Operation Management: Savoy hotel case - Essay Example

?Table of contents Section Page Executive Summary 2 Introduction 3 1 Objectives 3 2 Scopes 3 3 Acknowledgments 3 4 Assumptions 3 5 Background 4 2. Strategic Issues 4 2.1 Customer and Market 4 2.2 Services 5 2.3 Market Order winners and market qualifiers 5 3. Operational issues 6 3.1 Booking 7 3.2 Parking 7 3.3 Reception 7 3.4 Room services 7 3.5 Conference room 8 3.6 Recreational facilities 8 3.7 House Keeping 8 3.8 Laundry service and Inventory 8 3.9 Maintenance 10 3.10 Fire emergency 11 4. General Recommendations 12 4.1 Installation of unified wireless networking 12 4.2 Eco friendly installations 13 5. Conclusion 14 6. References 15 Executive Summary This report provides an analysis of some key areas of the operations within the hospitality industry, using Savoy hotel, Frankfurt as a case study. Management is not satisfied with the profitability of business and therefore wants to re-assess hotel’s operation management. First part of the report deals with strategic aspects of hospitality services of Savoy while the second part concentrates on operational management. In connection with increase of quantity of hotels and hotel chains, consumers have now more choices where to stop, when they travel. It has led to increase the demand for qualitative services of hotel. Report focuses on problems that are faced by hotel business, as well as viable suggestions on how services can be improved. The areas focused are booking, parking, reception, lobby services such as availability of Wi-Fi and self check in kiosks in lobby, room services, recreational facilities, conference room facility, guest room cleaning, laundry quality, inventory, maintenance, fire fighting and emergency procedures of the facility. The report investigates the current operations and existing practices at the hotel. Consequently, some problems have been identified and addressed suggestively. Thus, recommendations are made accordingly such as special discounts as many customers would like to save money. To keep competitiveness, a hotel economy should listen to consumer requirements of quality hotel with additional services. Recommendations include availability of integrated network on Wi-Fi, interactive and user friendly kiosks, technological improvements in booking, reception, room , conferencing services, automated record of housekeeping and laundry inventory, portable fire extinguishers and their suggested locations, maintenance followed by routine inspections and eco friendly measures, in order to seek a plausible conclusion. 1. Introduction 1.1. Objectives: The aim of this report is to analyze strategic operation management of Savoy hotel, Frankfurt. For better performance and improvement, the identified problems will be addressed and analyzed in search of plausible conclusions. 1.2. Scope: Scope is to focus on operation management of Savoy hotel and devise an operational management strategy coupled with recommendations for value added services 1.3. Acknowledgements: In order to complete this academic report, the students interacted with hotel staff for a valuable insight of procedures/processes of hospitability industry. Course materials, academic journals, websites and facts have been resorted to strongly back up the ideas/suggestions. 1.4. Assumptions: This report is made by students and, henceforth, is produced for academic purposes. Therefore it is not conclusive to be presented as a professional insight in hospitality services. 1.5. Background: Savoy hotel is a four star rated hotel establishment comprised of 144 rooms. Operation Strategy Krajewski, Larry and Malhotra (2007) explain that strategy specifies how operations implements corporate strategy and helps to build a client driven hospitality service. Operation strategy links long term and short term operations decisions to corporate strategy and develops the capabilities the hotel needs to be competitive. It is the core of managing processes and value chains. Operations strategy is the linchpin that brings these processes together to form value chains beyond walls of hotel to ensure client satisfaction. 2.1 Customer and Market There is a dire need to implement a client-driven strategy. This has to be achieved through effective marketing strategy focusing potential clientage. Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others. (Kotler, Bowen, & Makens, 1999). Marketing analysis categorizes customers, identifies their needs and assesses competitor’s strength. Information is used to develop competitive priorities. Priorities help managers to develop the services. When marketing wants to add a new service, it should coordinate with operations to ensure that hotel has finances to support it. An operations strategy that requires investment must coordinate with finance because it affects the ability of firm to generate revenues and contribute to performance. 2.2. Services Services strategy should exhibit the characteristics of intangibility, inseparability and variability. Employees should be managed effectively. Training should be a regular feature. Performance can be enhanced by regularly giving incentives and bonuses. Motivated employees ensure quality in services. Risk analysis/mitigation is of vital importance for management to avoid catastrophe in routine operations. Development of good hotel culture is also very important to ensure quality services. 2.3. Market Order winners and market qualifiers Terry Hill of the London Business School has developed the strategic concept of order quali?ers and order-winners. Market quali?ers can be de?ned in hospitality services as the minimum elements or characteristics a hotel or its services must have to even be considered as a potential. Basically, when very few hotels offer a specific characteristic, such as high quality, customization, or outstanding service, that characteristic can be de?ned as an order-winner. However, over time, as more and more hotels begin to offer that same enhancement, the order-winner becomes an order-quali?er. In other words, it becomes the minimum acceptable level for all competitors. As a result, the customer uses some other new enhancement or characteristic to make the ?nal purchase. On a strategic scale, it is recommended that a detailed Enterprise Resource Planning of Hotel should be carried out to avoid being just a qualifier. First stage of an ERP is doing the AS-IS study of all the processes of the hotel. Then a TO BE study should be conducted in which all the redundant processes should be removed .Then comes a design and implementation phase. This activity shall remove all the decaying and slow processes in the hotel and supplement the productivity of service with a very effective system of services and process eventually making Savoy a market winner. Operational management Term operations management refers to systematic design, direction, and control of processes that transform inputs into services/products for internal and external stakeholders. A process is an activity or group of activities that takes one or more inputs, transforms them, and provides one or more outputs for its customers. A process can have its own set of objectives, involve a work flow that cut across departmental boundaries and may require resources from other departments. Therefore cross functional coordination is essential to effective management of hotel. The concept of operations strategy plays an important role in determining the overall long term success of an organization. Developing an operation strategy means looking to new ways to add value for the customer in the goods and services that the hotel produces and delivers. Value can have many meanings. Managers must therefore align the operations strategy with the strategies of other functional areas and with the hotel’s overall business strategy. The combination of the globalization of business coupled with advances in technology has created a hyper-competitive environment in which managers must constantly be looking for new and innovative strategies to stay ahead of the competition. To properly implement these strategies, managers need to clearly understand the core capabilities and focus their resources on maintaining and improving these capabilities. 3.1 Booking Web site of the hotel needs to be up graded ensuring fast online booking. It should act as an effective tool for marketing. Discount feature needs to be frequently introduced and highlighted on the web site. Potential clientage should be lured through lucrative website and they should understand why Savoy as choice of hotel is worth their money. 3.2 Parking There is no parking available at hotel. This proves to be a problem for clients. Parking should be arranged to facilitate guests. 3.3 Reception Reception of the hotel works on manual entry. It is recommended that hotel reception desk software is installed which shall save many hours of work and ensure speedy yet effective communication with clients. 3.4 Room Services "We're finding that baby boomers are spending more time in their rooms when they travel, just relaxing, and younger generations are spending more time in their rooms working," says Bjorn Hanson, a principal in the Hospitality and Leisure Practice at PricewaterhouseCoopers. "As a result, there is a higher level of demand for room service, and hotels are forced to improve it." Room service of the hotel needs to be improved. It is recommended that room should offer fine dining in guest rooms instead of delivering food all together on one tray. A server should arrange a table in the room with Frette linens, white Bernardaud china and sterling silver, and deliver each course one by one or as the guest wishes. An economical but quality meal for children with goody bag as a complement can even further value the room service. Wine list of room service can be upgraded. 3.5 Conference Rooms Conference room facilities are not adequate. Fully equipped business and conference centre should be established with video conference facilities and state of art corporate environment. 3.6 Recreational facilities: Hotel has an adequate gym and sauna facilities. In gym cardio vascular machines need an upgrade with I pod dock facilities and gym instructor needs to be made available on request of clients. 3.7 House keeping “Hotel industry surveys consistently confirm the fact that the role of the housekeeping is most important, from the point of view of the hotel’s guests.” (Hayes & Ninemeier, 2007, p.312). It is ideal that Savoy Hotel runs a good practice of distributing a room cleanliness rating card (refer to appendix 1 for Savoy Hotel room cleanliness rating card) to guest rooms in purpose for rating the room cleanliness. By doing this, the housekeeping staff receives feedback from the guest’s point of view and they know how well the rooms have been serviced. Complaints from guests, if any will help improve service. 3.7 Laundry service and Inventory Choosing to outsource in commercial laundry service has advantages for two reasons, convenience and real estate costs. On the other hand, “the hotel does not want to take the responsibility of having yet another large department in their organization” (Jones, 2005, p.355). However, this has certain disadvantages in controlling the laundry quality. The fact is that Savoy Hotel does not have an in-house laundry. All laundry is outsourced to a service company who picks up dirty sheets, towels etcetera, and delivers clean linens every day. It has been evaluated as a considerably good operation. However, the point is that checking laundry quality of every delivery is an issue. The hotel staff cannot possibly take their time checking every item. Consequently, quality of laundry when delivered may not be satisfactory or a random check of a few items, if any, will not make a difference as damaged or defected items are in between a large quantity of laundered items. Defects may occur to these items during the cleaning process or transport by the side of the service company, which is out of the hotel’s control. Problems are only found when room attendants make use of the items when it is too late to claim as to how, by whom and when the damage or defects have been caused. It is suggested that automated system of laundry and quality control be implemented, such that the items are inspected upon delivery and records are updated by the housekeeper on every incident. Damaged items should be isolated in a separate bag and reported to the staff in charge for controlling purposes. Loss and damage as mentioned above must be recorded immediately so the staff in charge can easily trace the causes. This relates not only to the costs and expenses of purchasing items against revenues but also to balance availability for use. Jones, 2005, p.263 states that “use, balances, supply levels are critical control information that must be routinely maintained to ensure availability of materials when needed”. Thus, it seems that the controlling system at the hotel is not functioning quite well at an optimal level. Some cases of damaged items were not reported or housekeepers simply discarded bath towels and other damaged or dirty items beyond repair in rubbish bags for disposal. Have records on damage, loss been done effectively? Is staff checking item inventories properly? And what is frequency basis of the controlling system for checking inventories? It is known that the hotel has inventory control system in place but needs to be executed in a different manner for better performance. Management should look into this issue as the establishment can experience big expenses against its revenues in a long term. Hayes & Ninemeier, 2007 recommend a systematic tool for proper inventory control, called “a product usage report“ (a report detailing the amount of an inventoried item used by a hotel in a specified time period, i.e. week, month, quarter, year). 3.8. Maintenance Facility maintenance is a huge department which is responsible for maintaining exterior and interior facilities of the hotel (Hayes and Ninemeier, 2007). In this report, the interior furniture maintenance will be addressed. As the part of the hotel’s style, according to Jones and Lockwood, 2006, interior furniture such as beds, tables, chairs, cabinets will have a significant impact on the guests’ perceptions and enjoyment of that stay. Therefore, to keep and maintain the beautiful and costly furniture with its standard finishing and design is a critical job. Beautiful furniture to match with room design and decoration costs the hotel a large amount of expenses (Jones, 2005) but enhances the hotel’s elegance. When guests enter their room, it is usually the first impression that forms the basis of their judgment for that hotel. It is without a doubt that the role of housekeepers is essential in caring for the interior for cleaning should not be placed on top surfaces of furniture as spills may happen. In event of damage to the finishing, or construction of the furniture due to any circumstances, housekeepers should report to the maintenance staff for immediate actions. 3.9. Fire equipment and fire procedures Evidently speaking, fires in lodging and residential estates are a human-caused disaster. It is difficult to estimate the cost of loss in terms of human lives and properties as a result of such disaster. Accommodation establishments must be vigilant in sustaining fire procedures and prevention. It is, by law, the responsibility of the organization to correctly implement fire procedures in order to eliminate and control fire hazards to create safety, security to guests and staff in their establishment. 3.10 Fire equipment: Fire equipment must be installed in place in high rise buildings by legislative requirements: emergency lighting system, automatic fire alarm system, electric fire pump, central control station equipment and lighting, complete automatic sprinklers, smoke proof enclosures, rooms smoke detector, fire hose reel, standpipe for fire department use, exit signs, and importantly external escape stairs. Access to fire equipment stations must be kept clear and available at all times. For example, housekeeping trolleys, other materials must not hinder the access to fire hose reels or exits. Once the fire equipment have been fully installed, it must be a strict practice that maintenance staff should conduct inspections of the equipment on a regular basis to ensure that all is in working condition, if anything is found not working properly or out of order, make sure it must be fixed or replaced immediately. Attention should be paid to dry chemical fire extinguishers for expiry date, and that fire alarms work well. In summary, a complete checklist of fire equipment must be inspected and controlled by the maintenance department. It is no use if equipment is there in place but is not functioning when needed. As a result, a regular audit on fire equipment needs to be done in order to take corrective actions if necessary. Fire safety information and emergency instructions, emergency contact numbers must be provided to guest rooms. Floor diagram and assembly exits must be clearly guided. Aside from the fire equipment, fire drills and procedures must be implemented correctly. The trained staff is responsible for guiding and evacuating guests to exit locations. Jones, (2005, p.348) insists that “training employees and drilling them in various situations is a most effective tool to reduce the possibility of panic in a fire situation”.  Effectively, at Savoys, all staff has been trained in fire drills. The staff and fire fighting team successfully evacuated all the guests out to safety and that they were able to control and put out the fire. It has proved that their reactions were favorable in an emergency situation. However, for better fire prevention, the following suggestions should be considered by Savoy’s hotel’s management: Portable fire extinguishers in between guest rooms along corridors need to be installed on walls; A fire extinguisher should also be placed in the elevator for emergency situations. General recommendations Installation of unified wireless network It is recommended that Unified Wireless Network is installed to provide comprehensive wireless mesh coverage for the entire property. Guests will be able to access the Internet anywhere on the property using a Wi-Fi connection, or they would take the small, portable Wi-Fi telephones placed in each room and visit the pool, restaurant, or spa and stay in touch. Operations staff, including housekeepers, banquet servers, engineers, and maintenance teams shall all use the wireless phones to communicate with anyone across the property. This integration of data and voice shall assist management to perform efficiently from a single, centralized location. The solution can also include integration with service providers’ external billing systems, simplifying accounting and book keeping for hotel staff. Each guest room shall feature a large, flat-panel HDTV that offers regular television channels as well as movies on demand, archived television shows on demand, and other customized content. The network shall also support all hotel telephony, which provides regular telephone calling as well as customized guest applications. Guests should be able to use the telephone or the HDTV remote control to easily place a room service order, schedule a wake-up call, or request housekeeping items. Guest rooms and suites should also feature interactive workstations with innovative connectivity panels that allow guests to plug laptops, MP3 players, or digital cameras into the system. The system automatically should sense which device is used and enable them to instantly listen to MP3-player audio over the room speakers, access high-speed Internet, or view their digital photos on the large, flat panel screen. 4.2 Eco friendly installations Installation of eco-responsible toiletries and cleaning materials, allergen free mattress and pillow protections, eco-friendly amenities, for example, bathrobes made of organic cotton and recycled stationery, mini bars using heat absorption cooling technology that uses no compressors and is therefore completely silent in operation, efficient boilers automated operations with O2 trimming consumes less diesel to produce more steam and wasted heat recovery through condensate recovery ensures energy saving. Variable primary hot/cold water flow for optimum level of hot/cold water flow thus utilizing less electrical energy.Co2 sensors based fresh air handling units operated by IBMS leads to optimum comfort to guest while saving energy, energy efficient lighting using compact fluorescent lights, energy efficient tube lights etc, use of LEDs, CFLs, in the guest rooms, use of energy efficient periphery lighting, computerized controls for light dimmers in the restaurant, treatment for Grey/black water and reutilization of the same back in flush water and in processes ensures reduction in water consumption, water flow restrictors in all the water taps. Conclusion: It is stressed that management should take corrective measures to continually maintain and keep good practices running at an optimal standard in hotel to minimize and control the problems. The final goal of such strategic management is to run the organization in smooth operations, to provide excellent service to guests, to bring in high revenues and establish a good reputation. It has been known that successful organizations result from managing and implementing efficient business practices. Thus, the best management knows how to manage and control the problems at minimum impact for requisite revenue. References Savoy Hotel, Frankfurt (2011). Web Page.Available at http://savoy-hotel-frankfurt.h-rez.com (Accessed: 28 Nov 2011). Krajewski, Ritzman, Malhotra, 2007, Operation Management: Processes and value Chains, 8th edition, Pearson Education, Inc. Booking, Savoy Hotel (2011). Web page. Available at http://www.booking.com/hotel/de/savoyhotel.en.html (Accessed:28 Nov 2011) Jones, T. 2005, Professional Management of Housekeeping Operations, 4th edn, John Wiley & Sons, Inc:New Jersey. Kappa, M.M, Nitsche, A & Schappert, P.B. 1995, Managing House Keeping Operations, Educational Institute of the American Hotel & Motel Association:USA. Hayes, D.; Ninemeier, J. 2007, Hotel Operations Management, 2nd edn, Prentice Hall: New Jersey . Jones, P.; Lockwood A. 2006, The Management of Hotel Operations, Thompson Learning, USA. Read More