The purpose of this paper is to explore Case Study # 10 – Good Hotel: Doing Good, Doing Well?excerpted from Strategic Management: Planning for Domestic and Global Competition Thirteenth Edition authored by John A. Pearce II and Richard B. Robinson published 2013 by The McGraw – Hill Companies New York, NY. This paper will seek to address five issues concerning the Good Hotel case study. This paper will discuss the vision/mission behind the concept of the hotel. Pam Janusz’s considerations that she may present to the new hotel ownership will be discussed. The Good Hotel’s target customers will be defined and assessed. The marketing strategy of jDV for the Good Hotel will also be assessed and discussed. Finally, this paper will give insight as to how the Good Hotel should be competitively positioned against its rivals.
American Pacific International Capital, Inc. acquired the Good Hotel located in San Francisco in May 2010 and is now managed by HAIYI Hotels and Management Group. (Hotel Interactive, 2010) Joie de Virve was the prior management of the Good Hotel. (Pearce and Robinson, 2013) The hotel is referred to as a “hotel with a conscience.” (Pearce and Robinson, 2013) The hotel desires to inspire the “good in us all.” (Pearce and Robinson)
The Good Hotel’s mission is to make differences for guests and associates by sharing passions for work, life and individualized experiences. (Haiyi Hotels). Its vision is to be a unique boutique hotel with its own character and style.(Haiyi Hotels).
Pam Janusz Considerations
Pam Janusz weighed three different options for the hotel to present to the new ownership. She considered the continuing, expanding, or discontinuing Good Hotel’s concept. The continuation of the current concept would have a minimum effects on operations. The recently trained staff embraced the current concept which led to increased customer satisfaction and occupancy, and financial results were being met or exceeded. Continuing the concept of the hotel can also have disadvantages. Increased awareness of the need to become more friendly to the environment may lead to a more competitive marketplace. The employees could become complacent and may resist future needed changes. The hotel may acquire a greater market share if the current concept was expanded.
This option could increase the hotel’s occupancy and increase the financial bottom line. Since the associates have recently been trained on the current concept, they may be more receptive of additional training to expand the concept instead of replacing the concept completely. The decision to expand could have some repercussions though. Employees may be resistant of the additional training and there would be additional costs and decreased productivity, because of the training. The third consideration of Pam was to completely discontinue the current concept of the hotel and seek a new direction. If this option was chosen, then there would be a fresh new start under new management with a new concept of the hotel.
This decision may be beneficial or detrimental to the hotel. It could be beneficial because of a fresh new start. The hotel could re-brand itself by setting a new tone and image. The cons of the decision to discontinue the current concept are similar to the cons of expanding. With discontinuing the current concept, associates may resist the change especially since they have recently been trained on the current concept. They would have to be trained a new concept and the training comes with a monetary cost.
Good Hotel’s Customers
The Good Hotel targets customers who are environmentally conscious. These customers are referred “Cultural Creatives” by sociologists(Pearce and Robinson, 2013) These customers tend to be younger in age and hold the belief that they are to be responsible both economically environmentally.
JdV’s Marketing Strategy
Chip Conley, JdV’s founder and CEO, stated that he became interested in hospitality industry because he “enjoyed commercial real estate but hated the transactional part.” (Pearce and Robinson, 2013) Per Conley, if a customer perceives a hotel as an extension of themselves, then the hotel would be an aspiration to them. JdV’s strategy is being “geographically focused and product-line diverse.” This strategy may suffice, but it can also have disadvantages. The greatest disadvantage of this strategy is the limitation placed upon itself by filling a niche market which will lead to a smaller segment of customers desiring their services.
The Good Hotel has positioned itself competitively in relation to industry rivals. Great strides were made by the Good Hotel from 2009 to 2010. The hotel’s twelve month occupancy from 2009 to March 2010 increased 61.3%. (Pearce and Robinson, 2013) The industry’s twelve month occupancy declined 9.9% over this period. (Pearce and Robinson, 2013) The hotel has a great outlook for future profitable business.
Haiyi Hotels. About Haiyi Hotels. Retrieved 05/07/2014 http://www.haiyi-hotels.com/ soma-hotels-san-francisco-en.html
Hotel Interactive. May 3, 2010. Haiyi Hotels and management group assume ownership of three San Francisco hotels subsidiaries of American Pacific International Capital, Inc (APIC) make first U.S. Hotel purchases in San Francisco, California. Retrieved 05/07/2014 from http://www.hotelinteractive.com/article.aspx?articleid=16899. Pearce, John A. II and Robinson, Richard B. Robinson, Jr. Strategic management. 13th edition McGraw Gill. 2013.