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HOTS Simulation

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by

Kelsey Ligon

on 23 April 2014

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Transcript of HOTS Simulation

Hotel Overview
- Currently has 125 air-conditioned guest rooms, all with private bathrooms.
- Pub bar with snack service, and a full service restaurant
- No leisure facilities, business services, conference facilities or meeting rooms.
- The exterior, the guest rooms, the front desk, the restaurant, and the bar were all recently refurbished.
Plan of
Action

Human Resources
Department
HOTS Simulation:
Thank you!
Keys to Success
Group 4 - HTM 381
Tripper Carter
Jack DeBoef
Stephanie Ren
Yilei Zhang
Kelsey Ligon

SWOT Analysis
Internal Factors
External Factors
Strengths
:
Opportunities:
1. Seafront location
2. Easy transportation access
3. Free parking available
4. Pub bar and full service restaurant
1. New target groups
2. Recent increase in popularity of
resort locations for conferences
3. Re-imaging opportunity with the
new amenities
Weaknesses:
Threats:
1. No Business services
2. No Conference or meeting facilities
3. Guest services
4. Lack of personnel experience in the
business and conference department
1. Other resort properties within the
area
2. Off Seasons (Fall/winter)
Profitability
Lack of Facilities
- No conference rooms or space for events
Ease of Access
to hotel from transportation hubs
-Shuttle from airport and railroad
Advertising
- No strategy for target market
Poor Management Skills
- Lack of understanding of customer service
The Vision
To become the most desirable
business conference resort
destination
Goals for the year
1. Even distribution of leisure and business travelers throughout entire year
2. Develop and reconstruct conferences facilities
3. Target couples and wedding parties for destination receptions/weddings
4. Further develop transportation from area hubs (airport, rail, major cities)
Strategy-
Asset management
Strengths:
1. Ability to increase revenue paths (more than just room sales)
2. Improve group and leisure functionality of entire hotel resort
3. Would develop competitive strategies against surround hotels similar assets
Weaknesses:
1. Initial capital investment
2. Time and labor to construct facilities
3. Training new staff for new outlets (event coordinators, directors, etc.)
Rooms Department
Food & Beverage Department
Goal:
Increase customer satisfaction by improving staff satisfaction first and by increasing their understanding of customer service
Objectives:
1. Increase the average weekly training spend per staff member in order to improve customer service.
2. Keep labor costs steady in relative
direction to revenue
Performance against numbers at the beginning
- By increasing the average weekly training spend per staff by about only $1, the negative customer review comments about the staff were eliminated.
Performance against industry averages
- The average weekly training spend per employee in other hotel companies is around $40.

- Compared to other hotel’s in the industry, we did not spend enough money on training per employee as we could have, however we increased the spending enough to still see positive results.

ACHIEVED!
3. Lower the annual staff turnover rate.
ACHIEVED!
ACHIEVED!
Performance against numbers at the beginning
- As revenue increased from the first quarter to the fourth quarter, labor costs also increased within in a respectable range in relation to the sales revenue.

Performance against industry averages
- Hotel operators adjust their staff and payrolls according to changes in business volumes

Performance against numbers at the beginning
Performance against industry averages
- Very beginning of the simulation, our team took on the hotel when they had an annual staff turnover rate of 83.9%.

- By the end of December in year 1 we were only able to reduce annual staff turnover rate to 79.9%

- The end of year staff comments stated that the staff enjoyed working with our team.

December Year 0
December Year 1
- The average turnover level among non-management hotel employees in the US is about 50%
- Five months out of the total year was our staff turnover level below 50%.
Objective #1: Increase ADR and ADR yield through marketing and advertising
Performance in the Beginning
In the beginning of the simulation our hotel started out with $300 and had an increase of 6.9% bringing us $4,750 in the first year.
As well as an ADR of 15.70 from the first year reports
In the figure below you can see that in the first year the Average room rates were very high and not too dramatic in the changes throughout the week.


Looking at the competitor status, we started out very well compared to our competitors with great reviews regarding our rooms, F&B, front desk, and other amenities.
Our sales numbers were also very high relative to our competitors with 102 weekday transients and 67 weekend transients.

Performance Relative to the Competition
Performance against Industry Averages

Based on a report from STR, the forecast for 2013 is going to increase from the previous year. ADR is going to increase from $105.45 to $110.06, occupancy is going to increase from 60.4% to 60.7%, and RevPar is going to increase from $63.68 to $66.81.


Performance against Objectives

In the first couple months the ADR yield was satisfactory and as far as we could see in the marketing and sales department there was not much happening.
We did see a $7,091 increase through onsite distribution such as telephone and internet sales.
In the first 6 months the hotel also attracted a good amount of public awareness through sales and marketing as shown in the graph.


The Objective Was Achieved

Objective #2: Increase connection with the third-party distributors

In the beginning of the simulation we had incorporated telephone sales and generated a revenue of $1,591 and used $1,032 for the cost of telephone sales giving us a total of $559 in gross profit over the first month.
There was also a huge dip in the sales and marketing income statement during the first year from $4,750 to $300 which means we decreased the use of sales and marketing by 94% just in the first month.
During the first week the hotel utilized third-party channels very sparingly; 19 reservations through Expedia, 12 from Booking.com.





Performance against Numbers at Beginning of Simulation
Like the other hotels except for one, all had business services which is not surprising at all, had incorporated excellent business services.
Since we had a poor sales and marketing number from the beginning, our hotel probably did not do as well as some of our other competitors.

Performance Relative to the Competition
Performance against Industry Averages

Third-party distribution channels are essential in the hotel industry, a room booked through GDS or travel agents typically take up around 15% of the reservation totals.
Internet distributions has also increased throughout the years, increasing from .8% to 3.3%.
By 2005 companies like Expedia, Travelocity, and Priceline which are online travel agencies are expanding into the hotel industry.

Performance against Objectives
We did not do as well as we wanted to regarding increasing connection with customers through third-party distributors mainly because we did not utilize third-party channels efficiently.
A lot of the sales were from direct distribution channels such as telephone sales, internet sales, and in hotel sales.
Based on the graph the hotel’s sales to non-residents were very low only 30-45%, which means our third-party channels were not as effective and sales and marketing department did not connect to the customers well.

The Objective Was Not Achieved
In the beginning we did not think to target to a certain target market but rather more transient guests. In the graph it shows that we had a substantial number of transient guests.
Within the first month we had earned $99,268 in revenue and a 18.2% occupancy rate.

Objective #3: Research more into targeting to our specific target market
Performance against Numbers at Beginning of Simulation
Other
Performance Relative to the Competition
Comparing to our competitors we had the most transient guests in the first month and we never really had a huge drop in our transients guests.
Our hotel never had conferences booked until week 47 so that probably pulled our hotel down the charts compared to the others.
In the first two months the hotel did not make much telephone sales, only $4,203, and none from internet sales.

Performance against Industry Averages
Differentiate their competition and valuing their guests.
Repeating current levels of business and adding more newer customer loyalty in the competitive market.
Attract more new market sectors


Performance against Objectives
Did not achieve objective because we did not market to the right target market. We only focused on transient guests and did not pay attention to traveling guests, or the non-residential guests, and before we could focus on conferences, it was too late.
In the graphs we can see that in the month of January, the number of weekend and weekday contract and groups guests decreased significantly.

Objective 1: To become the most desirable
business conference
resort destination.
Objective 1
Performance against Numbers at Beginning of Simulation:
The Objective Was Not Achieved
With the conclusion of year one our management team accomplished the following in regards to increasing the Food and beverage revenue.
NO conference rooms





With conference rooms and facilities

Increased Total food revenue by 6.1%
Improved Group related revenue by 5.8%
Created a room service division and added 18.1% revenue from this channel alone
Objective 2
To add a catering section of the department that would be responsible for conferences and group meals.
Shown in the table to the left it is shown that there was no revenue at the beginning of our management teams introduction
However by the end of our first year we as a team
were able to add revenue from this department amounting to $5,552.00
Sales
and
Marketing
Goal: To increase revenue through sales and marketing
Objective 3
To reduce department food costs via a more stable and personal relationship with current providers, or a new provider must be found.
Based on the data provided from the last quarter of the simulation we can see that while our costs increased from last year at this time, so did our revenue.

Looking at the percentages will allow us to really see if we achieved our objective.

As we can see our costs remained virtually the same. going from 2.7% to 2.8% after the increase in revenue had been taken into account.

Achieved!
Achieved!
Didn't achieve it but within acceptable levels
Objective 1
The tables from above show that since conference rooms and facilities were added to the hotel the amount of total sales revenue increased.


Performance Relative to the Competition



•Adding a conference facility was attractive to almost all of our competition.

•All but one of our competitors invested in conference facility.




1. Increase the number of average weekly training spend per staff.
2. Utilize the third-party distribution channels more
3. Add conference facility at the beginning of the year.
4. Add room service at the beginning of the year.
Recommendations
& Conclusions

THANK YOU

Performance against Industry Averages

•In order to target more than just leisure travelers, resorts often install conference facilities to influence business groups.

•Most hotels in the industry find that holding conference meetings can influence the attendees to spend more money once they are there whether it is in the restaurant or purchasing a guest room for the night.


Performance against Objectives
•Since conference rooms and facilities were added to the hotel the amount of total sales revenue increased.

•By adding a conference center we were able to keep up with our competitors


Increase number of room nights sold in each type (weekday, weekend, group, conference) of guest sector, while monitoring and adjusting rates to increase number of bookings.
The Objective Was Achieved


Performance against Numbers at Beginning of Simulation:


•A business center was installed during the third quarter in order to add convenience to the corporate transients.





Objective #2: Create another source of convenience for the guest’s, specifically targeting corporate transients.

Performance Relative to the Competition


•All but one competitor added a business center to their hotel


•The same groups who added a convention center also added a business center

◦This shows that there is an understanding that when you are attractive business guests in with a conference facility, there is also a high demand for the convenience of a business center.




Performance against Industry Averages

•Most hotels who accommodate to business and corporate transients also add in addition a business center for more convenience.


Performance against Objectives

• Other hotels agree that a business center is a convenient addition for guests, specifically for business purposes.

•All our competitors who have a conference facility also has the business center included.


Objective was achieved
December Year 1
-When we acquired the hotel property, room nights were only being populated through Transient and Group guests.
-At the beginning of Year 0, Weekday Transient room nights stood at 345, as compared to the 400 sold by Year 1.
-Weekend Transient room nights in Year 0 were 237, but increased to 347 by Year 1.
-At the beginning of the simulation, Group Weekday room nights stood at 155, as compared to 183 sold by Year 1.
-Group Weekend room nights sold began at 190 and reflected a slight increase to 220 rooms in the final year.

Performance against Numbers at Beginning of Simulation
Objective 2
Increase total Rooms revenue and average daily rate (ADR) by introducing new amenities to the hotel facility, providing guests with a better experience and greater overall value.
Objective 3
Optimize both room and guest occupancy in order to increase the overall guest spending in the hotel facility.
December Year 0

-Although no data is provided about the competitions room nights during Year 0,
we can make the following statements based on their performance during Year 1
-Team 3 yielded the lowest room nights sold overall, while Team 6 yielded the
highest.
-Our hotel preformed average as compared with the other groups. We yielded
454 total room nights, putting us at the fourth highest tier.



Performance Relative to the Competition
Year 0:


After attempting to research industry averages regarding rooms nights, it is
evident that this information is not readily available or provided. This can be
attributed to the confidentiality of this information, or price needed to view Smith
Travel Research reports.



Performance against Industry Averages


-The increase in room nights sold could be attributed to the advertising in Quarter 1, which was prompted customers to book Weekend nights using printing.
-This can be seen in the chart, specifically between the first and second quarters.
-The chart also displays the level and variety of guest types, noting the Weekday Transient as the greatest amount.
-Our objective was met due to the fact that our room nights sold increase over the course of the four quarters. Although we did not have the greatest number sold among our competitors, we still produced an increase.
-The introduction of meeting space highly impacted our room nights by adding a significant number that we would not have had before.



Performance against Objectives
-When we acquired the hotel property, room nights were only being populated through Transient and Group guests.
-At the beginning of Year 0, Weekday Transient room nights stood at 345, as compared to the 400 sold by Year 1.
-Weekend Transient room nights in Year 0 were 237, but increased to 347 by Year 1.
-At the beginning of the simulation, Group Weekday room nights stood at 155, as compared to 183 sold by Year 1.
-Group Weekend room nights sold began at 190 and reflected a slight increase to 220 rooms in the final year.

Performance against Numbers at Beginning of Simulation

-Despite the fact that the competition revenue and ADR numbers were not available through the simulation, looking at their set room rates could give us an idea as to where we stand against them.
-As compared to the competition, our room rates are relatively low, with Weekday rates set at $115.00 and Weekend rates set at $130.00.
-Other hotel groups’ rates were upwards of $200 per night, in some cases.


Performance Relative to the Competition
-We introduced new standard amenities to the facility in order to boost guest experience and value.
Because of the added value from the additions, we were able to slightly increase our rates to maximize possible revenue, specifically in the Rooms division.
-Overall, our revenue increased significantly.
-Although we could not compare the ADR from Year 1 to that of Year 0, due to lack of information given by the simulation, we were able to see a glimpse of ADR in various guest types.


Performance against Objectives
-In year 0 the guest occupancy level was only 18.2%. By year 1 the guest occupancy level increased to 23.4%
-In year 0 the room occupancy level was 26.5%, and by year 1 the room occupancy level increased as well, to 35.3%.
-Total Sales revenue in the first quarter of year 1 was $145,168 and then increased to $191,177 in the fourth quarter.
-This shows that as the guest and room occupancy percentages increased in the hotel, the overall sales revenue also increased.


Performance against Numbers at Beginning of Simulation



-The average overall occupancy rate for hotels in 2012 was 61.4% according to the American Hotel and Lodging Association
-This industry occupancy rate average in 2012 is almost two times our occupancy rate.
-Our occupancy rate at our hotel is not good compared to the industry average


Performance against Industry Averages


-As guest occupancy percent and room occupancy increased, the sales revenue also increased in relation to it.
-According to the industry averages, our occupancy levels for both rooms and guest occupancy are much lower, however, we still improved our rates and revenue went up in relation.


Performance against Objectives

The Objective Was Achieved


The Objective Was Achieved


The Objective Was Achieved
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