Weakness
Manager decision is one weakness that can be faced by the hotel. A hotel manager should be hired on his or her ability to make informed decisions. The total revenue in January was 23,196.54, (Appendix 1.1) however, the total income for the company has kept fluctuating. In July, the total income for the hotel was lowest reaching 130,332.34 (Appendix 1.1). The income rose again and then subsided reaching 166,747.04 in December (Appendix 1.1). Managerial decisions played a big part in these fluctuations. Firstly, it is clear that the managers were not able to define some of the problems facing the hotel and which make the hotel experience fluctuating trends in revenues earned. There is a need for the managers to pinpoint the actual problem facing the hotel through looking at the symptoms of the bigger issues. When the problem is established, managers can make quick fixes to rectify the actual problem being faced. For example, if the actual problem that leads revenue is employee absence due to calling in sick, then the manager should be in a position to know that there is perhaps a health issue among the employees of the hotel. Employee absence affects every business. The hotel cannot operate at its full level if employees call in sick. Clients are left an attended making them prefer other hotels where they are served as soon as they settled down to the one they will have to call a waiter or waitress to be served. The hospitality operation manager who is the one responsible for making many of day to day decisions through interaction with vendors, staff, and hotel guests. The decisions made regarding all these parties affect the total revenue that the hotel will earn at the close of the financial period. The hotel managers can take advantage of the following steps when making decisions. First, identification of the issue through separating symptoms from the problems. Secondly, collecting facts together with evidence, documenting observations made, soliciting input from hospitality experts, fellow employees, or peers. Thirdly, evaluating the gathered evidence. Fourthly, making decisions as well as deciding on alternative results based on results from the analyzed evidence. Fifthly, the manager has to make or reach the decision. Lastly, results got from the decisions made have to be monitored to ascertain of actual outcomes are being attained.
Market share of the hotel has been another weakness faced. The occupancy rate for the hotel is increased as from January to April. The occupancy index rose from 97.76 (Appendix 1.2) to 111.49 (Appendix 1.2). The occupancy index declined to reach 99.98 in July (Appendix 1.2) before it started to rise again. This clearly shows that occupancy index which can be termed as the market share of the hotel has been fluctuating. At the close of the year, the occupancy index was 99.73 (Appendix 1.2). The reason behind these huge fluctuations is that the managers of the hotel are not well informed. Hoteliers will always give excuses to their clients because they stay current through reading online Newsletters related to hospitality management changes. Staying informed on the changing guest needs is one way to attract customers and increase the hotel’s market share. The hotel management can make use of the power of the internet to increase market share which will in turn increase occupancy index of the hotel. It has been established that in the current technological world we are living in that internet will directly or indirectly impact almost seventy percent of the hotel business. Use of internet has enabled guests to make reservations, research on services offered, and prices charged. A good website will steer the hotel towards maximum occupancy index.
Threats
The hotel faces stiff competition from other hotels in the region who offer similar services. These other hotels include Hotel Brava, Hotel Dolomites, Hotel Lagoon, and Hotel Navario. The first challenge posed is due to room rates charged by the hotels competitors. The competitor room rates are lower compared to those charged by Hotelsim. If room rates are higher when compared to those charged by other hotels, it means that clients will prefer getting services from other hotels to the Hotelsim. For instance, premium leisure rooms for Hotelsim cost $134 (Appendix 1.3) which is the highest price charged when compared to other hotels. Hotel Lagoon charges the least rate of $104 (Appendix 1.3). When we go to the standard leisure rooms, Hotelsim charges the highest price of $123 (Appendix 1.3). This indicates that Hotelsim on average charges higher room rates when compared to other hotels. If no extra services are offered by the hotel that makes clients willingly feel like paying for these increased costs, then the hotel will lose its customers to its competitors who charge reasonable prices and offer similar services. Hotelsim management needs to re-examine the prices charged by competitor hotels and then find a suitable cheap range for their rooms. To make a decision whether rooms fit on the existing or new price range, rooms as well as services offered should be compared to those offered by the competitors. Pricing rooms higher than the range charged by competitors has its consequences.
Bank loan is another threat facing the hotel. The hotel had acquired a loan from a lending institution meaning that every month it has to service the loan as well as pay the accrued interest. Currently, the loan of the hotel stands at $4,750,000 (Appendix 1.4). This poses a threat to the hotel as some part of the revenue earned will channeled towards repaying the loan. Therefore, Hotelsim is bound to encounter cash constraint in case it intends to undertake investments. The bank loan is the core reason why the hotel has a large liability amount. In case the management does not implement strategies aimed at increasing the hotel’s market share in the region to get increased revenues, it will be unable to service the loan. Reduced market share and revenues is a sign that in the end the business will fail leaving liabilities such as bank loans unpaid. If this happens, the bank will have to sell the held collateral to get the remaining amount leading to closure of the hotel.
Appendices
Appendix 1.1
Image sourced from (Ihtti.redhotelsim.com, 2016)
Appendix 1.2
Images sources from (Ihtti.redhotelsim.com, 2016)
Appendix 1.3
Images sources from (Ihtti.redhotelsim.com, 2016)
Appendix 1.4
Images sources from (Ihtti.redhotelsim.com, 2016)
Work cited
Ihtti.redhotelsim.com. (2016). IHTTI - Neuchatel. [online] Available at: http://ihtti.redhotelsim.com/participant/months/13/result/market_indexes_trend [Accessed 28 Apr. 2016].
Ihtti.redhotelsim.com. (2016). IHTTI - Neuchatel. [online] Available at: http://ihtti.redhotelsim.com/participant/months/13/result/revenue_profit_trend [Accessed 28 Apr. 2016].
