Reference no: EM132776710
THE HOTEL AMBION PLC Case Study
The Hotel Ambion, a PLC, independent, four star hotel located in Sri Lanka's west coast is now facing with a financial crisis owing to the turbulent and fragile business environment. Since its inception six years ago the hotel has grown in prominence during the pro touristic bustling economy from 2013 to 2019, and it has been one of the top performers in the midmarket and economy segments over the six years preceding the current crisis. The hotels main target market segment is the tourist on round tour (75 percent of the room booking) who will usually stay for at least two nights at Ambion for $150 per night.
During the past three months, the hotel has been a victim of the severe economic upheaval due to pandemic which has led to a significant reduction in room bookings from the vacation travel segment. This has reduced profits significantly to the extent that the hotel is no longer able to cover the fixed costs. CEO has called an executive committee meeting to discuss the future direction of the company should take in the immediate term and in the long term to sustain its competitive advantage.
The present crisis has resulted in policy changes such that tour operators, travel agencies, and transport firms which form an integral part of the hotels stake holder network - have tightened their policies. The tour operators are claiming about the escalating insurance costs and travel agencies are delaying the hotel payments. But the hotels can't take a hard stance as these business partners are an important source of business. More over the hotel is now compelled to reduce the hotel prices, further thinning their margins. These restrictions have had a major impact on hotels like Ambion which CEO and his executives have to resolve.
The local market where Ambion did not consider much has become active and is bringing lots of business to its business rivals. However Ambion has little or no experience in handling local customers during the past six year's business run.
Before CEO meets with his executives to discuss the situation the managers are providing more information. They describe the hotel is mainly targeting the mid market and economy segments (85 percent), while also attracting the upscale vacation market segments (15 percent). The hotels main competitors are RUI, Hikka Tranz, Citrus Hikkaduwa, which are all located within a six mile radius. There is fierce competition among the hotels in this region, and the hotels have resorted to price cutting tactics during economic downturn before.
The products and services of the Ambion Hotel have been designed with high quality. Guests have been particularly satisfied with the ambience of the hotel that is given that it has focused only on its core market segments for business. The rooms have been designed and appointed to satisfy its market segments. In fact there has been a coherence among product (tangible aspects)and service quality (intangible aspects). However the economic downturn has raised questions about how the hotel would continue in its market.
1. Identify and discuss the key problem that the hotel is faced with
2.what options does the hotel have to do in the short and long term as survival and rebuilding the business
3.What are the pros and cons of the each short and long term strategy that you propose
4.What is your advice to the CEO about the way that he should conduct his discussion (leadership style, negotiation, conflict management style )with the executive to address these concerns and to find the solutions.