Hillside Hotel Case Study

Introduction

This case study discusses the primary problem of Hillside Hotel whose effects are seen in low rate of occupancy since the hotel was established and small profits. The primary problem is poor management strategies characterized by use of limited marketing strategies, over-reliance on part time employees, and under-utilization of market segmentation. Three solution alternatives have been identified as effective in solving the problem including employing on a full time basis, adopting social media marketing strategy and yield management. Yield management has been identified as the more urgent solution for the primary problem.

Problem Statement

The main problem of the Hillside Hotel, a small boutique hotel in a unique location is poor management strategies. Hotel management strategies play a significant role towards the success of a business. The hotel uses limited marketing strategies, ineffective personnel, and fails to utilize markets segmentation strategy in boosting revenues. Rosemary Leader, the manager of the hotel, had no previous experience in hotel industry. This suggests that she has limited knowledge on the best techniques of managing a hotel that can yield better outcomes. A hotel manager with enough experience in the hotel industry, is able to identify the most appropriate strategies that drive a business towards the desired outcomes.

Key Case Facts

Poor management in the hotel affects all Fraser Graham’ family who benefits a little from the profits of the hotel that consumed a lot of resources during its construction. Other stakeholders such as the employees fail to benefit from the employment as the limited cash yielded cannot support their development. There are two symptoms that are stemming from the poor management strategies in the hotel.

Low level of occupancy

According to the hotel’s manager, the hotel has been facing challenges with the level of occupancy since it was opened. When the hotel was opened, it had a total of 26 rooms and during peak season only 40 to 50% were occupied while in the low season on 5 to 15% were occupied (Locker, n.d).The room occupancy was much lower than expected. Despite the aggressive steps taken to raise the awareness of the hotel in the market including the use of offers for non-profit schools and organizations, use of fliers, use of coupons for weekend specials, the hotel still has a lower occupancy with lower season registering only 20%.

Small profit

According to the manager, the hotel is making small profits compared to the cost of time spent in operating the business. Even after attracting large corporates that often hold retreats and courses in the hotel through discounts, the profits are still minimal. The hotel has been unable to potential market offered by the identified market segments to drive more profits. Even though the unique location and unique services offered by the hotel have played a role in limiting the number of clients associated with lower profits, ineffective management strategies have played the major role by failing to utilize the available resources to attract more customers boosting the sales.

Solution alternatives

Full time employment

The current management strategies on employment have a limited number of employees on a full time basis and a majority in part time basis. While full time workers are fully committed to the vision of an organization, part time employees are reluctant. Research shows that part time workers tend to find it difficult to offer a full commitment to an organization as they spend more time seeking full time jobs on other organization. Committed employees increase their efficiency which promotes customer satisfaction and eventually customer loyalty (Stamper & Van, 2003). Employees are a major asset to any business and having their full support is associated with customer satisfaction which results in enhanced outcomes as more customers continue seeking the services.

Social media marketing strategy

The hotel relies on flyers, offers, and selling of coupons as promotion strategies. While the strategies have been successful in attracting some customers, there are many other marketing opportunities that the hotel can adopt to reach a wider customer base. Use of social media helps in reaching a large population across the world. Through platforms such as Facebook, Twitter, and Instagram, the hotel can increase engagement with potential customers. Through the platforms, the hotel can post pictures and videos of the facility and customers will not need to travel to the place to evaluate it (Locker, n.d). The sites also ensure that hotel management interacts easily with the guests which promote good experiences. As a result the guests develop loyalty to the brand which keeps them coming and informing their friends about the business.

Adopt a yield management strategy

So far the hotel has been able to rely on two market segments. These are the new immigrants into Zealand who wish to have a New Zealand experience, and the people from New Zealand who live in foreign countries but wish to have a home wedding. The other two market segments are individuals on get away weekend from the largest city of New Zealand who take advantage of the increased annual leave in the country. Hillside Hotel should take advantage of market segmentation to generate more income. Apart from the four market segments, the management should target different segments including the youths, couples, families, individual guests, local people, politicians, and social events among others. The market segments bring in the issue of yield management by determining the amount charged per room (Berman, 2005). Changing room rates through yield management will help the hotel to increase its revenue.

Analysis of the solution alternatives

As part of the analysis of the provided solution alternatives, three different levels of potential outcomes are considered, that is, best, worst, and may be for evaluation purpose. The alternatives with the highest number of ‘best’ lead in solving the major problem, while the other alternative follows. Table 2 shows the score of Table 1 which shows that Yield management has a greatest positive impact in solving the problem, followed by social media marketing, and then employment of full time employees.

Table 1: Analysis criteria

Key Decision CriteriaEmploy full time employeesSocial media MarketingYield Management
Improve profitabilitybestmay bebest
Improve customer satisfactionbestbestbest
Improve employee moralebestmay bemay be
Increase revenuemay bemay bebest
Minimal environmental impactmay bemay bemay be
Within business capabilitiesworstbestbest
Related to the problem statementbestbestbest
Measurablebestbestbest
Within acceptable parametersbestbestbest
Speed of implementationworstbestbest

Table 2: Analysis Score

AlternativeBestMay BeWorst
Employ full time employees622
Social media Marketing640
Yield Management820

Recommendation

Employment of full time employees, use of social media in marketing, and yield management strategies are all important solutions that need to be implemented in Hillside Hotel to eliminate the poor management strategies that attract low occupancy which yields small profits. However, yield management is the most urgent alternative as it has the greatest positive impact on hotel processes. When it comes to increasing profitability, customer satisfaction, revenue, and speed of implementation, it has the greatest positive results. The alternative is within hotel capabilities, its acceptable, its measurable, and most of all it is related to the primary problem. In addition, research shows that, yield management increases revenues. In the implementation, rate strategy will be utilised. This involves classification of rooms according to their types and bedding types. The second step is to determine the number of bookings and other packages such as on special occasions. The third step is setting room charges based on the findings in step one and two which will guide the process of changing room rates associated with increased revenues.

Conclusion

In conclusion, it is clear that Hillside Hotel has a major problem in management strategies whose symptoms are seen in the lower rate of occupancy ever since the hotel was established and small profits. The hotel uses limited marketing strategies, ineffective personnel, and fails to utilize markets segmentation strategy in boosting revenues. There are three strategies that the hotel can adapt to solve the problem. These are employing on a full time basis, adopting social media marketing strategy and yield management. While the three alternatives are essential, yield management is more urgent as it has great potential in saving the hotel. The strategy has been effective in other businesses in increasing revenues making it an effective solution. The other two alternatives are also essential in solving the problem and should therefore be implemented later for more benefits.

References

Berman, R.D. (2005). Applying yield management pricing to your service business. Business Horizons, 48(2), 169.

Locker, T. (n.d). Case Study on the Hillside Hotel: A small boutique hotel in a unique location, pp.1-7.

Stamper, C.L., & Van Dyne, (2003). Organizational citizenship: A comparison between part-time and full-time service employees. Cornell Hotel and Restaurant Administration Quarterly, 34(1), 79.