Situation Analysis for the Sea Paradise Hotel - Case Study Example

Sea Paradise Hotel Student's Name Institution Supervisor’s name Date Executive Summary. In this report the students use the HOTS simulation to learn more about the hotel and hospitality management. The participants who are mostly students are usually placed in a virtual setting where they operate a hotel business from. This report tries to identify the strategies and tactics that should be used by the management and how effective they would be in helping have been in helping the hotel gain its prominence once again. Immediate action is of the utmost importance in this case the main purpose of the report was to put in place a marketing blueprint to increase the profits of the hotel. Through the identification and analyzing the difficulties the hotel faces it can be able to make profits. The report also comprises a strategic plan for marketing and overall improvement of the hotel after a SWOT analysis. 1.0 Introduction The Sea Paradise hotel is a hotel that was built in the 1950s and over the years problems have plagued the hotel. As a seafront hotel and having good rail and road links made it a popular destination. The airport is also in close proximity so is the main shopping center and with all these factors made it one of the choice destinations for those seeking coastal vacations and off-season breaks. The hotel has 125 air conditioned rooms which also have private rooms. The hotel doesn’t have a star rating, but has a lounge, pub, bar and a full service restaurant. There are no leisure facilities, business facilities, conference facilities or meeting facilities. 2.0 Situation Analysis for the Sea Paradise Hotel. The situation analysis of a hotel examines the environment in which a hotel is operating in to be able to identify key factors that will influence the business (Grundy, 2006). Social trend analysis and forecasts are some of the affirmative ways for businesses, especially hotel businesses to spot opportunities that would help in staying ahead of the competitors. Analysis of both internal and external environment should be taken into consideration (Kotler, 2002). A SWOT analysis is essential in investigating both internal and external environment (Potter, 1980). Analysis of the internal operating environment may include products and experiences of the customers, infrastructure services offered by the hotel,both financial and human capital and also the structure of the business its weaknesses and strengths should be taken into consideration.The internal environmental analysis takes into consideration the factors that are affecting the hotel in meeting its objectives.These factors may include the finances of the hotel, management and also the employees(Lynn, 2003). The external operating environment may include changes in trends in the market, threats, opportunities and competition. 3.0 SWOT Analysis. The SWOT analysis is described as a structured tool that is used to evaluate, Strengths,Weaknesses,Opportunities and Threats that are involved in running a business (Grundy, 2006). In the case of the Sea paradise hotel based on the internal environmental analysis one of its major strengths is its location which is essential for a hotel business. The hotel being a sea side resort makes it as an attractive destination for those looking for a coastal vacation. With its large comfortable rooms the hotel offers good accommodation for different kinds of visitors. Its close proximity to infrastructure which includes roads and rail link makes it a desirable location as the easy access to the resort is essential for any business to grow(Lynn,2003). The hotel has a number of weaknesses that make it not possible for it to progress in the new emerging tourist market.Lack of keeping up with trends is one of the major issues and the next major issue isthe lack of facilities that would be lucrative if they had them. Tourism over the few years has shifted from the traditional vacation to business tourism where companies can hold meetings in resorts.The hotel is missing out on this because it lacks the facilities for facilitating such meetings. The hotel is exposed to various opportunities, especially being a sea side resort gives it an advantage over other hotels. Water sports are a huge hit with tourists and since they are looking for new experiences the hotel can take advantage of this by providing excursions for the visitors. This will not only bring new experiences to the tourists, but will also cement the hotel as a pioneer of such activities (Grundy, 2006). Various threats also pose a significant threat to the hotel the most outstanding one being competition from other hotels. Sea Paradise hotel has to compete with hotels around which are of the same or almost the same standards as it. Tourists seeking new adventures and experiences are also another threat and if the hotel does not come up with new activities to attract the visitors then this will be a major concern (Kotler, 2002). A high turnover in the employees workers is also a major concern for worry as the hotel has to train new employees frequently and this may lead to having substandard employees and also the cost implication on the hotel are too high to ignore this problem. 4.0 Five Forces of Analysis for the Sea Paradise Hotel. For a hotel to be successful Porters five competitive forces must be taken into consideration. According to Porter (1980) the five forces are; threats of new entrants, Threat of substitute products, bargaining power of suppliers, bargaining power of buyers and intensity of rivalry among competitors. The hotel industry is characterized with high capital costs and the Sea Paradise hotel is no different.In this hotel there are 125 rooms and full occupancy is a sign of success and most notably customer loyalty that may be created by quality and efficiency of services offered. Due to the good location of the hotel it has ensured it maintains a certain portion of the clientele but entrance of new hotels in the area has also proved to be a challenge for the hotel to maintain this exclusivity. A threat of substitute products is another force that may influence the hotel industry.Tourists are seeking new adventures and this may prove to be aproblem as they have found new things to do at other places and not at the Sea Paradise hotel. This may prove to be a major obstacle unless the hotel introduces new packages for the visitors. The hotel can avoid this by concentrating on a certain niche market by offering the highest quality service it can ensure that it only attracts a certain type of client and the possibility of competition is almost nil as it offers exclusivity that can’t be found anywhere else. Porter(1980) mentioned that the buyers of goods and services from an industry may be powerful if they are more concentrated than their customers and their customers do not command a significant share of their business because their customers do not represent a long term or major relationship. In the case of the Sea Paradise hotel, for a sustainable business strategy the hotel has to maintain cost advantage over its suppliers to ensure profits. Bargaining power of buyers is where the buyers of goods or services are more concentrated than the players in the industry and this case it’s the visitors being more than the hotels.These can lead the visitors to be bring down the prices of the services being offered and also demand for higher quality services.The Sea Paradise hotel can improve on this by introducing services that are unique to the hotel and thus reduce the bargaining power of the buyers (Lynn, 2003). Intensity of rivalry among competitors is generally the product differentiation of each hotel and what it is doing to keep aheadof the other competitors.(Grundy, 2006)The seas side hotel has a number of competitors. The hotels main competitors are those that provide more services that are attractive to lets say the business traveller. Even though the hotel has gone under refurbishment that i still not good enough for increasing visitors and room occupancy to the hotel as customer loyalty is very important. This can be achieved by having excellent and efficient services or having a product that you provide to a niche market. 5.0 Competitive Advantage of the Sea Paradise Hotel and its Competitive Position. In the ever increasingly competitive hospitality industry, hotels must find new ways in ensuring that they keep their competitors at bay. Product and service differentiation is one of the ways to staying ahead of competitors (Lynn, 2003).Management plays a crucial role in ensuring that the hotel maintain an edge and in the Sea Paradise hotel they have tried this by refurbishing the hotel however this is not enough to keep customers from going to otherhotels. The hotel should also improve on its customer service as the negative reviews in its website do not paint the hotel in positive lighting. Some travellers do rely on these reviews to determine which hotel they should stay at. The location of the hotel is a huge plus for it as vacationers who want to be at the sea side can come here and also its close proximity to the shopping centrehas also ensured that the visitors who visit during the festivals can stay at the hotel.The rates of the Sea Paradise hotel are affordable and this is essential in ensuring that you stay competitive. 6.0 Major Income Streams for hotels. A hotel should a number of income generating projects other than the room sales. Food and beverage is one of the revenue generating sections of hotel. In the Sea Paradise hotel they have a restaurant with both a snack service and a full service restaurant. This helps in that the visitors don’t have to leave their rooms when looking for food. Car parking service is also a huge revenue source (Grundy, 2006). As the hotel is close to a shopping centre and the town has a population of 145,000 this means that those who work around the shopping centre can be able to access parking service and they can be charged by the hour by the hotel. The hotel can take advantage of business travellers and conventions by constructing a conference hall and facilities that are likely to receive heavy patronage. 7.0 Business and Marketing Strategy of the Hotel. The hotel’s main selling point is its location that has proved to be an asset to the hotel for the visitors seeking a seas side vacation. The Sea Paradise hotel business and marketing strategy is mostly dependent on the rivalry that is there and the growth of the industry. The local authorities where the hotel is situated have helped elevate the situation by making the town a favorable area for relocation of businesses and this in turn has helped boost the overall standards of the hotel and its environs (Grundy ,2006). The hotels management is also taking an interest in heightening customer needs and improving on the maintenance activities. The hotel is not doing much in advertising and marketing and this has led to poor occupancy and as it should be noted that the projections of the summer season which should be the time the hotel should be fully booked are very poor and this should be looked into. The management expresses a need for all departments to be proactive to ensure customer satisfaction and increased bookings in order to break even. The refurbishment of the hotel has put it ahead of most of its competitors and this has led to increase in bookings albeit not as many as should be. However more steps should be taken to increase occupancy at the hotel. Effectiveness of Operational and Marketing Plan. As noted different plans were used to try and reach the objectives of the hotel however these approaches haven’t showed any improvement. The operational plan which included refurbishment hasn’t increased the level of generating revenue.The management at the Sea Paradise hotel doesn’t seem to take the state of the hotel seriously and with the high turnover of employees it is best to say that the operational plan has failed.With a lack of good services and amenities offered this has led the hotel to not being profitable.(Kotler,2002). The marketing plan has been slightly successful with the use of social media it can be noted that the hotel has created a name for itself however most customers are only willing to return if there is an improvement to the services rendered. Strategy used. The team at the Sea Paradise hotel should strive to be able to offer unique services to its cutomers in order to dvelop a niche market of its own.The refurbishment program was meant to improve the standards of the hotel but the hotel is still having a hard time filling up its rooms especially during the busy months of summer. The hotel should also have made it a priority to have a star rating.This would help improve the oversll quality of the hotel and in the process the Sea Paradise manangement would have to include more facilities like leisure facilities to earn it a star rating.(Lynn V,2003). The hotel also had plans to introduce revised pay structures and training schedules to staff of the hotel and restaurant services.This was meant to improve the overall quality of their service and also reduce the high turnover experienced.The reviews posted on the hotel’s board are not very good and most of the customers have complained about the restaurant services accorded to them.The delay in implementing these new pay structures has negatively affected the hotel as the services rendered tend to remain the same and the quality isn’t as good. Impact of team decision on Human Beings. The decisions of the team impacted others in the following ways; Customers are the most important source of revenue for any hotel.The Sea Paradise hotel is not providing the services that their customersrequire.Lack of skills by the team involved in the hospitality makes the hotel suffer from bad reviews from the customers and consequently low bookings even in seasons like summer. The employees seem not to like enjoying here and with lack of proper training it makes it hard for them to be any good at their job.The high turnover is also an indicator this circumstance and the hotel is suffering from having people who don’t know how to deliver good services to their customers. Owners of the hotel include those who might be investing and those who own the hotel.The hotel is no longer breaking even and their investments are going to a loss.Thesub par standards offered make it hard to gain revenue from the customers and in turn the owners,not making any money, may instead decide to stop investing their money in the hotel. The community at large would benefit from the increase in business in the hotels as it would mean the small businesses would grow in support of the bigger hospitality industry.This would help improve the overall leaving standards of the whole community. Business Objective of the Hotel. The business objective of the hotel is to provide a good experience to all its visitors but that is not the case as the hotel was not able to do so.This lack of good customer service has led the hotel not to be able to achieve its intended objectives.This has led to an overall decline in the quality of the business thus not attracting any more customers. Technical Analysis of the Result. Initial analysis of the result shows that the overall team starting from the management to the employees has failed in implementing the strategies set up to improve the condition of the hotel.Lack of training that is essential for the hospitality staff has led to major setbacks and also the loss of the two senior staff members has been a challenge for the hotel.With the frequent change in management it is hard for the hotel to keep up with the improvements as no management is around to see the finishing of a project.This has adversely affected the hotel and the quality of services it provides.(Porter,1980) Decision Making. The decision making involved every member of the team where each and everyone was given a specific area to work on and come back with different ideas.After consultation with members the best ideas were put forward to include in the simulation.Though disagreements did arise these were solved quickly in a civilized manner and in a way that would be beneficial to the whole team. 8.0 Conclusion. The most crucial factors that determine a hotel’s success are its location and the quality of the service. The Sea paradise hotel is already in a good location therefore they have to concentrate on the quality of service they offer to the customers (Lynn, 2003) Customer feedback is essential as a means of marketing and the hotel should strive to get the most positive reviews. 9.0 Recommendations. The hotel should introduce new facilities to ensure that they are at par with new trends in the hotel industry.The hotel should also take the opportunity to cross-sell profitable products such as parking space and halls for business rooms and meetings to ensure maximum profitability.The hotel should also look into getting new management that will implement all the startegies needed to better it.Training of the staff should be top priority and consequently it will lead to better services being offered References. Kotler,A.(2002), Marketing,Prentice hall. Porter,M.E (1980), Competitive Strategy: Techniques for analyzing Industries and Competitors, New York: The free press. Lynn V (2003),Professional hospitality: core competencies 2nd Edition, Pearson Education, Frenchs Forest. Grundy ,T (2006),Rethinking and reinventing Michaels Porters’ five forces model; Strategic Change. Routledge London. Read More