Reference no: EM132908542

Case Study: Operations Management of a Hotel

Hotel XX is a 400-room 4-Star hotel in Southeast Asia. Hotel operations are inherently complex and challenging, often because of the diversity of its guests (both domestic and international guests) especially during the peak holiday seasons. It is not surprising that the hotel's General Manager has constantly emphasised the importance of running a high-quality operation.

'Managing a hotel of this size is an immensely complicated task', he says. 'Our customers have every right to be demanding. They expect first-class service and that's what we have to give them. If we have any problems with managing this operation, the customer sees them immediately and that's the biggest incentive for us to take operations performance seriously.

Our quality of service just has to be impeccable. This means dealing with the basics. For example, our staff must be courteous at all times and yet also friendly towards our guests. And they must have the knowledge to be able to answer guest's questions. The building and equipment - in fact all the facilities of the operations - must support the luxury atmosphere which we had created in the hotel. Stylish design and top-class materials not only create the right impression but are also durable so the hotel still looks good over the years. Most of all, though, quality is about anticipating our guests' needs, thinking ahead so you can identify what will delight or irritate a guest.'

The hotel tries to anticipate guests' needs in a number of ways. For example, if guests have been to the hotel before, staffs avoid their having to repeat the information they gave on the previous visit. Reception staff simply checks to see if guests have stayed before, retrieve the information and take them straight to their room without irritating delays. Quality of service also means helping guests to solve their problems. For example, if the airline or the coach company loses a guest's luggage on the way to the hotel, he will arrive at the hotel understandably irritated. In the general manager's words;

'The fact that it is not us who have irritated them is not really the issue, but it is our job to make them feel better'.

Speed means a fast response to customers' requests.

'A guest just should not be kept waiting. If a guest has a request, he or she is likely to want that request to be attended to very quickly. This is not always easy to achieve but we do our best. For example, if every guest in the hotel tonight decides to call for room service and request a meal instead of going to the restaurants, our room service department would obviously be grossly overloaded and customers would have to wait an unacceptably long time before the meals were brought up to their rooms. We cope with this by keeping a close watch on how demand for room service is building up. If the response time to customers becomes too long, we will call in staff from other restaurants in the hotel. We have to ensure that our staffs are multi-skilled. So we have a policy of making sure that the restaurant staff can always do more than one job. It's this kind of flexibility which allows us to maintain fast response to the customer'.

Dependability is a basic principle of a well-managed hotel. 'We must always keep our promises. For example, rooms must be ready on time and accounts must be ready for presentation when a guest departs; the guests expect a dependable service and anything less than full dependability is a legitimate cause for dissatisfaction.' It is on the grand occasions, however, when dependability is particularly important in the hotel. For example, when holding a banquet, everything has to be done on time. Drinks, food, entertainment have to be available exactly as planned. Any deviation from the plan will very soon be noticed by customers. 'Detailed planning and anticipating what may go wrong. Anticipate possible problems and plan how to cope with them, or better still, prevent them from occurring in the first place.'

Flexibility means a number of things to the hotel. Firstly, it means that they should be able to meet a guest's requests.

'We never like to say NO! For example, if a guest asks for /camembert cheese and we don't have it in stock, we will make sure that someone goes to the supermarket and tries to get it. If, in spite of our best efforts, we can't get any we will negotiate an alternative solution with the guest. This has an important side-effect - it greatly helps us to maintain the motivation of our staff. We are constantly being asked to do the seemingly impossible - yet we do it, and our staffs think it's great. We all like to be part of an organization which is capable of achieving the very difficult, if not impossible.'

Flexibility in the hotel also means the ability to cope with the seasonal fluctuations in demand. They achieve this partly by using temporary part-time staff. In the back-office parts of the hotel this isn't a major problem. In the laundry, for example, it is relatively easy to put on an extra shift in busy periods by increasing staffing levels. However, this is more of a problem in the parts of the hotel that have direct contact with the customers.

'New temporary staff can't be expected to have the same customer contact skills as our more regular staff. Our solution to this is to keep the temporary staff as far in the background as we possibly can and make sure that our skilled, well-trained staffs are the ones who usually interact with the customer. For example, during a busy period, a waiter who would normally take orders, service the food, and take away the dirty plates would restrict his or her activities to taking orders and serving the food. The less skilled part of the job, such as clearing the plates, could be left to temporary staff.'

About 60 percent of the hotel's total operating expenses go on food and beverages, so one obvious way of keeping costs down is by making sure that food is not wasted. Energy costs, at 6 percent of total operating costs, are also a potential source of saving. However, although cost savings are welcome, the hotel is very careful never to compromise the quality of its service in order to cut costs. 'It is the very good customer service which gives us our competitive advantage, not price. Good service means that our guests return again and again. At times, around half our guests are people who have been before. The more guests we have, the higher is our utilization of rooms and restaurants, and this is what really keeps cost per guest down and profitability reasonable. It a circular pattern; it's the quality of service which keeps our volumes high and our costs low.'

Question:

Choose one your new services and briefly explain how the hotel's operations (of the different departments) may change to support this new service? Give reasons for your answer.