The US Hotel and lodging industry, according to forecasts from Standard and Poor’s has been characterized by overcapacity with about 48 million rooms, approximately one room for every 64 US citizens. The macro environment has been understood to be characterized by a cyclical trend with ups and downs in the recent years. The financial crisis of 2007/2008 seems to have hit the industry very hard as all indications point at a downward trend in the forth coming years.
High levels of unemployment, fore closures and declined business and travel characterized this period, leading to the lowest occupancy levels since the great depression of the 30’s of between 55 and 56 %. Predictions by S&P also point at an even bad year in 2010.
In 2009, a research company, Smith Travel Research put conservative estimates at a drop of 8.9% of hotel rates and also forecast another 3.4 % decline in the coming years. In conclusion, the macro economic climate for the lodging industry in the United States is bracing itself for yet another poor business period as is predicted by S&P and other research firms. However, with the economic recovery from the recession, it’s likely that the industry will begin to look up much later, as is shown by the 1.6% growth forecast for the year 2010.
Joie de Vivre's global strategy has been to create a unique product in each hotel that it manages (Aaker, 2010). It comes up with a personality for the hotel by thinking about a particular magazine so as to create a unique personalized product. One of the cornerstone strategies that Joie de Vivre's has utilized is marketing, attaining of green certification and corporate social responsibility. The Good Hotel is located at the heart of San Francisco with close proximity to public amenities and transport systems; this is itself a strategy that has been used to ensure that marketing costs are significantly reduced(Thombson & Strickland,2009). The hotel is designed in such a way that it amplifies environmental conservation in almost all areas. As explained, most of the hotel facilities are made of recycled products. For instance, the bench at the hotel lobby is made of recycled felt blankets, while the room’s beds are made of reclaimed pine. In the United States guests are increasingly environmentally conscious and are even willing to pay at premium for a green facility. The strategy by Good Hotel is therefore aimed at cashing in on environmentally conscious customers who have an annual spending power of $219 million.
Good Hotel has also used Corporate Social Responsibility as a competitive strategy. We are informed that at check out, guests are required to donate $1.5 each day of stay a donation which is automatically added to their room charges. This money is then remitted to One Brick, a local charity organization. Guests are also required to offset their carbon footprint, all with the aim of environmental conservation (Nepuk,2010)
The strategy also involved hiring of a very competent hotelier, Pam Janusz who has a lot of experience in running successful hotels as indicated in the case study. She has also been part of the drive towards greening the hotel as she draws from her experience in the many engagements that she has had in the industry.
The management of Good Hotels has made concerted efforts to ensure that the strategies are implemented. The company has deployed funds to put up an elaborate infrastructure in the hotel that ensures that guests have got maximum comfort in the company. Information from the case study indicates that guests are treated to free Wi-Fi, a 26 inch flat screen TV and an iPod station. This is besides an outdoor heated swimming pool.
The management is also putting in a lot of effort in ensuring that the hotel gets the green certification through the establishment of the greendream website, an aspect that has been found to attract hotel rate premiums from most Americans.
In terms of leadership, Pam Januzs is an accomplished leader who has been at the forefront in ensuring the success of the facility. Her wide experience in running such facilities spanning about 6 years is testimony of her leadership capacity. Her leadership has seen the training of hotel staff on safety, guests handling and also information sharing with guests. This is evident from her admission that the hotel has the best staff, courtesy of her effort to train them to be the best.
Basing my argument on the key industry statistics which are occupancy levels, daily average rates ADR&) RevPAR, Good hotel was doing rather poorly as compared to the peers in San Francisco for the better part of 2008 and 2009.In these years the company recorded lower values for all the three significant statistics with an average occupancy rate of 63% , an ADR of $80.3 and a REVPAR of $50.82 against an occupancy rate of 69%, an ADR of $86.02 and a REVPAR of$ 59.38 for the peers.
2009 mirrored a similar trend but the year 2010 showed a different trend all together. Good hotel had performed much better as compared to the others as shown. Occupancy rate of 76.7%, an ADR of $78.55 and a REVPAR of $60.21 against an occupancy rate of 62%, an ADR of $80.27 and a REVPAR of $49.63 for the peers.
Information from exhibit 8 on the operational statistics show that Good hotels occupancy rate has risen significantly since 2008. Revenues have also been on the rise with some months raking in close to $10,000 per month especially in moths that have an occupancy rate of over 90%
As explained from the onset of the case study, Good Hotel is doing pretty well. The General Manager, Pam Janusz has been at the helm of the company and has steered it to insurmountable success (Lin,2011). By her own admission, the strategy has worked and the company is able to manage on its own without the help of Joie de Vivre. In November 2008 when the Good Hotel was born, it was the first one to be known as the hotel with a conscience, which encompassed philanthropy, a positive attitude and client sensitivity. As januzs explains, the hotel has excellent staff in place, guest’s numbers have been rising steadily over the last couple of months and the hotel is able to beat its financial forecast with ease. Januzs had spent a lot of time to train the teams, and especially management in a bid to increase the hotels standards, and as a result, employee satisfaction has greatly increased, as well as online reviews of the hotel which has been on the rise.
The hotel is therefore in a grand position to continue on its own and may not need the assistance of Joie de Vivre to survive
Even as the hotel management undergoes a transition, an evaluation of the existing strategy indicates that it has been the best in the prevailing circumstances. As much as at the macro level, the industry seems to be facing a number of challenges, Good Hotel has been able to sail through all this and still emerge profitable and is showing signs of positive growth in the very near future.
Conclusion
In conclusion, I would recommend to Pam Janusz that in her evaluation of the hotel, she has to indicate and elaborate on the success on the new strategy. It would also be very fruitful if she could also indicate the competence of the staff in place as a result of the continuous training that she has been conducting with the aim of ensuring competency and client satisfaction (Naylor, 2008). The Good Hotel concept should therefore be continued and in the long run, it will bear fruit.
In terms of employees, Januzs should prepare them of the impending transition, but assure them that their jobs will be safe. The fact that they have delivered even in the turbulent economic climate should be an indication of their commitment to the success of the hotel. She should urge them to continue with the good work, even in the new management as this will fulfill their commitment to the success of the hotel
Naylor, T (2008) The corporate strategy matrix. Basic books, University of Virginia
Lin, G.P (2011) the complete idiots guide to strategic planning.Alpha books
Nepuk,K(2010) The strategy-led business: step-by-step planning for your company's future. McGraw Hill. Indiana University
David,F.R (2009) Concepts of strategic management.Prentice Hall,
Pennsylvania State University
Aaker,D (2010) Developing business strategies.Wiley and Sons, Indiana University
