Wheatley Park Hotel Revitalisation Plan - Essay Example

Wheatley Park Hotel Revitalisation Plan Lecturer Preamble This report has been prepared as a prelude to the proposed rehabilitation and amendments for the Wheatley Park Hotel to transform the current prevailing low decline in bed occupancy and poor sales being experienced. The report is prepared in consultation with the hotels employees, suppliers, and directors (Grand Cosmopolitan) who have entrusted me as the principal administrator to embark on a strategy that will halt the decline of the hotel’s revenue and unto a journey of progressive growth. In this report an analysis has been conducted into what ails the Wheatley Park Hotel, the genesis of the detected problems, and a discussion of possible solutions. Consultations with all the stake holders was emphasised to garner why the hotel continues to suffer unremitting losses. The status of the facilities and equipment used in the hotel was also considered as there were complaints that the facilities were not well maintained. The loyalty of the employees was also ascertained to determine whether there was a tendency of negligence and lack of endeavour among the long serving staff. Other stakeholders consulted included the suppliers, contractors and most significantly the customers whereby the latter were encouraged to openly comment on their visit with a special emphasis on long time clients. From my consultations with the stakeholders and professionals in various fields of hotel and construction business, we have come up with a report that we hope will reverse the negative trend currently prevailing at Wheatley Park. The synopsis is that a substantial reinvestment or injection of funds is required to renovate the rundown facilities while converting others into money making ventures. In terms of employee relations, a revamping of the operations and motivation is required through staff training. The hotel policies also need to be changed to reflect the expected new position. As a the new CEO, my brief is to ensure the hotel’s reverses its slow sales and development and resume its rightful place as a reputable, profitable enterprise that will regain and enhance its former glory in the hospitality business. Am therefore obliged to use my considerable experience acquired from working at all levels of the hospitality industry initially at Grand Cosmopolitan, London Regency, and lately at the Midlands Court hotel to initiate a series of reforms as outlined below that will lead to a change of fortunes at Wheatley Park Hotel. Frazer Digby General Operations Manager, Wheatley Park Hotel Table of Contents Preamble 1 Background of the Problem 3 Planning and Control 3 Chronology of the Problems 4 Analysis 5 Recommendations/Proposed Remedial Measures 6 Laundry 4 Energy Savings 6 Convert Old Stable Block to Letting Rooms 7 Build an Indoor Swimming Pool 8 Manage Capacity better 9 Work Schedule 9 Improve Employee Relations 10 References 13 Appendices 15 Background of the Problem The Wheatley Park is prime a 100 bed roomed country hotel situated on the outskirts of Oxford. Formerly a family run business concern; it has since been acquired by the Grand Cosmopolitan consortium who procured the hotel from the previous original owners; the latter have since retired five years ago. Unfortunately, since the acquisition the hotel’s grand reputation and fortunes have since plummeted due to the poor sales and lacklustre management style prevailing. Planning and Control The current business environment is one of intense competition which is manifest by unstable, rapidly evolving fierce rivalry between firms hence require businesses to adapt fast to keep up with the competition (Johnson et al, 2006). Begg & Ward (2003, p.28) assert that demand is a function of customers needs in relation to the price and attributes of a product or service. A business manager is obligated to reconcile client’s demand with the organisations supply. However modern conditions make it hard to forecast demand due to financial uncertainties. At Wheatley Park, the demand is experienced both seasonally and on daily basis especially in the morning hours. Although not unsure at hotels or hospitality industries, Wheatley Park scheduling management is rather poor leading to several unhappy or dissatisfied clients who inevitably might not visit the hotel again. It’s important for such establishments to forecast and plan for such eventualities to maintain their customers (Slack et al, 2007). Planning is defined as the formalisation of the forecasted events whereas control is the action of dealing with the adjustments emerging from set variables. It’s therefore imperative to develop an ideal plan that serves the goals of the firm while noting that planning should be designed with a particular time span in mind. At Wheatley Park there is minimal evidence of focussed planning hence leading to variance and ambiguity on objectives. Planning and control must be clearly focussed on the supply and demand in terms of capacity, timing and value (Slack et al, 2007). Chronology of the Problems Among the issues that had been identified by the new owners as contributing to the hotel’s poor run as observed during the preceding six months include: Poor sanitary conditions in the hotel kitchens which had resulted in the closure of the kitchens for six days by the Public Health Inspectorate after a deliberate inspection tour to enable a thorough cleansing and replacement of dilapidated equipment with more serviceable ones. Poor Customer Service, exemplified by the hotel staff’s slow response to customer needs as a guest died within the hotel. Poor Planning: lack of proper planning and scheduling the by the font office staff was resulting in a perpetual congestion during the morning check out by guest after breakfast. This resulted in dissatisfied customers and high turnover of staff stressed by excessive criticisms. Soaring operational costs: Wheatley Park has some of the highest comparative operational costs in the hotel group mainly from the inefficient housekeeping department. Decline in profitability. Wheatley Park hotel’s profits had increasingly been plummeting culminating to the present position whereby the hotel has reported its first annual loss. Analysis In my first week at the Wheatley Park, the various department heads have been intensively interrogated regarding operations in their sections, and also the permanent and subordinate employees. The non-managerial staff were privately questioned and requested to offer personal and discreet opinions as to the problem areas. We have managed to stem the decline mainly by motivating workers to exert better service. According to McNamara (2008) the most important motivational tool should be self-motivation by the leaders as it is more effective in recognizing what motivates you and how your job is aligned or configured to sustain your motivations. Other measures introduced were enhancing and promoting the hotel through booking agents. Recommendations/Proposed Remedial Measures To survive in the market, Porter’s (1980) indicates three generic strategies in form of: a differentiated product or service; lowered cost; and, or concentrating on a specific market sector. After a thorough scrutiny of the numerous suggestions and recommendations advanced by both the managerial, non-management staff, and consultation with other stakeholders the following set of proposals clearly emerged as the most critical for your consideration and implementation by the board. Laundry To deal with the numerous breakups of the laundry equipment which is costing the hotel a weekly average of £1,980 (£1,800 fixed costs + £180 in daily room set), refurbishment of the equipment is imperative. The cost estimates for the total overhaul of the equipment replacement will be £70,000. This will result in reduced weekly costs by £500 while the room set costing will be halved to £1.50. Although the option of engaging a subcontractor rather than purchasing the equipment was considered, it was however disregarded since an outsourced supplier will not be easily controlled and costing the hotel £5 in daily room set. Similarly, the subcontractor was only hired to handle 60 percent capacity; hence any increment would result in a crisis. Normally in outsourcing, the deterrent cost of relying on outside contractors far outweighs the cost of internal management. The popular Overall Equipment Effectiveness (OEE) measure has been found to be proficient in evaluating the efficiency of operational equipment in an organisation including the period to function, quality of the product and the swiftness in using the apparatus (Slack et al, 2007). Energy Savings The most effective way of reducing energy consumption is to first improve the performance of other operations that consume energy, including the administrative overheads (Slack et al, 2007). At Wheatley Park, the electricity and gas costs, for lighting and heating purposes, are higher than in other similar hotels. In a free survey done by the Electricity Council, it was identified that 40 percent of the annual £25,000 energy expenditure can be saved, which translates to credible annual savings of £10,000. This can be achieved in the following ways: Twelve percent of the energy costs (£3,000) saved by improving the insulation though at a cost of £30,000, and additionally, A further 28 percent (£7,000) can saved through the installation of a computerised energy management system, which would cost (equipment and installation) of £70,000. This combined energy saving installation at a cumulative cost of £100,000 can be done within a few days and hence be immediately available. The real savings will be realised after eleven years when the hotel can break even after recouping its costing (See Appendix, Table: 4). Many organisations facing liquidity problems always consider energy as one of the most tangible areas for saving expenditure (Slack et al, 2001). Convert old Stable block to Letting Rooms Wheatley Park Hotel is strategically located at the outskirts of Oxford which makes it an ideal location for many corporate meeting destination or venues. The location at Oxford a historic city which has many visitors and has close proximity to London offers many opportunities. Thus to further enhance revenue collection, the underutilised hotel buildings that include an old stable block currently used for storage can be renovated and be converted into occupancy rooms. The building foundations are sound and services easily accessible. A local building contractor has been consulted and has already quoted a costing of £50,000 to transform the block into ten bedrooms, all with en-suite facilities. However due to the providence of unique location (quiet retreat town), a far better strategy will be to convert the stables into conference and meeting rooms. It is estimated that after the conversion, the hotel room occupancy will rise by 15 percent on average annually and particularly in the lean months of January and February when most corporate meetings are held. Build an Indoor Swimming Pool Wheatley Park hotel lacks modern leisure facilities while research reveals that many potential clients solicit for hotels that have such provisions. Consequently it has been proposed to erect a well equipped indoor heated swimming pool that recent survey among the hotels customers has revealed will enhance occupancy by 20 percent (Valhouli, 2006). The proposed project will however require municipal authorisation hence can only be completed in twelve months time. Preliminary estimates indicate a full costing of one million pounds. It is expected that other benefits apart from enhanced bed occupancy that will be accrued from installing leisure facilities will include will be the possibility of increasing room prices by at least ten percent higher rate. A survey of other hotels with such facilities has indicated that they are able to have enhanced bed occupancy of least £10 p.p.p.n. higher than Wheatley Park. An increment in fees by £10 in room charges and at a 20 percent higher occupancy rate will generate more profits from the current 60 percent rate and £100 input. The enhanced improvement in sales volume will mean that the overall costing in overheads will be significantly reduced due to the expected low unit costs including the fixed operation costs like heating and rent (Slack et al, 2004). Conventional wisdom dictates that corporations strive to reduce costs as a means of enhancing its revenue collection; however Nivaskar (2009, p.11) argues that the use of price strategy as the principal driver of profit improvement is more valid. By emphasising on price yields, Wheatley Park can generate more profits as opposed to relying solely on cost reduction. As depicted in Table -1, a prices increase by ten percent results in a further ten percent profit increment. In Wheatley’s case, the marginal profits existing can be enhanced significantly whereby a mere ten percent price rate increase at the hotel can generate a 100 percent boost to the prevailing profits which will be critical to the hotel’s diminished demand and dismal revenue returns. Nivaskar (2009, p.4) asserts that, ‘critical information such as competitive data, price lists, bundled offers and the pricing strategy remain locked in spreadsheets of individuals’. He further argues that the lack of many firms inability to initiate effective like ‘price setting, offer creation, Request for Proposal (RFP) responses and competitive analysis’ is a clear omission of constructive stratagem that can make a difference to other competitors hence give the firm a competitive edge. Manage Capacity better Since Wheatley Park’s operational costs were extremely high, in comparison to other hotels in the group, an internal analysis of the hotel’s processes was conducted to stem the tide. Daily operational costs were scrutinised and the following segments were identified as the problem areas that if addressed could significantly improve the service levels and reduce costs. Work Schedule Wheatley Park Hotel workers were found to be engaged in indulgent work schedules that were inconveniencing management’s planning. The worker’s continued logging of many unnecessary overtime hours while they were ironically reluctant to work over the weekends and summer holidays was found untenable in a hospitality facility. Studies in the U. S. have revealed that approximately 2.8 million workdays are lost annually due to absenteeism hence leading to organizations budgeting 5.3 percent of their total budget reserve to cover this negative costs. In contrast, in the highly motivated organizations, only 3.7 percent of their total budget is set aside (Chirino-Klevans, 2008). Less focused employees who are not well motivated will tend to produce less effort hence negatively impacting on organizations profits. At Wheatley Park, the housekeeping staff must be educated on Total Quality Management (TQM) methods for continuous development even as a better duty timetable scheduling management is implemented. A better schedule for the housekeeping staff was planned that will involve a seven staff working five hours daily whereby six will commence wok at 9:00 o’clock to 15:00 o’clock. The other worker will then start at15:00 o’clock checking the room’s left un-cleaned du to occupancy. The seven workers will then be given a day off the following day in alternatives (See Appendix, Table: 3). Generally flexibility in a work schedule to cover unexpected changes in supply and demand is recommended (Slack at el, 2007). Improve Employee Relations Wheatley Park Hotel workers were found to be largely de-motivated and unenthusiastic over their duties. An organization’s overall motivation is improved job performance to ensure better profits, customer satisfaction and enhanced market penetration (Outlaw, 2005). Performance is therefore the integral key for this achievements and it’s regarded as a function of ability and motivation, thus: Job performance =f (ability) (motivation). Ability or aptitude is usually a result of education or training, skill or experience, and continuous development over a long period. Motivation however, is a process that can be promptly achieved through self-motivation by the leaders as it is more effective in recognizing what motivates you and how your job is aligned or configured to sustain your motivations (McNamara, 2008). Wheatley Park must therefore ensure that all employees are focused on the principal organizational objectives of enhanced productivity and service. Grant (2005, p.3) defines business strategy as the process of setting the course for a firm to compete within its market domain. Firms are therefore concerned at aligning organizations operations approach to their business stratagem. The strategies adopted shape and direct the direction firm takes however changes may also lead to a shift in strategy. Slack et al (2005, p14) argue that strategy constitute the long-standing vision, goals and propensity of a firms operations and overall ambition. Chase et al (2004, p.34) describes operations management as the transformation of a firm’s resources into functional yields thus generating its revenue base. Other strategies will be in line with recommended employee relations procedures that will stimulate Wheatley Park workers to work harder for the good of the hotel and enhance its reputation once again. As a first step in implementing changes in motivational principles in management, the various line managers including front-office, housekeeping, and finance, among others; must develop exemplary leadership acumen. If the leaders are also unmotivated, it will permeate to the rank and file employees hence contaminate the whole organization. The leaders must be passionate about their work and hence cultivate the trust among the employees as they endeavor to improve Wheatley Park Hotel’s job environment, earn the respect of their subordinates. Outlaw (2005, p.2 of 4) argues that when a manager spawns confidence, enthusiasm and a affirmative altitude, it automatically lead to the better performance in the organization; and the opposite is true to a gloomy, mistrustful, and negative altitude in the workplace, performance suffers. From the abovementioned analysis and proposals, we consider that the Wheatley Park Hotel revenues will stabilize and even be further enhanced by adopting and implementing the recommendations. Although these proposals will need a cost outlay of £1.22 million, the long-term benefits will be tremendous as the hotel returns profit hence guarantee your investment and the careers of your employees. References Chirino-Klevans I (2008) Motivating Employees: Raising the Bar on Performance. Walden University: HireDiversity.com. Grant R M (2005) Contemporary Strategy Analysis (5th Ed) Oxford: Blackwell Herzberg, Frederick (1966) Work and the Nature of Man World Cleveland Publishing. Cleveland Hogan R J, G J Curphy and J Hogan (1994) What we know about leadership effectiveness and personality.  American Psychologist. 49(6), 493-504. Johnstone G, Scholes K & Whittington R (2006) Exploring Corporate Strategy (7th Ed) Harlow FT Prentice Hall Maccoby M (1992). Why Work?: Motivating The New Workforce. Alexandria: Miles River Press. McNamara C (2000). Basics About Employee Motivation (Including Steps You Can Take). [Accessed October 20, 2009] from Authenticity Consulting: Montana Patrick J, Charnov & Bruce H (2008). Management 4th edition Barrons Educational Series, Inc Nivaskar P (2009) Leveraging Price Management to Improve Profitability. Eindhoven, Netherlands: Tata Consultancy Services (TCS). Outlaw W D (2005) Motivating and Training Your Employees [Accessed on October 19, 2009 at Precisetech.com: Slack N, Chambers S & Johnstone R (2007) Operations management (5th Ed) Harlow FT Prentice Hall Slack N, Chambers S & Johnstone R (2004) Operations management (4th Ed) Harlow FT Prentice Hall Slack N, Chambers S & Johnstone R (2001) Operations management (3rd Ed) Harlow FT Prentice Hall Slack N & Lewis M (2008) operations Strategy. (2nd’ Ed) Harlow: FT Prentice Hall Slack N, Chambers S, Johnston R & Betts A (2006) Operations and process management. Harlow: FT Prentice Hall Valhouli C (2006) The World’s Best Swimming Pools. Online [Accessed on October 20, 2009] at Appendices Figure 1: Wheatley Park Hotel Occupancy ROOM LETTINGS Occupancy (%) Jan Feb Mar Ap May June July Aug Sept Oct Nov Dec Average 45 40 50 55 60 65 70 70 60 50 55 100 60 Table 1: Impact on Profit: Cost Reduction versus Price Increase   Case I Case 2   Baseline Reduce Cost by 10% Increase Price by 10% Incremental Profit Price £30,000.00 £30,000.00 Price 33,000   Cost 80% £21,600.00 Cost 24,000   Profit 20% £8,400.00 Profit 9,000 £6,000 10% Source: Tata Consultancy Services (2009) Table 2: Impact of Increased Price on Profit Margin Illustration Baseline Increase Price by 10% Incremental Profit (Direct Impact on bottom-line) Incremental Profit% Price   £30,000.00 Price £33,000.00 Cost 90% £27,000.00 Cost £27,000.00   Profit 10% £3,000.00 Profit £6,000.00 £3,000.00 100% Source: Tata Consultancy Services (2009) Figure 2: Wheatley Park Hotel Level Capacity graph Table 3: Housekeeping Chase Demand Plan Jan Feb Ma Apr May Jun Jul Aug Sept Oct Nov Dec Demand 55 40 50 55 60 65 70 70 60 50 45 100 Serve 60 60 60 60 60 60 60 60 60 60 60 60                           Balance 5 20 10 5 0 -5 -10 -10 0 10 15 -40 Staff Equivalent 14 14 14 14 14 15 15 15 14 14 14 17 From Overtime 0 0 0 0 0 0 0 0 0 0 0 0 Extra Staff 0 0 0 0 0 1 1 1 0 0 0 3 Chase Demand requires that     One Temporary staff in June, July and August Three Temporary staff in December   Table 4: Energy Saving Plan Annual Energy Cost £25,000.00 Energy Cost in 11 years £275,000.00 12% Enhanced Installation Cost £ 30,000.00 28% Installation of Automatic Energy Management System £ 70,000.00 Total Installation Cost £100,000.00 Energy Cost after Installation £15,000.00 Energy Cost after installation + Expenditure (11 years later) £265,000.00 Read More