The current situation of the hospitality industry comprises of multiple players thriving to capture maximum customer attention and revenue (Cloud Beds, 2018). F&B is new to the hotel leadership and trying to run steadily in the past few years. The hotel owners aim at providing luxurious facilities integrating the best in technology and comfort (SIM 301, 2018a). The hotel is in the same area as of its competitors and has been experiencing a steady performance decline over the last two years. The hotel has seen an increase in the competition from other cities as well as hotels operating in the same area and due to same offerings. The economic conditions have also been a reason for its steady decline in its occupancy, gross operating profit and average daily rate (Owner’s briefing- F&B, 2018). Therefore, the purpose of this report is to overlook the past performances and analyze the prospects for the hotel in future.
The hotel business has shown a downward trend in the past 2 years which seems to a challenge for the business owners to cope with (Owner’s briefing- F&B, 2018). There has been a plethora of issues the company is facing which is making the lending banks question its credibility. The company has been facing serious competition from competitors operating within the same area and providing the same facilities to the customers (Owner’s briefing- F&B, 2018). The declining rate in the gross operating profits and occupancy is a clear indicator that it is a buyer’s market where customers play an important in analyzing and deciding on the best options available (Barile, Saviano and Caputo, 2014). The hotel is unable to hold its market standing due to lack of financing from investors. Currently, F&B is lacking refurbishments which has been not been done since its opening due to insufficient funds. The previous reports of F&B show that they provided their forecasted revenue stands at 155.45% and spent approximately $ 38,000. The monthly expenditure on promotions were not more than $ 30,000 two years back. The advertising expenses were also high. In the consecutive years, the expenses forecasted revenue saw a steep decline of approx. 27%. The total expenditures also were lower than expected. This shows that F&B started spending a good amount on its marketing and promotional activities, but they could not keep the momentum and had to reduce these expenditures.
The hotel business was earning revenue from its promotional activities initially, but later expenses became less due to unavailability of proper funding and inflow of customers in the hotel.
The departmental profit index shows that the hotel earned a profit of 20.87% in the beginning of the 2 years which ultimately declined to 3.87% by next year January. The profit showed an upward trend again in the second year by the end of March. By the end of April second year, the profits have declined but since then it has been constantly declining but there is a hope to regain the market standing by strategizing the marketing techniques, bringing in sales promotions activities and developing the market area for better opportunities. The hotel administration aimed at hiring competent employees to be productive and support the day-to-day business operations. The competence of the staff performance was low at the initial stages which required recruiting efficient people and training them accordingly (SIM 301, 2018c). The current performance shows that training is required for the theme restaurant management. The restaurant manager and the supervisors require special training to handle the customers, managing the overall decorum of the theme restaurant and the lower level staffs require training regarding serving the customers. Lobby bar bartender also require skills to entertain the customers and provide them with the required services. Catering services also require some assistance. Overall, the entire hospitality staff requires training according to their works and help in improving the standards of providing service to the customers. There are certain positive aspects that the hotel can rejoice upon. There has been a good response from tour wholesalers and individuals which indicates that there can be inflow of more tourists in the area. The major changes that might help in improving the market standing is utilizing the carry-over balance left in the Replacement Reserve fund (Fasano-Filho, 2000). This will be done by deposit of 5% deposit from previous month’s revenue by the Finance Officer. The bank has also approved the assistance for providing short term cash loan to meet the daily operations of the hotel. Also, the hotel has currently installed a new software to prepare monthly reports, trend analysis and financial statements. These features where lacking in the past due to which the hotel was not aware of the technological trends that attract customers.
The future strategy will focus on presenting a two-year growth plan. The growth plan will formulate strategies that will be beneficial for the hotel to run a smooth business. The plan will target on the necessity actions to be taken and identify opportunities for growth. Currently, the hospitality industry is emerging with a plethora of trends that helps in building a steady business. The future strategies will also be prepared keeping in mind the possible threats that may be a hindrance in the growth of the hotel. The contingency plans will also be framed to mitigate the risks forecasted. The hotel administration should remember that lowering the rates and discounting strategies is nothing new and competitors are also the same to create demand. The hotel can instead focus on creating and promoting special packages. Collaborating with local tourist attractions and giving advertisements in newspapers and travel websites can help in promotions.
The hotel must create an online space which might be done by creating a better website and then develop mailing lists of the regular customers and send them monthly offers and mailers to remind them of the services they received. Local companies in that area can be invited to host their meetings and social gatherings. This strategy can be applied on companies that have branches in other countries also. The hotel can also partner with local restaurants during festivals. As the hotel has lost few valuable customers in the past due to lack of adequate services, it can now focus on the additional services like tour to local areas, an in-house gym, special offers and combos, working on the theme restaurant and hosting different events in the hotel. This will help in driving profits significantly and create a good reliable customer base. The possible threats include increase in number of competitors in the area and increase in the complex needs of the customers. This can be done by understanding the needs of customers and improve guest experience. F&B also needs to strategize its training process to improve the staff efficiency.
F&B requires funding to refurbish the hotel standards which will help in attracting customers. Since the plan to refurbish the hotel facilities were put on hold for past two years due to lack of adequate funding from investors. Investors can be asked for help regarding funds needed for providing on-job trainings, increasing marketing activities and providing higher salaries to the hotel staff.
Conclusion
Hotel industry is one of the most profitable industries which has numerous players in the market where each of them aim at providing a better service and customer experience than the other. Strategies are required to meet the challenges hoteliers face while thriving in this business. F&B is struggling to remain in the market but facing a lot of issues that has led to its declining profits and lowering customer base. The hotel has tried to improve its performance in the past but due to lack in few areas it could not strategize and plan accordingly. Currently, the hotel has tried improving its website and requested financial institutions to help in their crisis. They have also implemented strategies for marketing and sales promotion which will surely help in creating better opportunities in the future.
References
Barile, S., Saviano, M. and Caputo, F., 2014. How are markets changing? The emergence of consumers market systems. Towards Systemic Approach, 34(3), p.203.
Cloud Beds, 2018. Hospitality Industry. [online] Available at: <https://www.cloudbeds.com/trends/>
Fasano-Filho, M.U., 2000. Review of the experience with oil stabilization and savings funds in selected countries. London: International Monetary Fund.
Owner’s briefing- F&B, 2018. Current Situation. [pdf] Available at: <file:///D:/WORK/878203/owner_s_briefing.pdf>
SIM 301, 2018a. Information. [pdf] Available at: <https://wb.fandbsim.com/participant/months/23/files>
SIM 301, 2018b. Marketing, Advertising for Apr Y. [pdf] Available at: <https://wb.fandbsim.com/participant/months/4/input/marketing>
SIM 301, 2018c. Profit % Index for Oct Y2. [pdf] Available at: <https://wb.fandbsim.com/participant/months/23/result/fb_profit_percentage_indexes_trend>
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