Rainbow Bridge Hotel Analysis - Example

Hotel Analysis [Name] [Professor Name] [Course] [Date] Table of Contents Table of Contents 1 1.0 Introduction 3 2.0 Business Plan for Year 4 3 2.0.1 Product Sales 4 2.0.2 Raw materials 4 2.0.3 Services provided 5 2.0.4 Marketing and Distribution Channels. 5 2.1 SWOT Analysis 6 2.1.1 Current Strengths of the Company 6 2.1.2 Current Weaknesses of the Company 7 2.1.3 Current Opportunities to the hotel 7 2.1.4 Current Threats to the company 8 2.2 Objectives 9 2.3 Strategies 11 2.3.1 Corporate Market 11 2.3.2 Leisure Market 11 2.3.3 Conference market 12 2.3.4 Food and beverage 12 2.3.5 Service quality 12 2.3.6 Staffing 13 2.3.7 Physical property condition 13 2.3.8 EMS 14 3.0 Financial Targets 14 3.1: Average room occupancy 14 3.2 Average room daily rate 14 3.3 Total room revenue 14 3.4 Total Food & Bev Revenue 15 3.5 Total Revenue 15 3.6 Total Income before tax 15 4.0 Reference List 16 5.0 Appendices 17 5.1 Current Balance Sheet 17 5.2 Statement of Income for Year 3 18 5.3 Monthly indicator report for Year 3 19 5.4 Financial calculations for your forecast figures 21 5.5 EMS Decisions 21 1.0 Introduction Rainbow Bridge Hotel is a three-star hotel situated in XYZ town. Perched on the seafront, the hotel offers a breathtaking view of the city and has become local market leader competing against its two worthy competitors (one three-star hotel and one four-star hotel). It is located close to a shopping centre and is less than 30 minutes from the nearest airport. Generally, XYZ city has a good road, rail and bus networks to major cities and other resorts. The town has a resident population of 145,000. The brand recall among the corporate clients is high, and the customer perception is also positive given the hotel’s quality product and services standards. In year 4, Rainbow Bridge Hotel is projected to increase its total revenue by 10%, to $10,611,327.1. The hotel’s business plan addresses the following key attributes: The basic need to increase the highly rated hotel business. Need to increase the market share. Increase market segment to gain share of competitors’ business. Diversify promotional activities. Increase customer satisfaction. 2.0 Business Plan for Year 4 Rainbow Bridge Hotel is a three-star hotel that offers accommodation in addition a host of other offering such as food and beverage, spa and pool. In Year 3, the room occupancy was 64.5% contributing a total of $5,129,312 to the hotel’s total revenue. Lack of three-star hotels creates a profitability margin window for business in Year 4. When the hotel provides the customers with comfortable and clean stay, the fourth year of the hotels expected occupancy is estimated at 74.5%, with an annual growth of 10%. 2.0.1 Product Sales The majority of customers would comprise donor community, business executives, seasonal tourists, and seminars and conferences. Other key customers include international adventure tourists, travelers and trade bodies. No regular commission or one time will be offered to the sale workforce. Year 4 targets the traveler segment of customers to take advantage of the travelers who miss flight at the airport, or who fail to connect international flights. 2.0.2 Raw materials The basic requirements needed for running the hotel in Year 4 include the water, utilities and amenities. Generally, the requirements are available at discounted rates. In addition, the raw materials needed for running the hotel for local customers in Year 4 are commonly available in the market. Therefore, there is no need to depend on any particular manufacturer or supplier of a commodity. However, since the hotel targets the traveler segment, mostly international traveler, it seeks to diversify its cuisine offering. This shows a need to have new suppliers of different food supply, some of which may not be available locally. 2.0.3 Services provided The hotel provides restaurant, laundry, rooms for night stay, halls for parties and seminars. In Year 4, the hotel seeks to offer a free shuttle service to take and collect customers from the airport, as well as to tour touring customers around the locale. 2.0.4 Marketing and Distribution Channels. Marketing and promotional activities needs a carefully laid out strategy. Even though the promotional activities will continue from Year 3, the key sales pitch to be taken from the Year 4 include advertisement to the potential internal customers, discount campaigns and providing additional attractions to increase the hotel’s customer value. The hotel provides benefits and values to the customers beyond the standard of the hotel’s affordable rates and facilities. There is need to provide the clients with consummate personalized services and level of standards that will increase the hotel’s competitive edge. 2.1 SWOT Analysis The analysis below shows the internal strengths and weaknesses of Rainbow Bridge Hotel along with the opportunities and strengths that face the organization’s external environment. There is a need to improve the weak areas. The hotel’s strengths are to be leveraged to take advantage of the external opportunities as they emerge. Further, contingency plans are to be formulated to tackle the threats the environment presents. 2.1.1 Current Strengths of the Company Strategy: The hotel uses differentiation strategy, which makes its offerings unique to the customers, Structure: The hotel uses a flat decentralized structure. Skills: Rainbow Bridge Hotel benefits from a wide range of service skills within the staff and the management. The hotel has experienced and specialized staff that is motivated and self-driven. A well motivated sales team that is proud of the hotel and promotes the hotel brand. Location: Rainbow Bridge Hotel is situated in a central location with outstanding architectural heritage that is attractive to visitors. The hotel is also located on the seafront, which is a short distance from the main shopping centre. The hotel is less than 30 minutes from the nearest airport. YYZ town has good roads, bus and railway network to major cities. The town has a resident population of 145,000, which provides a ready market. Brand strength: The hotel brand is well represented stimulating brand loyalty among the current and potential clients. Reputation: Rainbow Bridge Hotel has a strong reputation in the travel trade, corporate and local market for offering commendable high quality services and for reliability. 2.1.2 Current Weaknesses of the Company Strategy: The hotel’s differentiation strategy is not well communicated within the local and the national market. The hotel has a weak interdepartmental communication (Krishnaiah, 2012). Staff: There is a need to train and orientate the mew staff on seasonal turnover. Facilities: Certain rooms are old and dilapidated triggering customer complaint. Such rooms need to be renovated and upgraded. They also need to be integrated with high speed internet access and local area network (LAN). Size: The large size of the hotel may turn into a weakness if the demand for the hotel remains small. This is since empty rooms will become costly to run and to maintain (Krishnaiah, 2012). 2.1.3 Current Opportunities to the hotel Market: the hotel industry is beginning to notice a growth after a period of slump. There is a potential to create more recreational facilities for clients without using any more open space. The slow yet consistent recovery of the national economy is increasing the potential of the back-office operations of the organization in the city (Yu and Huimin, 2005). There is an opportunity to develop tourist resources further. The hotel offers wide variety of events that attracts both local and external visitors. Refurbishment and expansion of the current facilities has the potential to improve brand name (Freund de Klumbis and Munsters, 2005). Competition: Currently, one direct competition exists with regard to the three-star hotel business niche. Guest dependency: The hotel experiences repeat corporate customers who require personal service in a small yet luxurious environment. Suppliers: The hotel has established long-term relationships with its suppliers. 2.1.4 Current Threats to the company Market entry: there is a high potential for highly competitive global brand to enter the market in the three-star hotel business niche. Substitutes: Four strong competitors are situated in the immediate area, including two two-star hotels, one three-star hotel and one four-star hotel. Since Rainbow Hotel does not create a new market, this means it has to compete with other hotels in the location for customer (Sun, 2011). Demand: The seasonal hotel demand is short term and threatening the viability of the hotel. Economy: Recovering from the small recession is taking time (Yu and Huimin, 2005). 2.2 Objectives Rainbow Bridge Hotel’s goals and objectives are straightforward and aim to ensure that the hotel is run in a profitable and ethical manner, strengthening relationships with the clients, investors and suppliers, driving sales and promoting the hotel brand. In sum, the hotel seeks to: In the financial objective, to achieve a forecasted revenue of $10,611,327.1 for Year 4. To achieve market dominance by giving highest premium services. Provide personalized service. Operate hotel properties, to be equipped and fully furnished to the standards of the national 3-star classification standards and to be able to maintain them at that level. Strengthen relationships with the investors. Secure desirable management contracts that can manage the hotel investment successfully as well as underpin market values. Strengthen the hotel’s position in the market place as a reliable hotel management company. Attain profitability levels that are sufficient for reinvestment and that can ensure equitable returns to investors and shareholders. Provide customer satisfaction within each hotel operation with regard to service food and beverage, standards and facilities and related products at fair price. Ensure management of the hotel through human resource policies that encourage and offer incentives to the individuals and team achievements through training and personal development. Create working environment where the staff can experience a real sense of job involvement. Market the hotel using effective marketing strategies. Integrate effective commercial practice and ethical standards in handling clientele, the suppliers as well as the investors. Comply with the statutory legislation and the local authorities. 2.3 Strategies Rainbow Bridge Hotel’s targeting and positioning in based on different strategies that depend on the market segment. 2.3.1 Corporate Market The corporate market makes a significant contribution to the total revenues. It also has the greatest paying capacity. For this reason, the hotel should continue maintaining the maximum share of corporate market to the revenues. The marketing strategy is to promote the hotel to the corporate market. The basic plan is to create pamphlets and catalogues about the hotel that shall be distributed at the corporate events. The catalogues will offer additional information on the services and special discounts of the hotel offering. 2.3.2 Leisure Market Rainbow Bridge Hotel has taken a conscious decision to leverage this segment to supplement the gap created by the corporate clientele over the weekends. The leisure market contributed to about 33% of the overall hotel occupancy, and only 20% share. However, this segment has a higher paying potential. The sales workforce will play an instrumental role in identifying customers in this segment. The hotel seeks to offer competitive prices compared to that of the competitors. In addition to radio advertisements, the hotel seeks to use television, websites and newsletters. Premiums prices will be charged on customers who stay at the hotel for more than 3 days. 2.3.3 Conference market Rainbow Bridge Hotel has a high share of the conferences because of its large conference hall within its premises. The segment contributes about 15% to the hotel’s revenue and 15% to the occupancy. Given the large conference hall, the hotel looks to charge charges premium to guests who attend the conferences and who also use its accommodation facilities. The strategy is expected to increase the segment’s contribution share to the accommodation and the revenue. Quality products and services will also be offered to ensure product differentiation. The organization also expects to advertise its conference facilities on its website, television and banners on the social media. 2.3.4 Food and beverage Rainbow Bridge Hotel will focus on what best differentiates its food and beverage from that of its competitor in the three-star hotel niche. The company will as a result focus on improving the quality of its products by adding different exotic cuisines to appeal to more customers, particularly the travelers, with different tastes. Advertisements will be done on the travel websites, the company’s websites, newsletters, banner and billboards. Competitive prices will be offered at lower rates to appeal to bulk buying. 2.3.5 Service quality The plan of the hotel is to go hand in hand with a strategy that ensured upgrading the services based on customization. The hotel wants to cater for the travelers as its new target group since the airport is 30 minutes away and hence offers a potential viable customer base. Therefore, people who miss their flights or whose international flights do not connect will be the prime focus. The hotel aims to focus on training its employees to cater for multicultural customers. Those of prime concern are the marketers and receptionists to be more people oriented to ensure customer satisfaction. The hotel also aims to start a free shuttle service to and from the airport. 2.3.6 Staffing Rainbow Bridge Hotel currently experiences a low turnover rate. The hotel would not need to train its entire staff to meet it targets. Rather, only the staff personnel need to be updated on new customer-oriented approaches to tackle the new target market. For instance, the sale workforce and the receptionist need to be customer-friendly. The financial managers need to be trained on new technologies for financial management. Other staff such as the cleaning staff and janitors would not need to be trained. Given the company’s expansion plans, new staff will have to be recruited. These include 3 salesmen and 2 drivers. The potential employees will be sought in local newspapers and the labour market. Internships to students will also be offered, who can be retained to work on fulltime. 2.3.7 Physical property condition The hotel’s deluxe suits need to be upgraded to have WI-FI facilities to meet the communication needs of the corporate clients. The traveler segment will also find the internet facilities useful. The hotel also needs minor internal refurbishment changes and works to the facia signate regimes and colour associated with the Rainbow Bridge Hotel brand. The proposed works include retaining skirtings, repainting timber windows and architraves. The ceiling should be repainted and retained. The carpets need to be replaced. Floorboards need to be patched and refinished. 2.3.8 EMS The environmental management services that the hotel integrates for Year 4 are focused on capital improvement and maintenance. Focus is put on reducing and recycling waste (level 2). The hotel also hopes to reduce usage of water in gardening and landscaping (level 2). Focus is also given to reduction in energy usage for lagging, insulation or draught exclusion and lighting (Level 2) [See Figure 1]. The hotel however has no plans to recycle and re-use water, or reduce water for showers and taps since the devices put in place have significantly helped in the area. 3.0 Financial Targets 3.1: Average room occupancy The average occupancy of the rooms is expected to rise by 10 percent, to 74.5 percent in Year 4. 3.2 Average room daily rate The Average room daily rate is forecasted to increase by 4 percent to reach 89.4 percent in year 4. 3.3 Total room revenue The Budgeted forecasts indicates room revenue $5,129,312 for Year 4 increase by 12%, with an average occupancy rate increase by some 10%. 3.4 Total Food & Bev Revenue The total food and beverage revenue is expected to increase by 15 percent to reach $4,456,926.20. 3.5 Total Revenue The total revenue is expected to increase by 10% to $10,611,327.1. 3.6 Total Income before tax The total income before tax is forecasted to increase by 11% to reach $1,718,658.51. Table 1: Financial targets Year 4 YEAR 3 AVERAGES/TOTALS YEAR 4 FORECASTS 3.1 Ave Rooms’ occupancy% 64.5% 74.5% 3.2 Average Daily Rate $85.2 89.2% 3.3 Total Room Revenue $5,129,312 $5,744,829.44 3.4 Total Food & Bev Revenue $3,875,588 $4,456,926.20 3.5 Total Revenue $9,646,661 $10,611,327.1 3.6 Total Income before tax $1,548,341 $1,718,658.51 4.0 Reference List Freund de Klumbis, D. & Munsters, W. (2005). Developments In The Hotel Industry: Design Meets Historic Properties. Retrieved from: Krishnaiah, P. (2012). "Andhra Pradesh Tourism – A Swot Analysis." Asian Journal of Research in Social Science & Humanities 2(4): 120-137 Sun, L. (2011). "The Core Competences and Strategic Management of Raffles — A Case Study of Singapore Hotel Industry." International Journal of Innovation, Management and Technology 2(4): 270-272 Yu, L. & Huimin, G. (2005)."Hotel Reform in China: A SWOT Analysis." Cornell Hospitality Quarterly 46(2): 153-169 5.0 Appendices 5.1 Current Balance Sheet Table 2: Rainbow Bridge Hotel Balance Sheet 5.2 Statement of Income for Year 3 Table 3: Rainbow Bridge Hotel Statement income Year 3 5.3 Monthly indicator report for Year 3 Table 4: Monthly indicator report for Year 3 5.4 Financial calculations for your forecast figures Avenue rooms occupancy = 64.5% + 10%= 74.5% Average daily rate = 85.5% + 5% = 90.5% Total room revenue = $5,129,312 + 12/100 = $5,129,312 Total food and beverage = $$3,875,588 + 15/100 = $4,456,926.20 Total revenue = $9,646,661 + 10/100 = $10,611,327.1 Total Income before tax = $1,548,341 + 11/100 = $1,718,658.51 5.5 EMS Decisions Figure 1: EMS Decisions Read More