SWOT Analysis of the Hotel - Case Study Example

Hotel Report Student’s Name: Institution: Instructor’s Name: Date: 1. Executive summary Analyzing the performance for any business is always important because it will help in knowing the future position of the business. Performance has also helped in forecasting the future performance of the business because it is analyzed using the past. Hotel report tries to help us in understanding the importance of analyzing business performance by exploring through some topics for analyzing the performance while basing on strategies. The purpose of the report is to give us an insight on the performance of the hotel for the past three years and, therefore, plan for the fourth year. This report is useful because it goes through the financial records in all the departments of the hotel and also the strategies and objectives of the hotel. It helps us to understand the SWOT analysis of the hotel and how it plans to deal with the external and internal environment while considering the strengths, weaknesses, opportunities and threats. Table of Contents 1.Executive summary 2 2.Introduction 4 3.1.Strategies 5 3.2.Performance Analysis 6 3.3. Financial Analysis 6 4.Business plan for year 4 13 4.1.SWOT Analysis 13 4.1.1.Strengths of the hotel 14 4.1.2.Weaknesses 16 4.1.3.Opportunities 16 4.1.4.Threats 18 5.Objectives 18 6.Strategies 19 References 25 2. Introduction The first aspect we should understand about analyzing performance is the Star report, which is a tool used to analyze hotel performances in terms of occupancy, average daily rate, revenue per available room, supply and demand. It helps the hotel by providing a comparison with competitors and also to various segments in the industry, it also tracks performance for multiple time, for example, current performance, yearly performance and after three month performances. From the above insight on star report, we can as well conclude by saying it provides that hotel with a simple way of making decisions and strategies by simply analyzing the performance which is helpful when making decisions in any business. Therefore, in this report we are going to provide a report for the performance of a hotel in the last three years while basing on the decisions and strategies that were made. The purpose of this report is to help us in understanding the details of the strategies that have led to the current position of the hotel business. It also helps in understanding the various tools that were used so that the business made some profits or losses. 3. Analysis of hotel performance for the past three years Strategies and decisions for the past three years 3.1. Strategies Strategies are those aspects that will make a business have an objective; it simply provides a direction where the business is supposed to follow. In the case of a hotel, their strategies include the vision, mission and objectives/goals. Any business requires to have the three aspects in order to consider it a goal oriented business. Vision describes what the business wants to become in the future, the mission is the purpose orreason for the existence of the business. Mission tells what the business is providing to the society and, therefore, it must be a unique purpose, so that the customers will differentiate it from other business. Objectives are the end results of the planned activities and they state what is to be accomplished by when and should be quantifiable if possible. The next step after determining the strategies is to implement them with the help of appropriate decision making processes. Objectives will only be achieved when the process of implementation is successful. In the case of hotel business, it is important to develop a strategy that will result to attraction of customers because of the services that will be delivered. Mission statement; “providing the best service that guarantees hospitality and resulting to satisfactory delivery to all our customers’’ Vision Statement; “to remain the best hotel in terms of hospitality” Objective; “to maintain our quality service delivery and continue attracting more customers” The above explains the mission, vision and objectives of the hotel .they have contributed to the success of the business in many ways because the hotel performs its operations basing on these objectives, therefore, when we analyze the result of the hotel for the past three years we will focus on the strategies that were implemented and contributed to the changes of the hotel performances. 3.2. Performance Analysis When we evaluate and analyze the performance of the hotel in the last three years, we focus mainly on the financial performance. It is obvious that any business will be rated according to the financial performances because they are the key aspects that determine the position of the hotel. After looking at the financial performance, we look at the employee contribution in their operations of implementing strategies. Analyzing the performance should also include determining the issues that resulted to the poor performance at some point; these issues could either be internal or external challenges. This analysis will help in preparing the plan for the next year and will, therefore, predict the results for the next year. 3.3. Financial Analysis 2.1. Total hotel revenue and total hotel net income During the first year, it is clear that the hotel experienced a low OCC and REVPAR whereby the ADR was high, for the second and third year we can see the fluctuations on the independent variables while the dependent variable continued to increase. Short term analysis The chart above shows the short term stability ratio for the three years of the hotel business. As it is shown the ratio was increased in the first year until there was stability in the second year whereby the hotel experienced a constant increase in the short term stability ratio. Therefore, we can conclude by saying that the hotel has been making an effort in maintaining the short term stability Long term analysis Let’s look at the long term stability ratio of the hotel in the last three years, you find that the hotel was financially stable in the first year, until the second year where it experienced a shortage in the finance and the stability ratio decreased. After the second year, we can see that there was an increase in the stability ratio. When we compare the two stability ratios; long term and short term, we find that there was a problem in the second year whereby the hotel had to rely on the short term decisions due to the failure in the long term decisions. Total revenue and net income analysis When we analyze the results of the total revenue versus the net income of the hotel, we find that there is a gradual increase in both, however, the net income in the first year was slightly below meaning that the hotel experienced some loss since the net income was negative. After the peak of the hotel business in the second year, we find that there was an increase in both the net income and the total revenue. Rooms department revenue and room net income analysis The analysis of the rooms department and rooms’ net income shows the financial stability of the accommodation services in the hotel. You find that, in the first year, there was low turn up on the customers and, therefore, the hotel experienced lower revenue and net income. The revenue and the net income is realized to have increased for the second year as the hotel business began to peak and the customers were aware of our services. F&B department revenue and F&B net income From the chart, it is clear that there has been a continuous increase in the financial analysis of F&B department. The results show that the cost of refurbishment has been decreasing from the first year, it is, therefore, expected to continue decreasing. The chart explains the staff turnover in terms of percentage and we can see that there was a high percentage of staff turnover in the first year when the hotel was new in the market. The second and third year has experienced a low staff turnover, this implies that there is a challenge in the human resource department because it is concluded that the turnover continues to decrease. This analysis therefore explains that the employee contribution towards the implementation of strategies was low in the first two years and, therefore, towards the end of the third year, the contribution improved showing that there is a greater contribution by the employees. Even though the turnover is quite unpleasant, we find that their contribution in job performance is impressive. The spending on marketing in the first year were low as per the analysis, there was, however, a gradual increase in spending on marketing. This was aimed at attracting more customers by creating awareness of our services and hospitality. Therefore, the marketing spend is expected to decrease because the customers are aware and, therefore, the image of the hotel has been maintained. Challenges encountered for the past three years From the performance analysis, we find that the hotel encountered some challenges which were; Maintain in the long term and short term and long term stability ratios. This is seen when there is a drop in the long term ratio, while there is a rise in the short term ratio, therefore, the hotel had a financial challenge in maintaining the stability. There is also a challenge in managing the staff, this is shown by the analysis of staff turnover for the three years, and we find that there is a fluctuation in the turnover, even though their performance is impressive. The staff is seen to be coming in and moving out of the hotel. It is a challenge to be addressed in the human resource department of the hotel. The analysis of the last three years in my hotel gives us the results that we will use in preparing a plan for the next year (peter, 2012). Since the analysis shows some certain improvement in the performance of the hotel business, it is, therefore, important that we use the past performance to predict the future and, therefore, set some other strategies that will help us in achieving the future objectives. 4. Business plan for year 4 Business plan for year 4 based on the performance of the past three years 4.1. SWOT Analysis The SWOT analysis is a tool that is used to analyze a situation analysis of the company; It is the process of finding a strategy that is fit between the external opportunities and internal strengths while working around external threats and internal weaknesses. The current situation of the hotel will be analyzed by the use of SWOT analysis. It provides us with an insight on how operations are performed while considering the opportunities and threats (Singh, 2000). The analysis comprises of the internal environment and the external environment, of which we the external analysis of the hotel will consider the opportunities and threats, while the internal analysis will consider the strength and weaknesses of the hotel. As for the current situation of the hotel in January year four, The analysis will help us in planning for the rest moths and therefore we will consider the following; Generating strategies that will use strengths to take advantage of the opportunities whereby the hotel will set strategies while considering the opportunities in the external environment and, therefore, using the internal strengths to benefit from the opportunities. Generate strategies that will take advantage of the opportunities by overcoming threats. The hotel will, therefore, set strategies that will use the realized opportunities so that they will overcome the threats that are foreseen and in the external environment. Generate strategies that will use strengths to avoid threats, the hotel in this case will develop strategies while considering the level of threats and their level of internal strength, this will enable designing a strategy that will work towards avoiding threats by using the strengths. Generate strategies that will minimize weakness and hence avoids threats, the hotel will, therefore, develop and implement strategies that will minimize weaknesses in the internal environment because the fewer the weaknesses it implies that the hotel will be in a position to avoid threats. 4.1.1. Strengths of the hotel The hotel resources and capabilities, this is a strength that has contributed to the survival of the hotel. It has resources such as land, buildings and the human resource together with machinery and equipments. All the resources contribute to the success of the hotel in the past three years and will, therefore, be expected to continue providing a working environment. The hotel also has the capabilities, for example, the financial stability, which has been able to maintain the operations of the hotel. Distinctive competencies, the hotel have managed to surpass other competitors because it has distinctive competencies in its operations. Let’s take an example of service provision whereby the hotel ensures quality and satisfactory services to the customers through integrating the tools of customer satisfaction and the capability of the hotel. Value addition, through a combination of resources and capabilities with distinctive competencies, the hotel has experienced quite a range of profit making through value addition to the services. This was obtained through the use of resources and competencies to come up with a strategy that will lead to value addition of customers’ services. When we look at the measurement of value, we find that the customers’ attributes towards our services are encouraging and also the results of job performances explain the aspect of value in the hotel. Efficiency and quality, this is where the hotel has been able to strive in a competitive market through providing their services efficiently and delivering quality services. Efficiency is measured by the quality of inputs that are used by the hotel to provide specified outputs as for the hotel there is high productivity as realized from the past performance and, therefore, the efficiency is high and it, therefore, means that the hotel can minimize costs of production and increase the outputs in the fourth year. Innovation and customer response, the hotel has been able to use its strength of innovation by designing and implementing services that are new and, therefore, gives a competitive advantage to the hotel. Innovation has been achieved through product innovation and innovation processes. When it comes to customer response, the hotel has been able to conduct a customer analysis and identifying their wants and needs and, therefore, implementing ways of responding to those needs. One of the responses is quality service provision and timely services; this has generated loyalty among the customers of the hotel. Sustainability of competitive advantage, this strength has been obtained by the hotel due to; durability of the services and product provision whereby the hotel provides durable service to the customers, capability of competitors whereby the hotel has managed to go ahead of competitors as a result of innovation and the use of specific knowledge that cannot be substituted by other competitors. 4.1.2. Weaknesses The hotel has been under the weakness of maintaining a competitive advantage since the first year; we notice that, from the analysis, there has been a fluctuation in various sectors such as staff turnover, marketing strategies and financial ratios. This is one of the weaknesses which result to imbalance strategies of maintaining competitive advantages. Another weakness in the hotel is the stability of finance; we notice that there are a problem in the financial ratios, in the long term and short term decisions on stability ratios. The hotel, therefore, needs to come up with strategies to avoid such issues in the financial department. 4.1.3. Opportunities Opportunities present the ability of the hotel to take advantage by identifying the opportunities that are in the external environment (Clifton, 2011). The hotel has performed an environmental scan and has discovered some opportunities that will help in improving the position of the hotel. These opportunities are; The adoption of the internet in the business operations, this is done through introducing the use of internet services to provide customer services. The hotel has done some research and came up with the benefits of using information technology and internet service delivery. These advantages are such as a reduction in the costs of marketing since the hotel will use internet advertising and will reach many customers globally, also there is a twenty four hour online service provision whereby the customers can organize for reservations of accommodation via online, and this is projected to promote the performance of the hotel. Another advantage is a faster service which be enhanced through the use of information technology. Another opportunity is to provide other services apart from the hotel which are linked with the tourist operators. This is a niche that will help the hotel in expanding its services; the opportunity will be accomplished through linking our customers to the best tourist operators in the country. Also, the hotel plans on expanding its services which are not offered in other competitor hotels. These services include extension of conference halls, wedding halls and grounds, photo shoot grounds, photocopying and printing services to the business people and extra car parking. 4.1.4. Threats The threat is an aspect of looking at the competitors’ progress and the situation of the hotel, it also combines the forces that lead to changes in the operations and they involve political, economic and social changes together with the technology. The hotel has identified an economic threat based on the monetary policies of the government. This is a treat because the government is not quite considerate when stipulating their monetary policies, which result to fluctuation in the profits of the hotel. There is also another threat about the rapid expansion of the competitors who have gone to the extend of opening up more branches globally. This is a threat to the hotel because they will not be able to serve customers globally through online services yet there are other hotels that are accessible to them. 5. Objectives The hotel report must present the objectives based on the past performance for the last three years. These objectives should be SMART meaning they should be specific, measurable, attainable, realistic and time bound (Michael, 2011). The objectives of the hotel will include; Ensuring sufficient service by expanding our services Designing an effective monitoring and control systems Designing an effective compensation system Use of information technology and internet in the marketing of our services Effective use of resources through developing a financial control system Strive to remain ahead of competitors through use of competitive strategies such as low cost leadership. 6. Strategies Strategies are the aspects that the hotel needs to focus on them so as to improve the service provision and also to implement the objectives (Andrews, 2013). These strategies are based on the opportunities and threats and, therefore, designing some strategies that will take advantage of the opportunities and avoid the threats. Designing an effective control system; the hotel will, therefore, design an effective control system based on the financial performance of the past year and the projected performance. It is, therefore, important to design a control mechanism that will enable efficient use of finance and limit the waste of resources. This will enable the projections of the financial stability to be successful because the hotel will control the budget by ensuring that the expenditures do not exceed the revenues. It will also ensure a constant stability in the long term and short term financial decisions. Designing an effective marketing strategy; as from the performance of the marketing strategy that was designed in the past years, it is noticed that there is a fluctuation in the marketing results. The hotel plans to design a marketing strategy that will aim at maintaining the existing customers and also attracting more customers. The purpose of marketing strategy will be to penetrate into the new markets such as advertising through the use of electronic marketing where customers will be targeted globally. Marketing strategy should be aimed at minimizing the costs because the hotel has established a customer relationship; the only remaining aspect is that of penetrating and creating awareness in the new markets. Developing a strategy for performance measurement and operation control; this is a strategy that will aim at controlling the operations of the hotel, it will be basically on the control of the flow of activities in and out of the hotel. This control system will range from the control of supply of inputs into the hotel, control of the production process, control of employee operations and the control of service provision and customer satisfaction. Performance measurement is integrated with operation control so as to come up with effective use of resources in operations. The performance measurement will focus on the contribution of the staff towards achieving the objectives of the company. Designing an effective compensation system; the hotel having realized the staff turnover results from the analysis, it has decided to design a compensation system that will motivate the staff. It is obvious that the staff provides the human labor needed in the hotel and they perform various operations ranging from receptions, chef, waiter/waitress, security guard, cleaners, managers and secretaries. All these staff is managed through the human resource department, therefore, the hotel has planned on designing a compensation system that will reward the staff according to the level of operations. The compensation system is a way of motivating staff and it will lead to improved and stable staff turnover. The human resource manager will also aim at recruiting qualified staff who will add value to the performance of the hotel through their innovative skills and competencies. Weekday program on marketing the hotel products and services Weekday: business press (weekly expenditure—1688) Weekend: business press (weekly expenditure- 1688) Group: direct sales force (weekly expenditure– 1700) Meal: local radio (weekly expenditure – 350 per day) or local newspaper (weekly expenditure 550) Event: direct sales force (weekly expenditure– 1700) Conference: direct sales force (weekly expenditure– 1700) A Weekly Budget: Search engine optimization: 1500 Contract a web designer to optimize website: 1000 Online advertising: 1200 Other market segments Decisions of the hotel Waste reduction and recycling: level 1 Water usage reduction – Gardens and landscaping: level 1 Water usage reduction – WC: level 1 Water usage reduction – recycling and re-use: level 1 Water usage reduction – flow control devices: level 1 Energy usage reduction – lagging, insulation, draught exclusion: level 1 Energy usage reduction – lighting: level 1 Room mini-bar: FACILITY DESCRIPTION: The provision of small refrigerators supplying chilled soft drinks, wines and spirits BENEFITS: Adds value for room sales/ Can influence liquor revenue in proportion to the number of guests staying at the hotel. CAPITAL COST PER ROOM: $429 INSTALLATION TIME: 3 weeks Internet: FACILITY DESCRIPTION: Provision of dedicated data point for PC access to internet and e-mail, plus office desk with chair, suitable for business users. BENEFITS: Good for business customers/ Adds value to room sales. CAPITAL COST (PER ROOM): $84 WEEKLY LEASE LINE & MAINTENANCE COST (PER ROOM): $4 INSTALLATION TIME: 6 week Quick check-in and check-out: FACILITY DESCRIPTION: The provision of smart card or swipe machine enabling credit card checkout. BENEFITS: Good for business customers./ Speeds departure./ Adds value to room sales CAPITAL COST: $8,629 INSTALLATION TIME: 6 weeks Business service: FACILITY DESCRIPTION: business services center offering copy typing, fax, photocopying, etc. BENEFITS: Benefits business customers./ Adds to room sales./ Adds to cross-sales for conferences CAPITAL COST: $60,403 INSTALLATION TIME: 6 weeks Extra car parking: FACILITY DESCRIPTION: 80 extra car-parking spaces adjacent to the hotel. BENEFITS: Adds a value to all hotel services. CAPITAL COST: $86,290 INSTALLATION TIME: 12 week Conference/ function room: FACILITY DESCRIPTION: Two new conference rooms.1x100 guests (School Room) and 1x50 guests (School Room). BENEFITS: Satisfies the latent demand for conference facilities in the area; more background information is available within the relevant Market Research. In addition to conference office staff, sufficient staff must be recruited to deal with the preparation and serving of food for the conference and wedding/social event meals. You should calculate your Conference and Banqueting staff requirements using the guidelines for Food and Beverage staffing levels appropriate to your menu and supplier choice. Decisions on prices, staff recruitment and training, and advertising may be made as soon as the conference centre will be constructed. The Conference & Banqueting Facilities will enable the hotel to sell Conferences, Weddings and Social Functions. Remember that a high level of Conference/Wedding/Social demand will put additional pressure on the Accommodation Services, and, therefore, the hotel will review on the level of staff.. CAPITAL COST : $522,970 MAXIMUM DELEGATES AT A CONFERENCE : 250 MAXIMUM GUESTS AT A WEDDING OR SOCIAL EVENT : 200 STAFF REQUIRED FOR CONFERENCE OFFICE : 2 INSTALLATION TIME : 20 weeks References Andrews, S. (2013). Hotel Housekeeping: A Training Manual. Tata McGraw-Hill Education. Copyright. Bard, j. A. (2011). Hotel Front Office Management. john willey and sons. Clifton, D. (2011). Hospitality Security: Managing Security in Today’s Hotel. CRC Press. Corporation, H. H. (1991). Annual Report: Hilton Hotels Corporation. Hilton Hotels Corporation. Division, P. T. (1987). Hotel industry in Pakistan: a survey report. Pakistan: Planning, Development & Research Wing. Ingram, H. (2013). Business of Hotels. Routledge. Michael J. O'Fallon, D. G. (2011). Hotel Management and Operations. johnwilley and sons. 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