This is a report for the Directors Board of the Cosmopolitan Hotels, to identify the projection of improving the business of the Wheatley Park Hotel over the next year.
INTRODUCTION
This is a report for the Directors Board of the Cosmopolitan Hotels, to identify the projection of improving the business of the Wheatley Park Hotel over the next year. After interviewed all the key people and a research through books, being the General Manager, I have the following analysis and recommendations, with a scope to get approval on investment proposals, which would further the business development of the Hotel.
. The Vision for the Hotel in the future in long term planning
Wheatley Park, as a country hotel, has the ability to provide services for both business and leisure customers. Her current situation of declining of turnover at a rate of 10% is the main issue we have to tackle by introducing new projects.
.1 Target
The first target is to increase annual turnover from £1.2m to over £2m in room lettings improving profitability by lowering the operating cost. The second target is to upgrade the hotel from 2 stars to 3 stars in one-year time. The plan is to have room refit first followed by building a well-equipped indoor swimming pool:
* After refurbishing, over two-third of the 100 bedrooms will be en-suited, assuming en-suite room rates between £55-£65 per night, with an average 60% occupancy, the annual turnover will reach £1.4m.
* The new indoor swimming pool will be in service in the following year. A recent survey has proved that the availability of facilities like swimming pool would bring a 20% up in occupancy. Continuously improving performance, effectiveness and providing leisure facilities, we will upgrade to 4 stars and raise the room rates: £75-£85 per night, annual turnover will achieve to £2.5m.
* We will offer 500 basic memberships that worth £500 each p.a. to local residents for using leisure facility which would potentially generate £25,000 extra profits p.a.
.2 Quality Policy Statement and Measurable Objectives
.2.1 Offering Quality Service
After doing some researches based on academic theories and practical results and interviews, Total Quality Management (TQM) is a way to create competitive advantage to give the best services to customers - we have to focus on the service quality offered to customers in the competitive hotel environment. The four key implications of TQM (Naylor, 1999):
* Involving everyone through term work, trust and empowerment
* Focusing on customers as definition of quality - customer survey, feedback and questionnaires
* Continuous improvement - set goals and incentives to be reached, ensure that the resulting ideas are put into actuation (Kaizen)
* Request input from employees and ensure top management commitment
.2.2 Measurable Objectives
Measure customer satisfaction by questionnaires, rate of customer returns, complaints and recalls. Also, services have to exceed customers' expectation and competition. Besides, we should receive customers' responsiveness and achieve productivity to improve and ensure product quality.
.3 Management Reformation
.3.1 General Management - Benchmarking
Marketing manager can check and compare the updated market information of hotel industry, while internal benchmarking may mean of raising overall organizational competence (Johnson & Scholes, 1997):
* The market segments and to explore new target customers
* How the different departments perform
* How the hotel marketing manager spends effectively to economize the cost
* Who are our competitors, their strengths and weaknesses
.3.2 Human Resource Management
The main target will be to reduce the high staff turnover and increase motivation to offer excellent services. We should have to have the right people by (Bank, 1992):
* Job design - continuously assessed and further job training will be carried out
* Daily meetings - essential to improve communication between staff and management, share information and viewpoints
* Reward schemes - stimulate staff to participate and perform a better service
.3.3 Operations Management - Changing in Capacity Strategy
The current Level Capacity is capable of handling peak business with stable supply of permanent trained worker, however, it needs higher costs to maintain quality as the seasonal fluctuation affects the performance to provide the best service. Chase Demand can provide a consistent ...
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* Job design - continuously assessed and further job training will be carried out
* Daily meetings - essential to improve communication between staff and management, share information and viewpoints
* Reward schemes - stimulate staff to participate and perform a better service
.3.3 Operations Management - Changing in Capacity Strategy
The current Level Capacity is capable of handling peak business with stable supply of permanent trained worker, however, it needs higher costs to maintain quality as the seasonal fluctuation affects the performance to provide the best service. Chase Demand can provide a consistent service standard at minimum cost, and is flexible in recruiting part-timers or offer contract placements to manage peaks. Unused capacity in lower seasons can be utilized to increase staff motivation, build loyalty, and commitment within the hotel to reduce staff turnover. Combining these two capacity strategies can maximize the turnover all year round (Ng, Wirtz & Lee, 1998).
.3.4 Management Information System - Use of Balance-score-card
Management Information System will be introduced, in which the balance-score-card can give our hotel a balance of information from four perspectives and minimize the chance of information overload (Brown & McDonnell, 1995; Naylor, 1999):
* Financial - enhance management planning, control and decision making.
* Customer - reflect how well our quality services serve the customers and the increasing non-financial competition between hotels.
* Internal - managers need to decide which operations, processes, competences and skills our hotel must excel.
* Innovation and learning - continually improving and introducing new services to create better value.
The balance-score-card emphasizes the interrelationships of all perspective (fig.1).This could achieve our objectives of growing profitability and continually improving services, we are able to response quickly to markets changes and customers, and provide distinctive service with value for money. Additionally, to develop skills of all employees and to recognize their performance, while maintaining awareness of competitors. (Brown & McDonnell, 1995)
Figure.1 Balanced score-card: emphasis on interrelationships and looking and moving forward
Source: Week 6 Lecture notes
.4 Competitive Advantages
Firstly, even though we will rise in price for 20%, it is still lower than the normal pricing around £100 charged by other 3 stars hotel (Defender strategy). Secondly, higher quality increases reliability and reputation, together with responsive to customers, it will increase reliability and satisfaction for customers, who possibly will become current customers and could be a way to promote our hotel, which is competitive advantage over competitors, enables us to raise prices in other sections and finally boost up in profits (Total Stay, 2002). Thirdly, improved communication by installing MIS will increase productivity that lower the costs, thus higher the profits (fig.2).
Top Route
Bottom Route - generate real profits
Figure 2. Why quality makes a difference: 2 possible routes
Source: Thomas, J (Jan 2000), Week 3 lecture notes
2. How the MIS can assist to have Synergy in medium term planning
Lack of communication between staff, management and departments is an essential problem to deal with. Policies adopted by the top management are not fully passed through all departments, so confusing the staff of how the hotel operated, this leads to misunderstandings and mistakes.
2.1 What is Management Information System?
Management Information System (MIS), is to manage an organized combination of people, software, hardware, communication networks and data resources, produce information products that support various day-to-day decision-making needs of management, explained as the "information triangle" (refer to fig.3) (Keuning, 1998:543).
High Broad/abstract
Low Details/specific
Figure 3. Information supply and level in the organization
Source: Keuning, D. (1998) Management:A Contemporary Approach, London: Pitman, p.543
The bottom is operational, information on the daily execution of activities and regards details of the operational company processes, will go to different departments. The middle - tactical, is to compare planning data to actual attained results. The top part is important - strategic, supports the process of policy making and formation in the hotel in medium term, by collecting from both internal and external sources, then provide ad hoc information. (Keuning, et al.)
2.2 Operations Department
MIS can improve communication between departments to perform effectively. All bookings of bedrooms and functions rooms are kept in schedule in the central computer system, facilitates to plan and organize properly before holding functions. Therefore, receptionists can check the room status, reserve rooms for customer call-ins at once, arrange rooms for unexpected walk-ins as well as avoiding double booking. Once the residents have checked out, the front office can immediately notice the housekeeping to make the rooms, reducing over-time working.
Further, manager needs to obtain extra data and information to know what has and is going to happen, of:
* Marketing activities, avoid charging full fees for who have discount agreement
* Budget available, then operation manager can choose the most benefit projects for profits
2.3 Marketing Department
The MIS helps marketing manager to collect data and information from internal (report) and external sources, such as Internet, to predict and plan for future demand over history, then identify by marketing strategy - 5Cs (Jobber, 2001): Consumer, Customers' needs, Cost to customers, Convenience for customers and Communication with customers.
Additionally, advance knowing of finance information from the Finance Department will help to set the budget for marketing activities to attract new customers, and to change the previous customers to become repeat customers, especially business customers.
The MIS will store up customers' details, feedback and complaints as records, so we can contact them for opinion and reasons they choose our hotel for service and quality improvement.
2.4 Finance Department
Finance department controls the cash flow and balance of payment of the hotel, hence, they need correct figures from all departments to know the benefits and costs of each operation and activity. Through the MIS, it can monitor and understand:
* Cash flow - make sure where the customers/cash come in and go out and in the future
* Figures to show every body in the hotel is spending on which particular category
* Customers' spending behaviour
After installed the MIS and introduced the new package - bills included the breakfast, impose of deposit payment and an encouragement of using credit cards (a kind of MIS), it can improve cash flow and reduce debts collection period, as well as saving the time from calculating bills. Additionally, it helps avoiding miss charging of the bills and reducing over-time payment for housekeeping staff.
The MIS helps to check and control people's expenditure easier, if discovers any problems, the manager can cut cost immediately preventing from financial crisis (Just-in-time). After gathering all information, they can work out the budget available for each department.
2.5 Human Resources Department
IT professionals will be hired to train the top-level management; in turn they will train lower rank staff. To close the skill gap by encouraging employees to learn database and able to use MIS for operations, we will get long-term multi-skilled staff that no need to recruit extra staff to cope with MIS.
All staff information and records are entered, we can identify and give further training to the right staff. The MIS can help with planning the staff shifting system and schedule effectively, avoiding the problem of miss-arrangement. HR manager can predict the future's demand level on part-time staff during peak and low seasons, so planning for recruitment in advance plus screening for potential employees.
2.6 Creating Synergy
Synergy is created, which makes all different departments to work together, thus communication has significantly improved. As Keuning (1998:200) stated "the advantages which arises because two activities are being carried out which complement each other..." This means output is greater than input.
3. MIS helps to add value in the short term
Information System can contribute to Add Value immediately, to perform our work more effective and efficient by (Laudon, K.C. & Laudon, J.P., 1998):
* Analyse and redesign business process
* Enhance quality
* Meet benchmarking standards
* Improve customer service
3.1 Communication problem
In Wheatley Park Hotel, lack of communication is a serious problem between reception and other departments, this causes complaints about wrong charging and room booking to the reception. The MIS can solve this problem because it is a central computing system, which runs through the hotel. The front office staff can check out which room is available easily, they only need to type in customers' information, and it is flexible to change at anytime. This can overcome the problem of overbooking so reduce complaints.
3.2 Staff turnover
Besides, staff turnover is especially high in reception at 60%, which is a lot more than the national average of 48%. This is the result of being dissatisfied by the complaints, great working pressure and inappropriate shifting arrangement. Wheatley Park Hotel should have to retain staff as recruitment is difficult in Oxford, and staffing costs about 22.4% of turnover, staff leaving means creating losses. The MIS could solve this by shifting re-arrangement, since then staff would feel less stressful and motivated, they would stay. (Week 5 Lecture notes)
3.3 Finance
By the use of MIS, details of income and payment are calculated effectively and accurately, so salaries and bills can pay to the staff, suppliers and booking agency on time respectively, which generates trust and consequently we can work happily. On the other hand, the promotion of credit card using and impose of deposit payment can reduce debts collection period and improve cash flow. Additionally, it helps avoiding wrong charging of the bills so avoiding complaints. Finally, the speed of MIS could prevent losses before mistake is made, saving costs for our hotel.
3.4 Strategic importance of MIS/IT
MIS enables processes move faster and fewer mistakes are made because of more efficient working (monitoring). This in turn provides lower costs, since accomplishing with JIT will cease the process immediately, preventing from continuous mistaking, which is an important factor in the competitive position. (Keuning, 1998)
4. The key management issues arising from implementing the MIS
According to the "Principle of Change Management" (Week 6 lecture notes), we need to follow changes by:
* Involve as many people as possible in chinage programmes
* Make constant change as part of our culture
* Try to tell everyone preferably in person humanly as often as possible
* Make liberal use of financial incentives and recognition
* Recognize the company culture and work in it
Since no one policy is perfect, it can be seen that management issues are arising from implementing the MIS (Laudon, K.C. & Laudon, J.P., 1998):
4.1 Hidden dangers
The potential dangers that MIS would have are: First, security is very principal problem, the system need to define employee to access, preventing from outflow of confidential information. Second, the computer system may break down due to technical problem, shortage of electricity supply and fire that create a threat of losing data. The other danger is the threat of bugs' attacks, such as, millennium bugs. Next, unexpected time slippage may happen and lead to cost overrun that vastly exceed budgets. Subsequently, performance is notably below the estimated level down to technical shortfalls, thus a failure to obtain projected benefits.
4.2 Expected difficulties
There are impacts of information systems on organizational structures, work groups and behaviour. Once the MIS is introduced, jobs such as calculating bills are automated, and staff are trained to be multi-skilled, redundant staff will be resulted from lesser working hours and specialization. With the aim of keeping effectiveness and efficiency, these unneeded staff and some layers of management have to be eliminated. Feeling the risk of taking away some of their power and stature or even their jobs, staff may resist and oppose against this project.
Besides, managers are unlikely to accept detailed designs that are difficult for them to understand.
The degree of user participation in the design and development process have effects, it may result in inappropriate design of the system that cannot fit the needs. (Naylor, 1999)
To prevent these failures, we need to manage:
Figure 4. Factors in information systems success or failure.
Source: Laudon, K.C. & Laudon, J.P. (1998) Management Information Systems: New Approaches to Organization and Technology, 5th ed., New Jersey: Prentice Hall International, p.515
4.3 Be cautious to potential causes of failure
* Insufficient or improper user participation in the systems development process
* Lack of top management support and user input/participation
* High levels of complexity and risk in the systems development process
* Poor management of the implementation process
* Incomplete specification leads to difficulties in handling with
* Changing requirements and specific systems development
* Technical incomplete
CONCLUSION
To conclude, if all the above stated are improved, then Wheatley Park Hotel should be able to improve communication, managing properly, increase the annual turnover and profits plus raising reputation in the hotel industry. Risks can be presented at any time, so the hotel should be flexible in managing and coping with changes.
M07026 Assignment One 00047378 Hoi Ying WONG
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