Executive Summary
The Hotel industry is a very important aspect of economic development, because it caters for tourism and business players. The foundation of tourism relies on the kind of accommodation facilities present in the country.
In addition, the business community mostly uses Hotels for accommodation during their entrepreneurial trips. Moreover, corporate organizations seek conference facilities in Hotels. Notably, the standard of a Hotel, its facilities and the services that they provide, would determine the kind of visitors, and functions it would attract.
The foundation of an International Hotel is pegged on the quality of the services, accommodation and the conference facilities, which would attract the foreign. Therefore, the report based on a secondary research on the problems facing the Plaza Athenee Bangkok, which is an International Hotel, located in Bangkok Town in Thailand.
The major findings included the following; first, the Hotel had low rate of occupancy, which at times, stood at approximately forty percent, especially during the periods of low season. Secondly, it was found that the central location of the Hotel, being a busy commercial center resulted to competition.
Third, it was also realized that the Japanese Brand called Okura, which was expected in 2012 and the Park Hyatt that is anticipated to start their operating in the city in 2013, emerged as the major competitors for the Hotel.
Also, the floods in the country were considered as an impediment for the development of the Hotel. Finally, the many resignations, including that of the Director of Sales and Marketing among other managers could be perceived as a hindrance to the development of the Hotel
Some of the recommendations include, introducing incentives to the workers, for instance, increasing their salaries and allowances of the employees, treating them with dignity and respect.
This would help in eliminating increased cases of employees’ resignation and boost the occupancy rate of the Hotel facilities. Furthermore, relocating the Hotel to a different part of the town, with high potential was also viewed as a better recommendation for avoiding the congestion of the central location.
As well, the researcher recommended the Hotel management could reduce their prices to attract more clients and the existing ones, thus compete favorably and outdo the emerging competitors. The research also recommended that the Hotel had to improve the drainage system along the road leading to, and within the business premise to reduce the impacts of flood.
Introduction
Plaza Athenee Bangkok is one of the royal and Five Star Hotels, located in Bangkok Town in Thailand (Starwood Hotels, 2012, p. 1). The Hotel started operating in November, 2002. In addition, the Hotel has adequate meeting space, covering more than 5,600m2, with 28 separate venues for conducting international gatherings, and two ball rooms (Starwood Hotels, 2012, p. 1).
The Hotel also has a fully operating SPA, Squash Court and a luxurious pool that is located outdoor. Besides, the pool has exotic gardens made in the Thai-style. It also has the fitness centre, fully equipped (Starwood Hotels, 2012, p. 1). Furthermore, it has a total of 374 guest rooms, which are very spacious and attractive to the visitors (Starwood Hotels, 2012, p. 1).
On the basic purpose of the report, it seeks to discover the problems, which the Hotel faces and clarify the research findings about Plaza Athenee Bangkok, which is among the best world class accommodation facilities in Thailand.
It presents an explicit overview facing the hotel, the management’s effort to minimize the problems and the recommendations for improvement. With its position at the strategic shopping hub in the city, the Hotel is better placed to serve the royal people visiting the place.
Issues Addressed
The major issues, which are addressed in the report, include the low rate of occupancy, which is standing at approximately forty percent, especially during the periods of low season. Secondly, the problem of location is also a very much pronounced, because it is competitive in nature.
Thirdly, the emerging competitors in this central location, within the city such as the Japanese Brand called Okura, expected in 2012 and the Park Hyatt that is anticipated to start their operating in the city in 2013.
Fourth, the current problem of floods in the country has made it difficult for the corporate clients to hold their meetings at the Hotel. It is postulated that the occupancy rate has been reduced to stand at around thirty percent, resulting from the impacts of floods.
Fifth, the resignation of the Director of Sales and Marketing has remained a blow to the development of the Hotel. The resignation has left the Hotel without the Director of Sales, keeping the returns very low.
Methods Used to Analyze the Topic
Since this particular research is secondary in nature, the method of analysis was through using both qualitative and quantitative data, which are already documented. Particularly, the descriptive statistics was used in doing the analysis, after which an inferential statistics was used (Collins & Porras, 1994, p. 51). In this case, the data were retrieved from academic journals, books: print and electronic, and achieves.
Importantly, the qualitative data were compared from different sources to get more concrete and reliable information that could help in recommending for the appropriate action (Collins & Porras, 1994, p. 52). This could, perhaps offer meaningful solution to the problems surrounding the Hotel.
Analysis
Low Rate of Occupancy
In this case, low occupancy of the Hotel has led to the problems, which the facility faces and perhaps the major challenge that the management has to solve (Chaffee, 1985, p. 74). Recently, the Hotel has experienced low rate of occupancy, leading to low sales turnover.
During the periods of low season, the Hotel registers a low number of occupants approximated at forty percent. The problem is attributed to the resignation of the salespersons, which has caused a major setback for the Institution. The low occupancy minimizes the sales volume, indicating that most of the Hotel facilities remain underutilized.
In fact, the sales personnel who previously worked with the company had good relationship with many of the clients. This kind of cordial relationship is the prerequisite for creating customers’ confidence in all organizations, more particularly in the Hotel Industry (Blyton & Fiorito, 2008, p. 29). Notably, the clients in this industry need a hospitable environment where they feel safe and enjoy the comfort.
The relationship that the salespersons cultivated with their clients created the hospitable environment within the Hotel that attracted the visitors repeatedly. Therefore, when the sales persons decided to resign in mass, the impacts was low turnout of visitors.
However, in an In-depth analysis of the issue, when the salespersons quitted their work, the confidence that they had instilled in the customers was eroded. Furthermore, it resulted to low sales since the few remaining recruits could not as much as their colleagues who had quitted (Davidow & Uttal, 1990, p. 35).
The truth is that after quitting, they lost communications and contacts with the clients, who in turn had to look for other places where they could get the comfort and the pacific environment.
Competitive Location
In describing the issue, the Hotel is located at the city center, making it to compete with the other present investors in the same industry within this location and the ones expected (Barney, 1991, p. 14).
As a commercial hub in the city, the central location is very busy and host many visitors at an instant, or cumulatively. With such environment, there might be clients who would like to reduce their expenses especially the business people, thus they look for immediate alternative available within the area.
In details, many dignitaries who visit the city need accommodation that guarantees safety and comfort (Reese, 2008, p. 29). Alternatively, other corporate organizations need secure places to organize their meetings. The problem with the issue is that there are other smaller investors in the hotel industry who are cheaper than the Plaza Athenee Bangkok. Similarly, they offer almost similar services
Considering an in-depth analysis of the issue, the Hotel faces stiff competitiveness of the location, because of the fair pricing that the other similar facilities, offering high class services, in the area. To an extent, it has made some of them win the confidence of many interested parties.
The Emerging Competitors
Other than the competitive location, the emerging investors are also posing a big threat to the Hotel. Notably, competition is imminent in all businesses and it is mainly the best company that survives the struggle for winning the majority in the market (Debra, 2006, p. 61).
For example, the emergence of Japanese Brand called Okura, expected in the country, in 2012 and the Park Hyatt that is anticipated to start their operating in the city in 2013.
Notably, the two investors among other smaller middle investors are feared for their competitiveness in the market. As a hospitality industry, the proper relationship that the workers and management have with the clients leads to the customers’ confidence in the Hotel, thereby increasing their chances of visiting the place repeatedly (Boselie, 2010, p. 92).
Floods in the Country
The heavy rain that the country has experienced in the recent past has resulted to increase in floods, which has interfered with accessibility and safety of the area (Reese, 2003, p. 34).
Since the floods have interfered with the accessibility of the place, many of the prospective corporate clients, which include the factories operating in Thailand, have not been able to organize their meetings at the facility. For example, the factories, such as Toyota, Mitsubishi, Honda, Intel, and others are not able to book the facilities to conduct seminars and other important meetings citing lack of safety (Reese, 2003, 36).
In addition, the current flood in the country has reduced the occupancy rate to approximately thirty percent, meaning that the facility is not utilized to potential.
With such situation, most of the meeting and accommodation facilities are under utilized and the revenue cannot be enough to sustain the cost of operation, pay the workforce and enable the company to make profits.
Resignation of the People in Management
Probably, the resignation of senior managers and many other sales personnel, between 2010 and 2011 have caused a lot of problems in running the Hotel. For example, two of the Director of Sales and Marketing (DOSM)’s resignation has remained the biggest problem to the development of the Hotel (Legge, 1995, p. 12).
In fact, the resignation has left the Hotel without the Director of Sales, keeping the returns very low and is assumed to be the reason explaining why the sales personnel quitted.
Other than the two DOSM, one director of sales also resigned, paving way for other three Assistant Directors of Sales (ADOS), in charge of MICE, Leisure Proactive and Corporate proactive to resign. Within the period, two senior sales managers also resigned as well as that of the Personal Assistant to the DOSM and Administration manager.
In another setback, three sales Managers and a similar number of Sales Executives also resigned from their duties, making the work even more difficult. As this was not enough, the mass resignation also saw two sales coordinators quit the jobs, making the Hotel to suffer more in terms of the occupancy rate.
In 2011, the trend did not reverse as the company lost three Assistant Directors of Sales (one reactive and the other two proactive ones), after they tendered their resignation. In a turn of events, three Senior Sales Managers and four Sales Managers quitted their jobs, paving the way for the new Personal Assistant to the DOSM and Administrative Manager also to resign.
After this incident, two Sales Executives and a similar number of the Sales Coordinators resigned from the duties, making the situation at the Hotel to remain worse.
Notably, with the absent of ADOS, the company lacked the sales personnel who work on group especially MICE market that the hotel could not find for almost nine months. This means that they had rough time coordinating those employees deducing the sales significantly. Indeed, getting the new guests was very difficult, because the available employees relented on the aggressive marketing campaigns.
Alternatives & possible solutions
Despite the problems surrounding the Hotel, there are alternatives and possible solutions to redeem its reputation, which was at stake. Apparently, the holistic approach could be applied in changing the management structure along with other reforms as discussed bellow.
Low rate of occupancy
In order to tackle the issue of low occupancy, the researcher considered it wise for the management had to introduce incentives to the sales persons so that they could have confidence in their work (Chaffee, 1985, p. 77). In this case, it is recommended that the management ought to increase the salaries and allowances of the employees, treat them with dignity and respect, listen and offer solutions to their problems.
The move is justification because, with such incentives, it would boost the workers’ morale and retain them on duty. This would make them enhance their cordial relationship with the clients so that they win the customers’ confidence, who in turn would be regulars.
Since the hospitality industry needs proper relationship between the clients and the employees coupled with a peaceful atmosphere would make sure that it grows to produce high turnover that is the main objective behind all investments (Deming, 1982, p. 25).
The main advantage of recommendations is that it does not cost a lot of money to the company. It means this could perhaps be the cheapest and best way that the management would use to boost the sales.
However, the risks of the recommendation include the fact that many people are dynamic and respond differently to incentives (Blyton, 2004, p. 55).
Therefore, it means that unless the company finds the best and widely accepted means of motivation, most of the attempts to motivate the workers would be futile (Boselie, 2010, p. 102). The other risk is that despite the motivation method used, an employee could find a more lucrative opportunity, making such measures a waste to the company.
Competitive Location
Being one of the problems facing the Hotel, there could be possible alternatives, which the company could use in dealing with the dilemma. For example, it is recommended that the Hotel could relocate to a different part of the town, with high potential.
With high congestion of the city center, it is justifiable for the Hotel to relocate its operations to another potential location, where there is enough space and easily accessible to all clients.
Notably, in such location, there would be change of atmosphere from the noisy congested city center to a more peaceful and comfortable environment (Camp, 1989, p. 78). In addition, the peaceful environment is very appropriate for holding meetings and seminars.
The advantage of this recommendation is that the Hotel would witness an increase in the occupancy due to the rise in preference. In fact, many people would prefer to stay in areas far from the busy commercial hub that characterizes the city center (Westbeld, 2002, p. 102). Therefore, relocation would be the other appropriate measure that the Hotel would take to redeem its image to the local and international clients.
However, the risk of this recommendation would be the loss of the customers’, who have preference for the city center, hoping that the place is safer than the suburbs. This would make the Hotel lose most of the potential customers, thus reducing their returns. In addition, some of the workers who are used to the city life might not choose to relocate to the suburbs, thus would quit the job, making it a blow to the business.
The Emerging Competitors
In the business world, emerging businesses, especially the ones offering similar services, are threats to the existing one (Bertucci & Alberti, 2003, p 23). Here, the major threat to the Hotel is the expected Japanese Brand called Okura, anticipated to start operation in the country, in 2012 and the Park Hyatt that is anticipated to start their operating in the city in 2013.
In countering the competitors and other small investors in the Hotel Industry, it is recommended that since the business has been in the market and has regular customers, they could reduce their prices to attract more clients and the existing ones.
Notably, lowering the prices of accommodation facilities, meeting rooms and other goods and services, which they offer justifies the belief that they would win the confidence of the local and foreign visitors, as well as the corporate entities to hold their meetings in this place. With such measures, the Hotel would be sure of increasing the rate of occupancy and increase the return (Boxall & Purcell, 2011, p. 48).
The advantage with this recommendation is that even with the reduction of the cost of goods and services, accommodation and conference facilities, the Hotel would be at a position of realizing average returns to meet their expenditure (Wade, 2004, p. 19).
In addition, the state would make it difficult for a starting business to attract many clients, or even realize meaningful profit in the new environment. Furthermore, it would make the business environment to be very competitive, limiting the progress of the new investors.
Since other corporate entities would be interested in reducing the cost of operation and comfort, reducing the cost of such facilities would make the Hotel the preferred destination for holding important meetings. Therefore, the business would be favored, while the new investors would be disadvantaged.
However, there is a high risk of reducing the prices of goods and services. For example, the measure might reduce the profitability of the business, making it realizes heavy losses (Wade, 2004, p. 22). This would limit their chances of improving the facilities of the Hotel.
As a result of low return, the company might not have enough finance to reward their employees, implying that they would cut on the cost through retrenchments of the employees and reducing the purchase. In addition, maintaining the facilities at the Hotel might be difficult since the returns cannot be enough to cater for the expenses.
Floods in the Country
Floods decrease the accessibility of the Hotel, making it difficult for the individual visitors and other corporate clientele to arrange for meetings. Really, the problem of floods leads to poor status of roads and stagnant water, which are hazardous to the environment.
In order to mitigate the problem, it is recommended that the Hotel Management takes the initiative, for example, to improve the drainage system along the road leading to, and within the business premise.
The recommendation is justifiable since improved drainage would make the place accessible. Therefore, many individual clients and corporate organizations would find it easy and cost effective to books and use the Hotel facilities, to rest and hold important meetings respectively (Blaxill & Eckardt, 2009, p. 45).
The other justification is that the improved accessibility of the Hotel would make transporting goods to and from the Hotel premise easy, making it the preferred place for most people.
The advantage of the recommendation is that improving the accessibility of the place makes it improve the image to the international and local visitors, both for individuals and corporate organization (Westbeld, 2002, p. 104). It is through increase in occupancy that makes the hotel realize high returns to meet its expenses.
Despite the advantages, it should be noted that there are looming risks of the recommendation. For instance, the cost of improving the roads and drainage system would be so high and out of reach of the business. Therefore, the Hotel Management might be forced to overstretch their financial expenditure, thereby risk under developing or collapsing (Howel, 2010, p. 22).
Resignation of the People in Management
Perhaps, this is the most serious problem that the Hotel faces during its operation. The possible way of ending mass resignation in the business would be, to implement a comprehensive restructuring and the policy to adhere and consider the employees’ interest (Guesnerie, 2001, p. 52). Therefore, it is recommended that the Hotel should use alternative approaches in motivating the salespersons and all other management.
For example, the environment under which the salespersons operate should be favorable to business. In this case, they should be treated with dignity and respect, given increase in salaries and allowances, guaranteed the safety and job security among many other necessary steps of assuring them of the best working conditions (Della-Guistina, 2000, p. 44).
The recommendation is justifiable because it is through improving the working condition that the salespersons and other employees of the Hotel that they would be motivated to perform their duties with vigor and interest (Buzzell & Gale, 1987, p. 39).
Mostly, the employees who are properly motivated cannot choose to resign from their duties. Therefore, it shows that the mass resignation that the company witnessed between 2010 and 2011 meant that the management had serious problems worth solving and the employees were less motivated.
The advantages with this recommendation are that through treating the employees with dignity and respect, increasing their salaries and allowances, guaranteed the safety of the workplace (Boxall & Purcell, 2011, p. 42).
In addition, job security, respecting diversity and implementing non-discriminatory policies are sure ways of redeeming the image of the Hotel and boosting the workers’ self-esteem and confidence in the company (Feenstra, 2003, p. 24).
The other advantage of increasing the morale of the workforce would be that it enhances the relationship between them and the clients, thereby creating the hospitality, which is necessary for the prosperity in the Hotel industry.
Therefore, Plaza Athenee Bangkok should embark on serious management restructuring that would guarantee the workers better terms of employment, thus increasing their confidence (Chandler, 1962, p. 17). As a result they would carry out their work with a passion and enhance their relationship with the clients. This would result to an increase in the number of customers visiting the Hotel and an increase in the sales returns.
However, there are risks of this recommendation including the haunt for self-esteem and personal decisions, which would result to resignation, despite the favorable terms and safe working environmental (Della-Guistina, 2000, p. 47). Thus, it is an indication that some measures opted to limit resignation of the workers would not produce desired results, perhaps a waste to the implementing business entity.
Conclusion
In short, Plaza Athenee Bangkok, like many other world class accommodation facilities have challenges, which it has to solve for its own prosperity. The report makes it clear that the hotel has had major difficulties, which have interfered with the operations and progress.
First, the report indicated that the Hotel had low rate of occupancy, which at times, stood at approximately forty percent, especially during the periods of low season. This was attributable to the less number of employees, who remained after the massive resignations of the salespersons, and other members of the management team.
In another development, it could be concluded that the central location of the Hotel was a threat to any visiting clients, because it is a busy commercial center. Therefore, the location resulted to very stiff competition from other local traders operating the same business.
Furthermore, it was also noted that the Japanese Brand called Okura, which was expected in 2012 and the Park Hyatt that is anticipated to start their operating in the city in 2013, emerged as the major competitors for the Hotel.
Also, the floods in the country were considered as an impediment for the development of the Hotel. Finally, the many resignations, including that of the Director of Sales and Marketing among other managers could be perceived as a hindrance to the development of the Hotel. It had significant interference with the accessibility of the Hotel, thus driving the potential visitors.
As a result, a set of recommendations were made to the institution, so that it may record an increase in the rate of occupancy and the sales returns. For example, incentives to the workers including, increasing the workers’ salaries and allowances of the employees, treating them with dignity and respect, and practicing non-discriminatory policies were vital for the Hotel.
This would help in reducing the high cases of employees’ resignation, which characterized the institution, thus would boost the occupancy rate of the Hotel facilities. Furthermore, relocating the Hotel to a different and less congested part of the town, which had high potential, was also considered as a better way of avoiding the congestion of the central location.
Literally, reducing the prices to attract more clients and the existing ones, thus being able to compete favorably and outshine the emerging investors. The research also recommended that the Hotel had to improve the drainage system along the road leading to, and within the business premise to reduce the impacts of flood. This measure would make sure that the Hotel becomes Hospitable for local and international visitors.
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