MATS COLLEGE TECHNOLOGY

R.Castillo, Agdao Davao City

Case Analysis
Case Study: Durian Hotel

STRATEGIC MANAGEMENT FINAL EXAM

Prepared by:
Padios, Aiza Mae C.
Sumayang, Blessy Grace P.
I. TITLE OF CASE

Case: Durian Hotel

BACKGROUND: Durian Hotel is with a deep sense of sorrow to see this beautiful

12-storey hotel regrettably neglected and unused for many years considering its very

strategic location along one of the city's chief thoroughfares in downtown area and its

close proximity to shopping malls, several business and commercial establishments,

dining and entertainment areas, and easy of access by all types of transportation.

This once elegant but still imposing structure along J. P. Laurel Avenue in Bajada,

Davao City, known as the Durian Hotel, would have surely been a big hit among

leisure and business travelers to the city. But sadly, the hotel has, for some reason,

remained unoccupied to date.

II. TIME CONTEXT

The study focuses on the bankruptcy situation of Durian Hotel. Theres no specific

time provided in the case. That being said, the period can be the present or the

period when the case study was conducted.

III. PERSPECTIVE

The problem will be examined from the point of view by Antonio V. Figueroa. This

perspective allows for a comprehensive understanding of the marketing related

challenges and opportunities face by the hotel.

IV. CENTRAL ISSUE

In 2001, due to a series of crisis, Durian Hotel, one of the impressive structures to

grace Davao City’s landscape towards the end of the millennium, was forced to fold

up after its lender, the Metropolitan Bank and Trust Co., foreclosed its property due

to unpaid debts.
But there were other factors that brought the hotel down. There was a rise in

insurgent conflicts, the Asian financial crisis, and the abductions by the Abu Sayyaf

group. These spelled drastic decline in tourist arrivals and severe reduction in

economic opportunities.

When hard times overwhelmed the city, Durian Hotel was in familiar company. The

mammoth P3-billion, Malaysian-owned Samal Island Casino Resort shut down due

to low occupancy. Even the iconic Davao Insular Hotel had to temporarily close its

doors to find remedy on how to resolve and underwrite its heavy losses.

On the other hand, other local hotels opted to severe ties with global managing firms

which failed to bring in the desired guests and became liabilities. For one, Mercure

Grand Hotel, now Davao Regal Hotel, seceded from the arrangement, followed by

Royal Mandaya Hotel, which was handled by Barcelo Hotel Group of Spain.

On the side, skeptics attributed the closure to claims the hotel was built on a weak

foundation, susceptible to earthquakes, the groundwork sank, and structural

engineers were not amenable in terms of safety to high-rise buildings due to a fault

line found in the City. Overtime, these led to the reduction in the number of potential

occupants and guests.

In its heyday, Durian Hotel, with an area of 16,500 sqm., was famous for its Heroes

Bar, a saloon overlooking Victoria Plaza and was a strategic hangout for those who

love to see the city by night. It sat on a property that comprised 15 adjoining lots.

The hotel’s original building had only a total floor area of 1,762 square meters. The

ground floor housed the lobby and the reception hall, excluding two business stalls.

On the second story was the executive offices, while the third and fourth stories

hosted guestrooms.
Due to rising patronage and better than usual occupancy record, the family of Bayani

Escora, original owners of the hotel, decided to build a six-story annex building with

a total floor area of 4,566 square meters. The edifice consisted of a basement,

ground floor, and a parking lot on the second floor, enough for around 60 cars. The

next two stories were dedicated as functions rooms, and the fifth story was the

Grand Ballroom, a theater-type function hall.

On the other hand, the 12-story main hotel, with a floor area of 10,172 square

meters, has a basement that housed the water boiler, exhaust fans, and parking

area, while the ground floor hosted a restaurant, main kitchen, two picturesque

elevators, and a service elevator. Going up, the second floor was home to a

cornucopia of rooms and cubicles, including the lunchroom of employees, medical

clinic, stockroom, locker room, food and beverage office, employees’ comfort rooms,

male-female quarters, and two medium function rooms.

Meanwhile, the third to eleventh stories were used as guestrooms; the twelfth

housed the Heroes Bar, the Concorde, a function room with a mezzanine, swimming

pool, and a mini gym. At the roof deck were the cell site, water tank, and elevator

motors. In terms of breakdown of guest rooms, the original building housed 22

lodgings while the main edifice hosted 126 rooms.

In 2015, news that the mothballed Durian Hotel, rumored as a haunted structure,

was bought by a new investor became hot item. Accordingly, the erection of a new

edifice to replace the structure was planned to start in the middle of that year. The

600-room hotel project would cost P400 million, making it the biggest in Mindanao.

The proposed hotel, under a progressive plan, would comprise three buildings with

9,000 rooms. The fantastic yarn was verified by the regional tourism office.
After surviving numerous economic crises, years of inactivity, stories of paranormal

manifestations, and challenges of earth-shaking tremors that struck the Davao

region, the hotel, almost unscathed structurally, is rising from the past.

In early 2020, after the foreclosed hotel was acquired by Armando Quibod, owner of

Montana Community Finance Corp. and Armando Financing Corp., rehabilitation and

renovation promptly started. For a change, Durian Hotel, when it reopens under a

new management, will be known as Davao Persimmon Suites, a premier boutique

hotel.

MAIN PROBLEM: The main problem identified in the case is the weak foundation,

susceptible to earthquakes, the groundwork sank, and structural engineers were not

amenable in terms of safety to high-rise buildings due to a fault line found in the City.

It is also foreclosed its property due to unpaid debts.

V. STATEMENTS OF OBJECTIVES

1. Improve Management. The primary objective is to address the issue of

bankruptcy of the management. The management should be supervised when it

comes in the factors of the hotel unpaid debts, insurgent conflicts, and financial

crisis. Gives best services in overall customer experience.

2. Enhance operational efficiency. This objectives focuses on efficiency when it

comes in structural engineers were not amenable in terms of safety to high-rise

buildings due to a fault line found in the City. Overtime, these led to the reduction in

the number of potential occupants and guests.

3. Cross-Cutting Paranormal Activity Issue. This objectives focuses on how to

address the issue of its haunted accessibility, it shows that the elevator of Durian

Hotel is functioning by itself. It was observed that during night time, this keeps on

happening. One strong reason might suggest, that this kind of unexplainable matters

led to the business own demise. By addressing the issue, the management need a

help from a expert (pastor/priest) to demise this kind of happenings

4. Improve Customer Satisfaction and Service Recovery.

This customer aims satisfaction by addressing the issue which results negative

images of the hotel because of the people making fake news about paranormal

activity issue. The management have right to file a case to those people who spread

this kind of activity.

VI. AREAS OF CONSIDERATION.

a. Operational Processes. The operational process in bankruptcy is a complex and

multi-step process that involves the management of a company’s assets and

liabilities. The process is designed to help companies restructure their operations

and pay off their debts while continuing to operate.

b. Infrastructure. The hotel was built on a weak foundation, susceptible to

earthquakes, the groundwork sank, and structural engineers were not amenable in

terms of safety to high-rise buildings due to a fault line found in the City.
c. Training and skills. Program that teaches important skills for professionals

starting in the hospitality industry. Through this training, your hotel crew will learn to

greet guests warmly, handle inquiries like pros, and work seamlessly together as a

team. This way, they can create a positive and inviting atmosphere that leaves a

lasting impression on every guest who walks through your hotel's doors.

d. Customer Service and Service Recovery. Customer service recovery is a

company’s steps to solve an unhappy customer’s issue through excellent customer

service. When customer service blunders happen, it can feel like a mark against your

business, but it doesn’t have to be you just need the right systems to fix the issue.

Implementing a service recovery plan for your business doesn’t have to be

complicated.

e. Performance Monitoring and Analysis. Performance monitoring and analysis is

an essential aspect of the hotel industry. It helps hoteliers to evaluate their business

performance and identify areas that need improvement.

VII. ALTERNATIVE CAUSES OF ACTION.

As highlight the central problem of the statement, the primary problem in this

case due to unpaid debts. However, the hotel's demise was caused by other

circumstances. The Asian financial crisis, an increase in insurgency wars, and the

Abu Sayyaf group's kidnappings all occurred. These meant a sharp drop in visitor

numbers and a significant loss of business prospects.

ALTERNATIVE 1: ENHANCE OPERATIONAL EFFIENCY THROUGH

MANAGEMENT
 The hospitality industry is ever-changing, and hoteliers are always looking for ways

to improve their operations. Streamlined hotel operations can significantly impact a

hotel’s bottom line by enhancing guest retention, attracting positive reviews, and

optimizing resource utilization1. Here are some strategies that can help enhance

operational efficiency in the hotel industry:

 Staff Training and Development

 Embracing Technology

 Efficient Housekeeping Management

 Streamlined Check-in and Check-out

 Personalized Guest Services

 Effective Revenue Management

 Energy and Resource Efficiency

 Security and Guest Safety

 Feedback and Continuous Improvement

 Collaboration and Team Communication

ALTERNATIVE 2: IMPLEMENT A PROACTIVE MAINTENANCE PROGRAM

Consider if Durian Hotel establishes a proactive maintenance program aimed at

identifying and addressing potential issue before they caused bankruptcy. By

conducting regular inspections, maintenance check, and predictive ,maintenance

analysis. The hotel ca prevent unexpected debts and weak foundation of

infrastructure to ensure the safety and wealthy process of the management.

 Advantages of this ACA:

 Enhanced safety and reliability of the foundation

 Reduction of loss caused of unpaid debts

 Increased operation efficiency and on-time performances

Disadvantages of this ACA:

 Additional cost associated with proactive maintenance activities and equipment.

 Potential challenge in maintenance activities.

 Specialized training and resources for the maintenance team.

VIII. DECISION MATRIX

To assess the alternatives, a decision matrix can be created with the criteria of risks,

costs, benefits, and ease of implementation. The decision matrix will help in

objectively comparing and evaluating alternatives.

ACA 3: Introduce a Rapid Turnaround Strategy

 Risks: This alternative is associated with a moderate level of risks. Challenges may

include close coordination between different teams, balancing speed with quality and

safety, and potential resistance to changes in existing processes.

 Costs: The costs associated with introducing a rapid turnaround strategy are rated

as moderate. Optimizing ground handling processes, improving coordination, and

streamlining procedures may require investments in training and operational

adjustments.

 Benefits: This ACA offers potential benefits such as reduced turnaround times,

improved on-time performance, enhanced customer satisfaction, and increased

productivity and resource utilization.

 Ease of Implementation: The ease of implementing this ACA is rated as moderate.

While it may require adjustments to existing processes and coordination between

teams, the potential operational and customer experience improvements make it

viable option.

ACA 4: Implement a Proactive Communication Strategy

 Risks: This alternatives carries a relatively low level of risks. Risks may include

managing high volumes of communication during peak periods, ensuring effective

communication channels and systems, and the risk of providing incorrect or

misleading information.

 Costs: The costs associated with implementing a proactive communication strategy

are rated as moderate. It may require investments in communication channels,

systems, and training for effective implementation.

 Benefits: This ACA demonstrates potential benefits such as Improved customer

satisfaction through proactive

 Ease of Implementation: The ease of implementing this ACA is rated as moderate.

While it may require adjustments to communication processes and systems, the

potential impact on customer satisfaction and brand reputation make it worthwhile

consideration.

IX. CONCLUSION

The case analysis reveals a significant problem of the bankruptcy caused by

the paranormal activities issue. One of the impressive structures to grace Davao

City’s landscape towards the end of the millennium, was forced to fold up after its

lender, the Metropolitan Bank and Trust Co., foreclosed its property due to unpaid

debts. But there were other factors that brought the hotel down. There was a rise in
insurgent conflicts, the Asian financial crisis, and the abductions by the Abu Sayyaf

group. These spelled drastic decline in tourist arrivals and severe reduction in

economic opportunities. When hard times overwhelmed the city, Durian Hotel was in

familiar company. The mammoth P3-billion, Malaysian-owned Samal Island Casino

Resort shut down due to low occupancy. Even the iconic Davao Insular Hotel had to

temporarily close its doors to find remedy on how to resolve and underwrite its heavy

losses.

The main problem identified in the case is the bankruptcy caused by the paranormal

activities issue. their local hotels opted to severe ties with global managing firms

which failed to bring in the desired guests and became liabilities. For one, Mercure

Grand Hotel, now Davao Regal Hotel, seceded from the arrangement, followed by

Royal Mandaya Hotel, which was handled by Barcelo Hotel Group of Spain. On the

side, skeptics attributed the closure to claims the hotel was built on a weak

foundation, susceptible to earthquakes, the groundwork sank, and structural

engineers were not amenable in terms of safety to high-rise buildings due to a fault

line found in the City. Overtime, these led to the reduction in the number of potential

occupants and guests.

The proposed action plan consists of several key strategies and objectives. Firstly,

Improve Management. The primary objective is to address the issue of bankruptcy of

the management. The management should be supervised when it comes in the

factors of the hotel unpaid debts, insurgent conflicts, and financial crisis. Gives best

services in overall customer experience. Secondly, enhance operational efficiency.

This objectives focuses on efficiency when it comes in structural engineers were not

amenable in terms of safety to high-rise buildings due to a fault line found in the City.
Overtime, these led to the reduction in the number of potential occupants and

guests.

Additionally, Cross-Cutting Paranormal Activity Issue. This objectives focuses on

how to address the issue of its haunted accessibility, it shows that the elevator of

Durian Hotel is functioning by itself. It was observed that during night time, this keeps

on happening. One strong reason might suggest, that this kind of unexplainable

matters led to the business own demise. By addressing the issue, the management

need a help from a expert (pastor/priest) to demise this kind of happenings. Lastly,

improve customer satisfaction and service recovery. This customer aims satisfaction

by addressing the issue which results negative images of the hotel because of the

people making fake news about paranormal activity issue. The management have

right to file a case to those people who spread this kind of activity.

In conclusion, the Durian Hotel must address the issue of paranormal activities

where it has no evidence and it could be misconception by the people that could lead

into negative image of the management, in that matter it can cause severe reduction

of occupants and guests and could possibly the main reason of the bankruptcy of the

company. They should address the issue where they supposedly file a case for

people spreading the fake news.

X. Recommendation

1. Implement Strategic Financial Management Plan

To address the main problem which is bankruptcy caused by the paranormal

activities issue. This system can understand and properly controlling, allocating, and

obtaining a company's assets and liabilities, including monitoring operational

financing items like expenditures, revenues, accounts receivable and payable, cash

flow, and profitability.

This recommendation is supported by the theory of corporate financial management

is summarized from the broad flow of finance literature. Within this, contributions to a

normative theory, amenable to corporate financial modeling, are reviewed in some

detail. The central propositions of a normative theory are isolated to provide a basis

of comparison for the practice of financial modeling, as observed through a field

research study. Differences between theory and practice are identified and

discussed, financial management encompasses furthermore involves continuous

evaluating, planning, and adjusting to keep the company focused and on

track toward long-term goals. When a company is managing strategically, it deals

with short-term issues on an ad hoc basis in ways that do not derail its long-term

vision. Strategic financial management includes assessing and managing a

company's capital structure, the mix of debt and equity finance employed, to ensure

a company's long-term solvency.

2. Retrofitting and Seismic Upgrades.

Durian hotel was built on a weak foundation, susceptible to earthquakes, the

groundwork sank, and structural engineers were not amenable in terms of safety to

high-rise buildings due to a fault line found in the City. Overtime, these led to the

reduction in the number of potential occupants and guests. It’s important to note that
retrofitting an existing building to make it earthquake-resistant can be a complex and

expensive process.

This recommendation is supported by the theory of seismic retrofit. The structures

can be earthquake damaged or earthquake vulnerable. Retrofitting proves to be a

better economic consideration and immediate shelter to problems rather than

replacement of the building. Retrofitting is the modification of existing structures to

make them more resistant to seismic activity, ground motion, or soil failure due to

earthquakes. Retrofitting techniques are also applicable for other natural hazards

such as cyclones, tornadoes and wind forces. The best approach would be to

consult with a structural engineer who specializes in retrofitting and seismic

upgrades. They can assess the current condition of the building and recommend the

most appropriate retrofitting measures. Earthquake creates great devastations in

terms of life, money and failure of structure. It is very important to upgrade certain

building systems to make them more resistant to seismic activity

3. Cross Cutting Paranormal Activity Issue

The Durian Hotel, structured at the center of the busy street of Davao City, was once

a popular destination and a favorite place for tourists to nestle. It is a 12-storey

building and its name was derived from the Davaowenyos iconic fruit; the durian. It

has a complete and up-to-date facilities during its time, and could profoundly

accommodate a lot of guests. By that time, Davao was starting to progressively

elevate in its economic activities and is expecting plenty of tourists, both national and

foreign, to have a traffic response in the city. Highlighting the most peak events in

Davao; are the festivals like Kadayawan and the Araw ng Dabaw. Unexpectedly at

the peak of the city's economic boom, Durian Hotel suddenly closed its doors for
everyone up to this day. It is a very intriguing subject to think about as to why they

abruptly released such decision.

This recommendation aligns with the theory of self-control to

the understanding of paranormal beliefs. In this matter if the case is really true, then

the management should find a professional paranormal investigator or a local ghost

hunting group to investigate the paranormal activities inside the Durian Hotel.

4. Improve the Facilities and Service Recovery

Durian Hotel was experiencing drastic decline in tourist arrivals and severe reduction

in economic opportunities. It also has severe reduction number of potential

occupants and guest, because of weak foundation of the buildings. If the issue about

the paranormal activity is not true and the main reason of their bankruptcy is the

unpaid debts, then the management should address the issue of people were

making fake news about the paranormal activities in a way that the management

should report it to the authorities. The Philippine National Police (PNP) has

a Cybercrime Investigation and Coordinating Center (CICC) that is responsible for

investigating cybercrimes, including the spread of fake news

XI. ACTION PLAN

Activities Objectives Division Person Costs Time

Responsible

1. Improve the Accounting Financial Investment Ongoin

Implement Financial Department Manager in Financial g

Strategic Management Management

Financial

Managemen

t Plan

2. Build a Hotel Civil Investment 1

Retrofitting strong Engineerin Engineers for materials Year

and Seismic foundation g and

Upgrades in the Department equipment

facilities. needed.

3. Cross Seek for Investigato Professional Collaborativ 6

Cutting professional r Investigator e with the Months

Paranormal investigators Department s managemen

Activity . t and

Issue Investigator

s
 4. Improve Address the Operations Cybercrime Provide 1

the fake news or Department Investigator Investigator Year

Facilities issues. s s in the

and Service managemen

Recovery t

REFERENCES

http://davaocitybybattad.blogspot.com/2012/09/durian-hotel.html?m=1

https://www.facebook.com/100266788456220/posts/foreclosed-durian-hotelby-

antonio-v-figueroain-2001-due-to-a-series-of-crisis-du/127566722392893/

https://www.investopedia.com/terms/s/strategic-financial-management.asp

https://pubsonline.informs.org/doi/abs/10.1287/mnsc.28.9.957

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