Hotel Benchmarking Case Study

Background

You are a Front Office Manager working for a major global hotel company. The company has 10 separate brands and over 1,700 hotel units in operation. The company owns none of these hotels, but manages about 20% of the hotels. Third party management companies manage the remainder on behalf of the franchise owners.

You have been promoted to a “task force” team of managers to travel to a hotel unit the company is managing that is struggling; to help the on-site managers diagnose problems and implement corrective action. Your team serves as “internal consultants” to the managers of this troubled unit. Your team has one week to diagnose the problems and recommend solutions to the hotel unit managers. They then are responsible for implementing those solutions. The company has specified that all goals from task force recommendations must be equal to the upper quartile benchmark.

Each manager on your team will focus on an operational area of the hotel. You have been assigned to the rooms division. You will analyze the front office (front desk, bell service, guest transportation and valet parking service), housekeeping, and the laundry operations.

Prior to departing for the unit, the company provides your team with access to the various financial statements, guest satisfaction scores and employee satisfaction scores, along with a brief overview of the hotel. You study this information carefully, and begin to formulate a plan based on what you see in these reports.

Assignment

The company has developed a very specific sequence they use to diagnose problems. Using this sequence:

1. Review all of the information you have, and list all of the items you see which appear to be problems. Your list should be categorized in the same manner as the data tabs on the Excel file, ie Income Statement, Labor Cost, Market Share, Guest satisfaction.

2. From your list, determine which 5 problems should be addressed first, based on your estimate of their likely financial impact. You need to calculate the impact of each item on the benchmark tab. Those items with the greatest impact should be attacked first.

3. For the 5 items you select, you will need to determine the financial impact (increased profitability) based on the hotel’s current performance and their distance from the company benchmark, using Year 4 revenue and volume. The Benchmark tab is the best place to start. Then, use the Calculations tab as a guide to calculate the financial impact, depending on the items you select.

4. For each item on the list, recommend 4 specific action steps the management team must take to correct the problem and reach the benchmark.

5. Submit a written report “addressed to” the unit managers. In this report, for each of the 5 items identify, you need to:

a. Identify what information you used to draw your conclusion for that item. Which report(s) you used in your review.

b. Show the calculation you made to determine the financial impact.

c. List the 4 action steps you are recommending they take. These can be bullet points, but must be specific.

JWU1001

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Johnson & Wales University