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MANAGING HOSPITALITY ENTERPRISES

Presented by:

Akshat Kaul

DATE OF SUBMISSION---- 11th December 2008

OVERVIEW
PDR Hotels and Resorts
A highly successful international luxury hotel and resort group with properties across the globe. Won the worlds celebrated titles including the Top 100 hundred hotels of the world and the Worlds best places to stay. Approaches each hotel with uniqueness and is innovative.

It is a market driven group and wants to spread its operations to other places also like the United Kingdom.
Plans to put in investment which involves renovation and branding of underperforming or functional obsolete hotels which in this case is the Mortloch Castle which under a debt of 1 million.

INTRODUCTION
Mortloch Castle
Based in the eastern heart of the Scottish highland is to be taken over by the PDR Hotels and Resorts as it is under a debt of 1 million.

Under 53 years of ownership of Lord Deeside has deteriorated due to lack of investments in infrastructure.
The quality of service provided to the customers has also gone for a toss resulting in loss of revenue. There is a lack of motivation in the hotel ranks and the frontline managers have been replaced eight times. There is a series of complaints from the part of the customers at a daily basis. The food and beverage and also the room equipment are appalling to ones sight.

STRATEGY
SWOT ANALYSIS

STRENGTH
Excellent infrastructure. Perfect location to attract tourists. All possible facilities to satisfy the guests.

WEAKNESS
Untrained staffs. Management lacks proper planning. High maintenance but low sales.

OPPORTUNITY
Large area so scope for renovations. As being a historical building hence the

THREAT
Competitors in the markets. Repayment of loan and debt. Large costs of renovations of the property. Take time to get back the goodwill in the

STRATEGY
Mintzberg (1994) portrays strategy as a plan a direction, a guide or course of action into the future and as a pattern, that is, consistency in behaviour over time. According to this the author wants to say that strategy is a map or a roadway for the up coming times so that the works and the goals set are achieved according to the plans set by the organization

STRATEGY
The points that are focused on are : Workforce strategy. Decentralization or contracted strategies. Training strategies. Hospitality operations. Recovery strategies. Talent management strategies.

CHANGE MANAGEMENT
According to Daft ( 1998) Change management can be defined as the effective management of a business changeit directly effects the organization and it benefits from them eventually.

As Daft ( 1998) states that forces of change are: Internal factorsnew departments or technologies are to be created if a goal of rapid company growth is planned. Environmental factors---these forces originate in all environmental areas which includes customers, technology among others.
Change as Daft ( 1998) says can be Implemented following: Coercion implementation of change by force. Negotiation--formal bargaining is started to win approval of a desired change. Participationit involves users and potential resistors in designing the change. PDR Hotels and Resorts need to adopt a radical change policy and eradicate the resistance to change.

HUMAN RESOURCE MANAGEMENT


According to (Armstrong, 2004, p. 3) Human Resource Management is a strategic contribute to the achievement of its objective. As (Taylor 1911, in Armstrong 2004, p.218) states that reward and punishment are correlated.

Then (Maslow 1954 in Armstrong 2004, p. 219) states that unsatisfied needs give rise to tension and disbalance.
(Herzberg, Mauser and Synderman 1957 in Armstrong 2004, p. 224) on the other hand stated that an employee is satisfied when his work has been recognized which motivates him even more. PDR Hotels and Resorts need to adopt the Herzberg theory and motivate the employees by recognizing their talent and side by side applying Taylors theory by providing incentives and rewards too.

HUMAN RESOURCE MANAGEMENT


Talent management is the process .. the talented people it needs. (Armstrong 2004, p 387) According to (Powell and Wood 1999 in Hughes and Rog 2008 ) Recruitment and retention of talent is a very critical problem in this industry as and when the employees gain the customer skills they are absorbed by other sectors. Steps in retainment of talent: Career growth opportunities to be given to talented staff. Recognition of talent by regular audits. Grant of rewards and incentives on fruitful talent base. Appreciation of employees whereby creating a positive work environment. Employees should feel that their employer is commited to their career development. Responsible work should be given to them so that they feel that they are important to the organization. (Woodruffe 2006)

MARKETING
As per (Gray, Matear and Matheson 2001, p 149) Marketing is all about looking after the needs and wants of the customers, the company and the organization as a whole and simultaneously dispersing marketing information throughout the organization as well as the customers. Marketing Mix consists of 4Ps which have been pointed out by (McCarthy 1975 in Vignali, 2001, p98) asProduct--- Importance to the features and quality of the product as well as standardization of the product is given importance to increase profits.

Price--- The products need to be priced according to the type of market where he
product is to be sold.

Place--- Organizations should focus on strategic expansions in order to


encounter the growing competition in the market place.

Promotion--- Demands of the customers and the type of market it targets


should be identified in order to promote products.

MARKETING
CUSTOMER SATISFACTION AND CUSTOMER LOYALTY
According to (Klaus 1985, p.21 in Pizam and Ellis 1999, p.328) customer satisfaction is the assessment of utilization of a product according to ..customer perceives about a product and what exactly is offered to the customer.
A prime objective in order to satisfy a customer is to develop a sense of care and affection and provide personalized services. (Parsuraman et al 1985 in Pizam and Ellis 1999, p.330) Proper knowledge of the product and service to be given which will enable the new customers to try the products thereby making them brand royal. (Lewis et al 1995 in Tepeci, 1999, p.227) PDR Hotels and Resorts need to improve the information and communication channel so that all employees get due knowledge and act upon it. Next concentrate on the policy of 4Ps as mentioned by McCarthy and give importance and improve on it. Next they should offer exactly what the customer perceives and provide personalized service and know more about the customer likes and dislikes. Lastly providing all information regarding the products being offered in order to lure customers to buy more of the product and come back again and again.

QUALITY
According to Taylor&Pearson (1994, p.26) .successfully supplying at a profit an appropriate product or service to a given customer. That requires:

Quality Planning building blocks for the organizational goals. Quality Control--- helps in keeping control over the operations
which are planned for managing the quality Quality improvement--- done by analyzing the past performances in providing quality service to the customers. Juran (2005) Two premium approaches Quality assurance-- assuring whether the standards are maintained or not in the service provided to the customers. Total quality management--- includes the entire strategy of quality within an organization. (Lonzo&Peris, 1998)

QUALITY
According to Anjard (1998, P.239) implementation of total quality management involves a seven stage process which are:
Basic needs to be identified A vision to be developed Understand and rectify the internal and external requirements Make a stage wherein the management can run smoothly Train the employees Skill, Knowledge and Attitude level. Record the establishment of a measuring regime Check whether the measures adopted are fruitful or not.

PDR Hotels and Resorts need to implement the above seven stage process by making a core team of quality experts and then check their ratios.

Known to one of the one complex areas of the catering industry as outlets are in variety which also then depends upon the size of the hotel too. Davis, Lockwood and Stone (2006). The basic policies according to Davis, Lockwood and Stone (2006) of food and beverage management are: Financial considerations: Hotels mostly depend on their market for the survival of their operation. Marketing considerations: Should imply to the intentions with regard to its resident and non-resident markets. Catering considerations: Types of customers, menu, food production and service style to be identified.

A standard accounting system is to be implemented by the PDR Hotels and Resorts in the Mortloch Castle keeping in mind the basic policies described above.

FOOD AND BEVERAGE MANAGEMENT

ACCOMODATION MANAGEMENT
According to Casado (2000) the principles of total quality management continuous improvement of the search for quality in accommodation.
According to Fayol in Casado (2000, p 32)the two principles pertaining to structuring in the accommodation department areUnity of command---workers need to be ordered by their own supervisor. Span of control---number of subordinates that a supervisor can control. As Casado (2000) puts in that the accommodation department needs to be organzed and intra-department relationships to be built upon. Taylor in Casado (2000, p.29)states that the introduction of new machines and equipment has led to job threatening. PDR Hotels and Resorts should implement the principle of Unity of Command while keeping the staff members in control. On the other hand it should also try and increase intra as well as inter-departmental relationship.

CAPITAL INVESTMENT APPRAISAL


Capital budgeting process begins with the identification of potential opportunities. Typically its the planning body who develops estimates of future sales which serves as the basis for setting production targets.This information in future will help in identifying the total capital investment in the company. Investment proposals identified by all the departments are usually submitted in a standardized capital investment proposal form.

Mort loch Hotel needs capital investment appraisal because of the following underlined points:
The castle has gradually deteriorated in terms of the internal & external physical appearance. For the last five years the castle has been running at a loss. The quality of service in the castle have diminished significantly.

Pay Back Period Bank Loan A 2 yrs Bank Loan B 2 yrs 10 months Bank Loan C 25 yrs

ARR 37.5% 29% 5.29%

NPV (Rs.) 5,77,400 1,41,900 -6,72,260

According to pay back period Bank Loan A should be chosen as it takes less number of years to pay back. According to Average Rate Of Return method Bank Loan A is preferred.

According to NPV method Bank Loan A should be preferred as it has higher net present value Overall taking into account the results from all the three methods Bank Loan A is preferred as it includes expenses like Marketing and Advertisement , Staff training initiative and other expenses. ( REFR TO APPENDIX)

CAPITAL INVESTMENT APPRAISAL


The Non financial issues they should be aware of when choosing the bank loan are Marketing Training and Development

Renovation
The techniques of capital budgeting highlights that different investment proposals under consideration are mutually exclusive which may not be true in practical scenario in some particular circumstances Urgency is another limitation in the evaluation of capital investment decisions. Uncertainty and Risks are the limitations to the techniques of capital investment appraisal

CONCLUSION
The following things have been cleared through this presentation Profile of PDR hotels and Resort. The problems of the Mortloch Castle in the spheres of Strategy, Marketing, Human Resource Management, Change Management, Quality, Food and Beverage Management and Accommodation Management. The solutions to the above problems also have been given including what should be done To improve it. A detailed SWOT analysis has also been included.

BOOKS

REFERENCES

Armstrong, M. (2004) A handbook of Human Resource Management, 9th Edition, London, Kogan Page Limited. Casado (2000) Housekeeping Management, New York, John Wiley and Sons. Armstrong, M. (2004) A handbook of Human Resource Management, 9th Edition, London, Kogan Page Limited. Taylor. R. , Pearson A. (1994) Total Quality Management in Research and Development. The TQM Magazine.6(1),26-34. Juan,Jose,Tari (2005) Components of Successful Total Quality Management.The TQM Magazine,17(2),182-194. Anjard P.R. (1998) Total Quality Management: Key Concepts. Work Study.47(7),238-247.

REFERENCES
JOURNALS
Gray J.B., Matear M.S., Matheson K.P., (2000), Improving the Performance of Hospitality Firms, International Journal of Contemporary Hospitality Management, [online] Vol.12 No. 3, pp.149-155, available from: . http://www.emeraldinsight.com (Accessed 5th November, 2008). Hughes, J.C. and Rog, E. (2008), "Talent Management, A strategy for improving employee recruitment, retention and engagement within hospitality organizations",[ online] International Journal of Contemporary Hospitality, Vol. 20 No. 7, pp. 743-757. Available at http://www.emeraldinsight.com [accessed on 8th November 2008] Pizam.A and Ellis T., (1999), Customer Satisfaction and its Measurement in Hospitality Enterprise, International Journal of Contemporary Hospitality Management, Vol.11 No. 7, pp.326-339, available from: http://www.emeraldinsight.com (Accessed 3rd November, 2008). Tepici.M, (1999), Increasing Brand Loyalty in the Hospitality Industry, International Journal of Contemporary Hospitality Management, [online] Vol.11 No. 5, p.227, available from: http://www.emeraldinsight.com (Accessed 3rd November, 2008). Vignali C., (2001), McDonalds: think global, act local- the marketing mix, British Food Journal, [online] Vol. 103 No. 2, pp. 97-111, available from: http://www.emeraldinsight.com (Accessed 3rd November, 2008). Woodruff, C (2006) Human Resource Management International Digest, [online] Vol.14, No.1, pp. 3-5. Available at http://www.emeraldinsight.com [accessed on 10th November 2008]