Qn 1a) Describe how you think Wernie will make sure that the way he manages the hotel is appropriate to the way it competes for business;
Penang Mutiara, being one of the most prestigious hotels in Penang, have managed to secure a foothold in this lucrative and highly competitive environment.
Wernie has the vision and very clear focused beliefs about the importance of running an effective operation where customers have every right to demand for first class service which they are obliged to provide for.
Assuming neighbouring competitors such as Pelangi Beach Resort Langkawi and Shangri-La’s Rasa Sayang Resort who is adopting common strategies like pricing and product strategies, Penang Mutiara aim at providing impeccable quality and customer orientated strategy to provide a personal touch as part of its uniqueness to retain customers.
In order to compete for business and to keep abreast with stiff competition in the hotel industry, currently, Wernie adopted impeccable quality strategy where he recognizes that “it is impeccable service which gives us our competitive advantage, not price.” Since it is cheaper to retain regular guests than to attract new ones, he understand the advantage of retaining regular guests through providing impeccable services which will in a way retain high occupancy rates to keep costs down while achieving reasonable profitability.
To achieve that, he set basic standards for his staff to be well trained, knowledgeable, sensitive and anticipative to think ahead in order to provide basic and value-added services to satisfy customer’s needs. The ability to remember regular customer’s information and personal preferences can also add on to a personal touch upon their next visit. Additionally, quality services in terms of providing stylish design and top-class materials and being able to practise good preventive maintenance to the building structure and equipment is also another way of sustaining high class image and luxury atmosphere to create a comfortable feeling to welcome visiting guests.
Wernie also measure the performance based on five performance objectives of Quality, Speed, Dependability, Flexibility and Cost.
To conclude, even though Penang Mutiara managed to maintain its competitiveness with their current strategy in the short run, however it is not sufficient to remain competitiveness due to volatile market demand. Moreover, with the emergence of the global tourism, hospitality industry and globalization with competition from ubiquitously, the need to augment existing and new strategies need to be address speedily.
Qn 1b) Describe how you think Wernie will implement any change in strategy;
Wernie should introduce new strategies to supplement and implement further changes to enhance the existing strategy.
To implement speedily new changes in the short term, supply chain management method can be used to improve internal processes rapidly can also be utilised to stay competitive.
The strength of Penang Mutiara includes the strategic location of being secluded and tranquil and with Wernie who has vast experience at managing luxury hotel worldwide, he has the ability to lead and influence the staff to bring about better internal functions.
To sustain existing quality strategy, Wernie can adopt proactive approach to enhance and maintain consistentancy in quality and level of services by conducting staff training, retrain and upgrading of skills to meet the volatile market demand and unpredictable customer expectation. He should always review and set new service standards for the staff for continuous improvement, conduct regular focus group studies to predict future customer requirements in terms of service and facilities, minimise and eliminate high employee turnover at the front desk by taking good care of staff welfare, and exercise job rotation of staff to promote innovation and creativity in the job.
To supplement the informal channels of communication, regular consumer’s opinion surveys can be conducted for rating to monitor the quality of its services and quality and efficiency as part of the feedback method.
With the target group of corporate businessman and to enhance its competitiveness, Wernie can adopt new flexibility strategy by utilisation of most advance reservations technology and internet for hotel reservations. He can also offer online competitive rates while ensuring complete security of customers’ personal information and credit card details and offer instant confirmation for hotel reservations to promote efficiency.
Marketing strategies is an important vision for growing of the profitability and value of the hotel such as introduction of frequent user programme, loyalty card program with further savings for travel and vacation plans. Hotel can also host elite social and sporting events which include International wine and food festival, polo championship, international cup to provide a platform to showcase its various expertises in lifestyle creation which can help to boost high occupancy rates also.
With business travel growing at a faster pace than leisure, Wernie should expand target group to include corporate, business travel package and tourist group to bring in more profits.
New lifestyle experiences and F & B concept strategy can also be implemented to define the highest standards of service excellence.
1c) Describe how you think Wernie will develop his operation so that it drives the long-term strategy of the hotel.
In 3 to 5 years time, operations challenge and threats which include globalization of markets, social responsibility, influence of new technologies and emergence of knowledge management will have an immense impact on Penang Mutiara.
Since majority of the revenues in hospitality will be generated from the Internet. By 2006, the Internet will contribute over 24% of all hotel bookings which will be direct-to-consumer (i.e. via hotel-owned websites).
To overcome the threats, Wernie can enhance the technology strategy, stay ahead of his competitors and capture new market share with an effective Direct Online Distribution Strategy with the advantages of having direct online distribution cuts costs, attracts affluent customers and lessens the dependency on online discounters and more traditional and expensive channels. It will also provide the hotel with long-term competitive advantages and lessen their dependence on intermediaries, discounters and traditional channels that are about to become obsolete.
Wernie can also employ all Direct Channel strategies such as email and pay-per-click marketing, link creation, lowest price guarantee, loyalty and retention programs, and trust building to encourage, entice, and convert lookers into bookers on his website.
Other measures also includes: re-evaluate his exposure in the Indirect Online Distribution Channel to avoid brand and price erosion with long-term negative repercussions ; limitation of exposure in the Indirect Channel to only a selected number of hotel-friendlier intermediaries ; institute a comprehensive Total Online Distribution Strategy, which turns the direct-to-consumer distribution model into the main focus of his Internet strategy and optimizes the Direct vs. Indirect Channel balance for the hotel ; subscribe competitive intelligence to allow him to help him to identify hotel pricing and positioning on major indirect channels throughout the Internet, and assure he maintain control of pricing with positioning without having to necessarily match lower competitive rates.
He can also adopt further strategies such as Website Optimization Strategy, comprehensive Destination Web Strategy, perform a robust Search Engine Strategy and partner with an experienced eBusiness hospitality consultancy to help him navigate the Internet and utilize the Direct Online Distribution Channel to its fullest potential at reasonable cost, with quick turnaround.
In the long run, Wernie should look into diversification and expand globally, divest non-core properties, target new source markets such as Southeast Asia, China and India.
As part of human resource management, Wernie should encourage two way communications between higher management and staff. Participation by all levels of staff should be encourage to provide feedback and suggestions to improvise operations and services since they are the people who have the most contact and are in direct contact with the customers. They are the ones who knows customers demands and are able to receive immediate feedback and valuable responses which are necessary for continuous improvement. While implementing operation changes, Wernie must be able to deal with cultural changes and changes in mindset of the staff in order to succeed in any minor or major restructuring of operations management of the hotel
As part of its long term strategy, Wernie can adopt performance management to achieve long term, strategic cost reduction. Secondly, Total quality management, which is concerned with the continuous improvement of all aspects of operations performance, can also be adopted to continually meet and exceed unanticipating expectations of customers.
To conclude, achieving competitive advantage through achieving accolades by winning several prestigious international awards in the long run can also enhance the hotel name to bring in stable revenues and profits.
Qn 2) The case describes how quality, speed, dependability, flexibility and cost impact on the hotel’s external customers. Explain how each of these performance objectives might have internal benefits.
The five performance objectives of Quality, Speed, Dependability, Flexibility and Cost will have an impact and benefits on both internal and external customers of the hotel.
Quality objective, which means doing things right can benefit external customers by delivering impeccable quality service to achieve service excellence.
Internally, staff can achieve satisfaction by providing error-free goods and services to give quality advantage to the external customers. With the minimization of blunders, time and cost of rectifying the mistakes are reduced effectively. Achieving high customer satisfaction will lead to the likelihood that the customer will return. Dependability also increases as it leads to a stable and efficient organization. It also enables high motivation, high morale, and great satisfaction of staff. Staff will have a sense of belonging and security for being part of the organization. All these will lead to efficient organization.
Speed objective which means doing things right, can benefit external customers by giving them a speed advantage to receive the services in the shortest possible time with minimum delay.
Internally, it effectively minimizes the response time to deliver services to the customers which in turn reduce the labour cost and increasing the availability of services, allow speedy decision-making and speedy movement of materials and information inside the operation. It also reduces risks and inventories. Help to establish and maintain hotel’s image and reputation, reduce backlog since there won’t be much follow up. Reduce wastage of labour and can concentrate on providing good service to other guests.
Dependability objective, which means to do things on time and to deliver timely promises made to the customers. External customers can gain a dependability advantage should operations staff are able to succeed this objective.
Internally, it enables staff to win mutual trust and increases operational reliability of internal customers in delivering services thus saving time, money due to ineffective use of time. It can also achieve a high level of trust between departments and minimize disruptions. If all departments are dependable and everything in an operation is perfectly dependable and in the case of any emergency or disruptions, each department knows what to do and their roles and duties of how to overcome the situation where everything will be predictable with no “surprises”.
Flexibility objectives, with the ability to make changes to allow flexibility to vary and adapt the operations activities to cope with unforeseen circumstances. Externally, customers are able to enjoy the flexibility advantage to receive customised services according to their personal preferences should they have any.
Internally, it can speed up response time, save time wasted in changeover and maintain dependability. Flexibility in deployment of staff who is able to multi task during emergency or peak season as extra help can help to avoid work overload by hiring temporary staff. Staffs enjoy the benefit of empowerment to make speedy decisions in order to achieve efficiency so as to reduce seeking high authority approval which take ages.
Cost objectives by doing things cheaply, seek to influence the cost of the hotel’s goods and services. Externally, it can pass good value and savings to consumers.
Internally, by allowing a good return to the organization, low operating expenses and low employment overhead by engaging temporary staff during peak period to avoid abundant staff after the season can achieve cost reduction which means more incentives, welfare and bonuses for staff
(Total word count : 1957 words)
1) Operations management – 3rd edition, Nigel Slack
2) Cases in Operations management – 2nd edition, Robert Johnston
3) Business strategy in Asia (A casebook) – 2nd edition, Kulwant Singh