Statement. The latter is an expression of the main purpose of an organization. It serves to unite efforts throughout an organization. The major conclusions of this exercise relate to productivity and professionalism. The organization realizes far less than its potential, making sub-optimal use of the capacities built in to its structure. It suffers from a paucity of formal procedures related to crucial management phases, and is more likely to be swept aside by tides of competitive changes, than able to leverage its strengths to grow in terms of its financial strength and market image. Fortunately, the situation can still be turned around. Background The name of the organization is the Brighton Beach Hotel. This name is partly suggestive of what the organization does. It offers a bed and breakfast facility by the sea side for visitors to the city of Brighton. However, this bare and factual description of the business hides untapped potentials on many fronts. Brighton is a major world tourist and business event destination, and as one of the city’s inventory of lodging places in prime surroundings, the hotel has a role in the promotion of the city has a whole. Similarly, as a surviving structure of the Regency era, the principal building asset has heritage value far beyond that stated numerically on its financial statements. The hotel is located on the Brighton city sea front, within striking distance of the city’s major attractions. Apart from its well established reputation as a resort and a convention center, the proximity and easy access of Brighton from London, gives it uncommon potential for year-round and global appeal for visitors of all demographic groups. Location is one of this hotel’s principal and most unqualified strengths, and one which can be exploited much further than it is today. The location is advantageous for business travelers and family vacationers alike. The functional organization of the Brighton Beach Hotel follows the conventional pattern of bed-and-breakfast establishments in the summer resorts of the temperate parts of the Northern Hemisphere. This makes it rather dated in terms of modern productivity concepts. Many employees are under-employed, and their career aspirations are not considered in any systematic way. Functional departments are perfunctory in their approaches, with little appreciation for initiative, or incentives to do better. Finally, the organization suffers from varying quality standards in various aspects of service, because of the relatively high dependence on temporary employees recruited to meet each seasonal summer rush. The hotel has a pedestrian position in its industry segment, with adequate and stable presence, but without any dynamic signs of ambitious growth plans. Methodology I started by reading available literature on management subjects, and by browsing my hotel’s website and other ones related to the city of Brighton. I tried to form some hypotheses in my mind about the strategic elements of business appraisal, and about the potential of a hotel business in a place such as Brighton in general. It appeared to me that the hotel followed a very traditional and conservative path of operating in a market environment full of modern ideas and needs. I therefore made a short-list of references which focused on the processes and methods of organizational change, and have used their concepts and ideas as a framework for my study and report. Reading and studying the references took a significant part of my time on this project. The learning from the books cited is a major gain for me personally, though the web sites did not add as much to what I knew about the hotel and the city previously. I then considered how I could apply my learning to the task at hand. A first step appeared to be to prepare lists of documents that I should try and access. I made two such lists: one related to the hotel for which I work, and for which I could ask for formal permission to access. The second list related to documents for which I could ask my friends who work in similar hospitality establishments. I knew that the latter would be difficult to access ethically, so I also prepared questionnaires which I could run on friends, colleagues in the hotel, as well as on willing guests. I therefore used a combination of references, internal interviews, meetings with hotel guests who agreed to participate in my project, and benchmarking with similar organizations. I supplemented my pre-existing knowledge of the hotel with information from the Internet (Brighton Beach Hotel, not dated, no page number). I conducted a total of 25 interviews, and covered all the functional management areas of the hotel, with a special focus on employee perceptions about career development and facilities for continuing education (Career Development, 2003, p7) Type of Business The present nature of the business is to operate a bed and breakfast facility in Brighton at a prime sea side location, in a kind of heritage building which is over 200 years old. It is possible to enhance the present nature of the business, and to upgrade it as well. The hotel has a second grade rating from the city administration, even though it has such a fine location, and is housed in such a fine building. The business nature is conventional and static by nature: it has not been thought through and structured on a professional basis. The limited scope of the business as it is viewed today is a major limitation in strategic terms. The hotel is privately owned and closely held. It is not listed on any stock exchange, and is insufficiently geared as a result. The owners are inheritors without professional qualifications, and limit business development to common sense and to some outdated industry practices. The business functions far below its potential as a result. Professionalism of management is lacking in the organization, and the enterprise suffers from a paucity of modern business management methodology. The hotel management does not employ outside consultants in a view to appraise the operations, and lack a structured vision about the future of the hotel. A major lacuna is the absence of a Mission Statement. Every establishment which operates in a highly competitive environment needs a Mission Statement (Payne, 2002, p 42). A Mission Statement is an expression of the core purpose of an organization, and all entities in the Service Sector, should make their customer satisfaction standards explicit. A Mission Statement would help all employees internalize the imperative to serve hotel guests to the best possible specifications. The absence of such a visible directive acts as a dampener on employee morale. Many of my colleagues do not respond to objections or to special requests from guests, simply because the core purpose of the hotel is not amply clear and frequently reinforced. I have discerned the business objectives of the hotel management by speaking to them, and by making inferences about the external marketing claims (Brighton Beach Hotel, not dated, no page number). The objectives of the hotel are qualitative and short-term by nature. They relate to providing an adequate bed and breakfast experience, with sea views from most rooms, modern amenities such as TV in all rooms, and choices between a full English breakfast in a dining area, vegetarian fare, and a continental selection by prior arrangement in rooms. There is also a common lounge area. The hotel therefore meets its qualitative and short term objectives by providing all the amenities which can be reasonably expected of a hotel of its given grade. Objectives should also be quantified, consider the long term, and reflect on business improvement areas. Nothing of this sort is documented, and I conclude from my discussions with the management and with my colleagues, that such perspectives are lacking in the organization. The approach is rather bureaucratic, with an emphasis on administration. The hotel survives simply because of the sheer weight of demand for rooms during the peak tourist season each year. Factors That Impact on the Business A PEST Analysis helps to put a business in the context of the environment in which it operates. My PEST Analysis for the hotel is appended to this report. The positive factors which the hotel can use relate to the popularity of Brighton as a conference and vacation destination, the prime location of the hotel, and the 200-year old building in which the property is housed (Brighton Beach Hotel, not dated, no page number). The negative factors against which guard are the absence of dining and bar facilities, the similarity of the business with other bed and breakfast facilities (Payne, 2002, p 96), and the absence of a coordinated human resources development policy (Career Development, 2003, p7). Definition of Products and Services The existing product is a bed and breakfast facility (Brighton Beach Hotel, not dated, no page number). The rooms are appointed as per the standards of a 2 star rating facility. There is a lounge area for guests. The breakfast service has a choice of fare, and includes a limited room service option as well. There are no ancillary services to improve customer satisfaction levels. The present business definition is limited and generic in nature. The location and heritage strengths and advantages of the hotels can be put to better use. Further, the hotel can make efforts to secure more of the spending budgets with which its guests come to Brighton. This will also make for better capacity utilization. The infrastructure, which is presently deployed for the breakfast service, can be used to provide traditional public house facilities, at nominal fresh investment, and with the possibility of high returns. The sea front strength can also be used to give guests distinctive visit experiences. I recommend conversion of the lounge area or one of the rooms without sea views in to a public house, with a provision for live music. Further, the breakfast area should operate during other meal times as well. The hotel should arrange tour facilities in and around Brighton and in the sea, as new value-added services. The hotel needs to take a fresh view of the definition and scope of the business, and how it can meet customer needs better (Ohmae, 1991, p 70). There is a high demand for experiences of the culture and ambience of the Regency era, and the hotel can transform itself from a poorly graded establishment, to one which provides guests with high spending powers, a unique experience. This will consolidate its position in the competitive business environment of Brighton, and lead to turnover and profit growths. Effectiveness of the Business The effectiveness of the business should be considered in view of its preparedness to meet the evolving challenges of the future (Hamel, and Prahalad, 1994, p 239). Brighton is a global destination, which attracts people of discerning backgrounds and increased spending power. The hotel should therefore leverage its assets and strengths more fully for sustained competitive advantage. The entity should be run on professional lines, with the development of a strong team spirit and unity of direction which epitomizes the best Service Sector members. There has to be a concerted attempt to build a brand of distinction, with a plan for revenue growth. The Human Resources function is almost entirely focused on Industrial Relations, rather than on improving the quality of employees, and helping them with relevant skills and career development opportunities. My own experience of joining the hotel proves that behavioral psychology methods are not used in recruitment. There are people deployed in functions that involve direct interaction with guests, who do not have suitable service personalities. This leaves many guests with less than fully satisfied experiences of staying at the hotel. Training is entirely focused on technical areas such as accounting procedures, laying tables, house keeping, and food preparation. General skills are not considered, and there is no help in terms of career advancement. Induction training for the extra staff that is taken on board to meet each summer rush is left to immediate functional supervisors, who in turn, are not equipped to teach new recruits in systematic and comprehensive ways. The Human Resources function distinguishes the best Service establishments from lesser ones. This area needs major attention in the hotel, for better financial performance in the future. It would help if the Department could start by preparing a Procedure Manual, so that much of the present capacity lost to routine is freed for more value-added and creative work. Certain mechanical processes such as the pay roll preparation and record keeping should be digitized and then outsourced, so that company professionals can spend time on more important tasks. A structured performance appraisal system would be an important and a useful new contribution from the Human Resources function to the business as a whole. Such a system would address the present informality and vagueness in terms of setting business objectives. It would also let employees know where they stand and contribute to team building as well (Adair, 1986, p 128). Formal performance appraisal should include identification of training needs, both for each present position, and for career advancement as well. The Marketing function does an adequate job in terms of promotion within its existing scope and limitations. The web site and hotel brochure are both informative, and also presented in attractive ways. The External Marketing effort is adequate in terms of the context of a bed and breakfast facility. The room pricing policies are strongly influenced by the Marketing Department, and are very competitive. The hotel has a competitive advantage in terms of offering well-appointed rooms with sea views, and within close proximity to the city’s major attractions, at such reasonable rates. The vegetarian breakfast option goes well with the economy rates to attract Asian guests. However, the Marketing function has a long way to go in terms of preparing the hotel for my suggested future as a value-added heritage experience of top quality. The major focus will have to be on Process elements of the Marketing Mix (Payne, 2002, p 168). The addition of dining and public house facilities will need Internal Marketing measures, many of which will need to be coordinated with the Human Resources function. The hotel must gear up to provide the planned superior lodging experiences, and to offer the new services to the best international standards. This will also mean that the branding of the hotel must be enhanced, which will be another major task for the Marketing function. Finally, the Marketing function will have to turn its attention to distribution and promotion elements, to make sure that hotel booking chains know about the new services offered by the hotel, and so that the upgrades are reflected in all communication investments by the hotel, and by the Bristol city administration as well. Though the Marketing department functions adequately for a small bed and breakfast facility as the hotel is of now, the people engaged in this part of the hotel’s operation may not be equal to the task of preparing for the new Avatar of the hotel which I have proposed. The management will need to weigh the alternatives of recruiting new personnel for this vital function, with that of using outside consultants. The Finance Department operates more as an Accounting and Treasury function, than as a full fledged support as in larger organizations. Book keeping is computerized using off-the-shelf accounting software. Hence, the trial balances, profit and loss statement, and balance sheet statements are available on real-time bases for those in this function, and for management. The hotel has an image of an economy and second-grade place of lodging. It therefore raises only modest expectations in the minds of prospective guests. Vacationers on tight budgets, and participants in conventions, hard-pressed to find any accommodation at all, are typical customers of the hotel. Complaints that the hotel has not met any of its advertised services, or that it has failed to meet city grading specifications, are virtually non-existent. The hotel has set conservative quality standards for itself, and is able to maintain an image consonant with its unpretentious claims. However, the quality standards and image are both far removed from the potentials of a global market place (Ohmae, 1994, p 177). The current management and technical competencies available within the personnel complement are of low orders. Concepts of modern strategic business management are lacking. The management style fails to evoke maximum initiative from employees, and most people rest content to adhere only to the letters of their job descriptions. The organization structure does not provide for the kind of sound conflict resolution which is essential to developing a world class organization (Hammond, 1994, p 140). Planning is informal and highly centralized. The entire operation is directed towards maintaining a status quo. This state of affairs finds reflection in the static financial performance of the hotel as a corporate entity. The hotel seems set for a radical change which will bring it in line with the dynamic business potential of Bristol (Nonaka and Takeuchi, 1995, p 162). This often happens to properties managed such as this one by acquisition by or merger with large, professionally managed hotel chains. However, it is not beyond the capabilities of the existing set-up to make the transformation on its own, if the management sets its mind to the task. The organizational structure has to be changed for better business performance. Empowerment of the lower levels of hierarchy, directly involved in guest interaction, should be the accent of these changes. Empowerment will only work if employees in line functions are re-trained for their new roles. It is well-established that the People element has a special role in the Marketing Mix for Services (Payne, 2002, p 162). Employees will have to learn to serve more international than domestic guests, and to cater to the more demanding needs of an upgraded clientele. The Purchase Department will need technical skills to manage stocking of the proposed bar, and the Marketing function will need to source and to select musicians for live performances. All categories of employees will need skills related to operating a top quality heritage structure in the competitive business environment of Brighton’s best hotels. Trained employees have to be retained, so the Human Resources function has to do more by way of formal career development (Career Development, 2003, p7). Some of the employees are relatively old, but they have to be motivated to take to continuing educating programs for their own good, and for the benefit of the hotel as well. Development of these new skill sets will enable the hotel to meet the needs of a more remunerative customer segment (Ohmae, 1991, p 73). This in turn, will be a path for the hotel to realize the full potential of its assets and strengths (Barger, & Kirby, 1995, p 230). Conclusions The Brighton Beach Hotel is a modest bed and breakfast facility. However, its sea-side location, the attractions of Brighton, and the 200-year old building in which the hotel is situated, offer opportunities for upgrading services. The addition of a public house within the spaces of the present lounge and the rooms without sea views, and the extension of the breakfast service in the dining room, to meals during lunch and dinner, are the first changes that I would like to recommend. The hotel should use the Marketing Mix elements of Services Marketing to prepare for such an upgrade, with special emphasis on the elements of Process and People. References Adair, J. 1986. “Effective Teambuilding”, London and Sydney, Pan Books Barger, N. J. & Kirby, L. K. 1995 The Challenge of Change in Organizations, Davies-Black Publishing, Palo Alto, California. Hamel, G and Prahalad, CK, 1994, Competing for the Future, Harvard Business School Press Hammond, TH, 1994, ‘Structure, Strategy and Agenda of the Firm’, Fundamental Issues in Strategy, edited by Rumelt, RP, Schendel, DE and Teece, DJ, Harvard Business School Press Nonaka I and Takeuchi, 1995, The Knowledge Creating Company, Oxford University Press Ohmae, K, 1991, ‘Getting Back to Strategy’, Seeking and Securing Competitive Advantage, edited by Montgomery, CA and Porter, ME, Harvard Business School Press Ohmae, K. 1994 The Borderless World, Harper Collins Publishers Payne, A, 2002, The Essence of Services Marketing, Prentice-Hall Brighton Beach Hotel, not dated, accessed December 2006 from http://www.thebrightonbeachhotel.co.uk/ Career Development, 2003, A Policy Statement of the National Career Development Association, accessed November 2006: < http://www.ncda.org/pdf/Policy.pdf> PEST Analysis FACTOR ANALYSIS Political Stable environment in the U.K. Social Growing demand for tourist and business-event needs in Brighton Interest in the Regency era Economic U.K. and global economic trends favor visitor growth in Brighton Number of travelers growing from emerging countries Rise in demand for prime realty in Brighton Technological Off-the-shelf software available for hotel management Read More