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Hotel cost benefit

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  • 1. Situation Background:“Crown of Farfara” hotel is expanding its operation after the late archeological discovery ofthe Lost City. The magnificent unique discovery and the expected increase in number of touristsexpedited the opening of the government funded transnational highway. Farfara has been knownfor “Loch Wesh” lake that is famous by its monster.In addition to that, many international companies are relocating their offices to the nearby town of“Karkara” which led to unprecedented demand on hotel rooms.International hospitality companies are mobilizing their businesses to grab a piece of the newinternational sensation. Plans for hotels and resorts are underway from big names like Marriott andIntercontinentalCrown of Farfara owners are partnering with reputable investors to increase the hotel capacity from30 rooms to 300 by building a lakeside resort carrying their strong brand name that has been developing thepast 30 years.One Stop Solutions Background:You are a systems integration company that provides solution to businesses by combining elementsof “point solutions” and integrating them in a total solution that provides value to your customers.One Stop Solutions is known to help customers in numerous industries to achieve their goals, solvetheir operational problems and capture lost opportunities.The situationThe founder of “Crown of Farfara” Mr. Beck dated is still the owner and the main decision maker inany business venture, his reputation as the pioneer of boutique style hospitality in the country andthe huge success of Crown of Farfara bred a generation of loyal management team who hasadopted Mr. Dated style of purchasing and his conservative us use of technology.
  • 2. CF success is proven by the minimum upfront booking of 6 months in advance and the premiumprice that guests compete to pay for a stay at boutique hotel. Celebrities and high profile socialpersonalities take pride in having their “special rooms” ready for them when they spend theirholidays.The only way to convince Mr. Beck Dated is to demonstrate the cost-benefit of ANY purchase to himand the management team. The current system is manual as will be explained in the followingsections.Consulting study:Mr. Beck has hired a consulting firm to provide the strategy that should be taken to approach theplanned expansion. The consulting firm report stated that the current CF system is fully manualwhich is acceptable for a small size boutique hotel. However to run 10 times room capacityestablishment CF should use automated solution for all business units. The business units andfunctions are outlined:Business area FunctionReservations & BookingFood and Beverage Food productionRestaurants supervisor & staffBar supervisor & staffBanquetRoom serviceMarketing & SalesEngineeringAdmin. & management control AccountingFrond desk (Cashier)Room division Front officeHousekeepingSecurityHuman Resources Hiring & trainingEmpowermentLaundryFunctions & eventsWellnessMr. Dated realizes that his success in CF being an exclusive boutique style hotel cannot bereplicated in a large scale operation that is 10 times the room capacity; however he has been
  • 3. running an internationally recognized operation that is fully manual with no complaint. “I have noproblem using technology to do the extremely necessary tasks that cannot be done manually” healways tells his team.Your mission:Despite Mr. Dated conservative business attitude CF is considered a lucrative customer to itssuppliers. If Mr. Dated sees a convincing cost-benefit case he will approve the purchase right away.He is a good payer and a great reference to boutique hotels community worldwide who have thesame “less technology, more personal service” business policy.However it is a challenging task to find a compelling argument that demonstrates to Mr. Dated theoptimum way to run his new operation that cannot be dealt with using the same methods andtechniques used by his boutique style operation.Running a 300 room hotel and keeping the rooms busy all the time requires a different sales &marketing strategy, innovative ways to increase revenues, additional services such as in-roomInternet and entertainment system, internet booking, partnership with hospitality websites such asbooking.com, Agoda, Experdia, etc..The only way to convince Mr. Beck Dated and win the lucrative automation contract is to tell himthe benefits of your solution to the new operation and the lost opportunities if he does notautomate his new operation.Current environment:Reservation & booking Reservations are done by telephone or by Fax; payment is received to CF bank account.Cancellation is allowed up to 30 days before arrival otherwise the booking is cancelled andthe payment is not refunded. Reservations are recorded on paper and are updated manually. No packages are offered, however due to the latest development new hotels are built whichwill drive competition that CF has almost no experience with. Credit card payments are accepted exceptionally.Hotel Staff CF employees are highly skilled and expensive to keep; the new expansion from 30 rooms to300 represents a recruitment challenge. The staff needed will be multiplied by 5 folds at
  • 4. least, hiring this number of highly skilled workforce represents a major challenge in financeand human resource availability. The low number of workers and the “homey” work environment makes staff managementa personal task , workers are known by name so issues as hiring, motivation, bonuses andfiring are handled by senior management. CF management did not practice outsourcing due to the contained operation, everything isdone by CF employees. HR records show the following personnel:o Reception staff, 2 personso Concierge and bell captain, 2 personso Security, 2 personso Accounting & HR, 1 persono Reservation & booking, 1 persono Kitchen & restauranto Laundry, 1 persono Room makeup and cleaning, 3 personso Driver, 1 persono Management Marketing is done by managementCommunication systems: Hotel rooms allow local telephone calls only, room to room and room to facilities. Nointernet service or paid TV, Mr. Beck Dated does not see any value in providing theseservices to his elite clientele. Hotel phone system uses PA feature (public address) so there is no need for an RF system,Mr. Dated is not a believer in “fancy shmancy walkie talkies”. There is a fax line to communicate with guests and travel agents.Rooms division: Room cleaning staff receives a list of checking out guests, clean the rooms on asneeded basis, no system to track the time taken to clean the rooms or the frequency and the bedturn out, etc..Restaurants and room service: All systems are manual!Laundry systems: The laundry is collected on a daily basis and sent to a nearby professional laundryservices owned by Mr. Dated nephew. The driver drops off the new laundry and collects thefinished one every day at 1:00 PM.
  • 5. Your assignmentTo help you, we provided a table that lists the business units and functions so you fill theBusiness area Function Current method Lost opportunity Benefit of new method &solutionReservations & BookingFood and BeverageFood productionRestaurants supervisor &staffBar supervisor & staffBanquetRoom serviceMarketing & SalesEngineeringAdministration andmanagement controlAccountingFrond desk (Cashier)Room divisionFront officeHousekeepingSecurityHuman ResourcesHiringTrainingEmpowermentLaundryFunctions & eventsWellness productsYou will present to Mr. Beck Dated the business areas/functions current method (manual) and theopportunity to make more money if the operation is automated. You will mentioned the benefits ONLY ,and if he is interested he will ask you “ what do I need to purchase to get this benefit?” THEN, and onlyTHEN you will talk about technology and features, etc.Good luck to all participants, Ashraf Osman 2013