Day 5: Hotel Consulting Begins

Today was a very long and frustrating day for all 5 of the team members. We were asked to formulate a plan for addressing pricing strategies before we left and a very vague plan was included in our pre-trip report. It would have been unproductive to devote any more effort to that plan because everything we were lead to believe about the operation and management of the hotel was incorrect. This was not a surprise to any of us I don’t believe but pre-trip planning can be only as accurate as the information provided by the host.

We were originally supposed to have meetings between our team and 2 managers. However, plans changed due to the fact that there is our team of 5 from Indiana University and 5 other teams from Hong Kong City University. Having 6 different groups requesting time with different managers was more of a burden than the management was expecting.

So, our individual meetings were canceled and 3 of the managers sat in from of all of the students and fielded questions. Since each group has a different topic, the questions by the other groups were not necessarily beneficial to our pricing issues. Furthermore, because the managers were in a large conference room in front of a large number of people (instead of in a small office with a few students), the answers to the questions were very vague and generally
unhelpful.

Our team of five started to show signs of frustration and fatigue due to the unproductive session and, for some, jet lag. Four of us have to have every spoken sentence converted to English from Mandarin Chinese and none of us are getting answers that are going to help us with a recommendation. Some of the group members are hoping to do a great deal of data
mining to determine the seasonal elasticity of demand so that pricing changes can be justified. However, I highly doubt that the database used by the hotel will be accessible to us and, even if
it is, will provide the type of information we will need. I sense that Garrett, Brian, and I all want to take a more hands-on approach but the language barrier has prevented us from taking a more proactive approach.

This hotel is focusing on convention hosting due to their location restraints, which seems to be a wise decision. I think some of our recommendations will found by going through the room reservation process, understanding the pricing and margins of all the available services, and doing the same for some key competitors. We know that package bundling and offering direct online reservations (rather than exclusively through 3rd party online services) are going to be recommendations.

We were initially lead to believe that the hotel have very crude pricing structures and very little understand of how to profitably operate a hotel. Nothing could be farther from the truth. Initially, some poor decisions were made. The original management believed that having a hotel between the beach and downtown would be an ideal location. In reality, it is a very poor location because it is a 20 minute walk to the beach for vacationers and a 10 minute drive to downtown for those looking for entertainment and dining. The rule of “location, location, location” was not understood. However, the current management has adapted very well to this shortcoming. They have focused on conventions, which don’t rely on external attractions. The level of service offered is exceptional, as it should be with over 1.6 employees per room.

Prices for the restaurant and the rooms are based on weekly market analysis. The management team has an incentive-based employee compensation package and has a strong grasp on the importance of cross-training and achieving high levels of customer satisfaction. The dining is excellent and the range of services is vast. Once the new building next door is completed, they will easily qualify for the 4 start status they are so close to achieving now. The general manager has comprehensive knowledge of the operation and a clear vision for the future. He has addressed many of the operational and HR issues. However, despite the confident presentation, I feel that there are still many opportunities remaining.

The ability of so many people to speak so many different languages amazes me. Most of the Hong Kong students can speak Cantonese, English, and Mandarin. I was very surprised to hear one of the Hong Students speaking English with a British accent! The translators have been invaluable. Faye has been very helpful and has gone beyond the call of duty by sitting through all of the meetings today and continuously translating. Two locals, Vanessa and Stella, helped us out as well. I was very impressed with Vanessa’s strong command of both languages and her accent-free English presentation to us. She provided more than just translation and seemed like she should have been a member of our team rather than a translator.

The capabilities and progression of the Chinese people is amazing and much closer to the capabilities of the US than most believe.

Written by in: MBA China Trip | Last updated on: 2014-May-27 |

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