Final business plan year 2 PDF

Preview

Summary

Completed a final business report for Hotel including analysis of Hotel and what it can do to do better and run more efficiently....

Description

BACHELOR OF HOSPITALITY & TOURISM MANAGEMENT

Business Plan: Year 2

Hospitality Business Simulation Course Code: HOS6126 Year: 2016 Fall Hotel Business Plan (Y2)

Table of Contents Executive Summary

3

Organizational Chart:

3

SWOT Analysis

5

Market Analysis: Current Market Demand: Target Market: Market Mix Sunday National Newspaper Hotel Website Local Weekly Paid-for Newspaper Direct Mail: Independant Local Radio. Pricing Strategy Competitor Analysis: Comp Set Analysis Positioning Map Analysis Products & Services Offered Comparison Star Index Analysis- Year to Date

7 7 9 9 10 10 10 10 11 11 14 14 15 15 16

Vision Statement:

17

Operational Targets

17

Financial Targets: Capital Expenditures:

18 19

Objectives:

21

Reference Page:

23

Executive Summary Under new management, Hotel has improved strategic management objectives in year 1. The main goal of this team is to continue to provide New Dawn Hotel with exceptionally increased services, and improved quality of what they are offering. A second goal is to attract customers from new target markets to increase their customer base, and doing so by enhancing their advertising and marketing strategies.

2

The following business plan outlines what the condition of the property was in Year 1 in comparison to Year 2, with a detailed analysis of their strengths and weaknesses, opportunities and threats, market analysis and financial situation. With the information provided, the management team HOTS for JESA plans to upgrade this property and while remaining at a 4-star hotel through additional expansion and refurbishments, and while improving employee and customer satisfaction through extensive training. The final projection is to increase revenues through New Dawn Hotel’s marketing efforts and vision for the hotel and allowing us to increase the occupancy %, and the average daily rate to follow. The team also plans to help this process by creating a more appealing brand image for the new-targeted market, with strategies shown in this business plan.

Executive Team Member

Team Member

Roles

General Manager

The General Manager is responsible for assuring Mission, Vision of the hotel is accordance with decision-making and with the execution of services on the property. Provides assistance for the rest of the team. Accountable for the management of capital expenditures and marketing. In charge of tracking actual to budget for the entire hotel. The GM must understand and oversee all areas of responsibility and be aware what is going on in all departments of the hotel at all times.

Director of Finance

The Director of Finance is responsible for the financial welfare and prosperity of the hotel. The role of the Director of Finance includes assisting executives in all decisions relating to budgets, revenues and expenses, as well as taking a particular interest in the hotel's cash flow position. Furthermore, the Director of Finance helps in negotiating the terms of a loan in the case of required capital expenditures and manages dividends when available.

3

Director of Rooms Division

The Director of the Rooms Division is responsible for all areas of the Rooms division. This includes revenues of the hotel, expenses, room rate changes according to different periods, incentives, managing the staff and hiring processes, demand management & packages to be promoted to potential customers. The director of Rooms Division is also responsible for the environmental management, and staying up to date with customer demands.

Director of F&B, and Other Departments

The Director of Food and Beverage is held responsible for managing the expenses and incoming revenue that involves the food and beverage aspect of the hotel which means constantly being updated on the hotel’s demands. The Food and Beverage Director is also responsible for any additional revenues and expenses that come in that relates to certain other departments such as marketing, human resources and the conference centre.

SWOT Analysis STRENGTHS ❖ New Facilities: The hotel is now equipped with newly constructed conference facilities to appeal to new potential guests. ❖ Additional products offered: The hotel successfully added Business Services, Internet Access and Quick Check In/Out services to their service offerings. ❖ Enhancement of guest comfort offerings: The hotel now offers 24/7 Concierge Service and Room/ Lounge Service for its guests. The hotel has also increased the level

WEAKNESSES ❖ Fluctuating levels of value perception from guests: During certain periods in Year 1 Food & Beverage Revenues were higher than Rooms Revenues, which translate to the hotel not providing value to its guests on a consistent basis. ❖ Increase in the loan from the bank with increase in interest rate: An increased loan from the bank was required in order to complete the planned capital expenditures expansion to attain a 4-Star rating. The additional loan came with a 3% increase to our interest rate, from 5%

4

❖

❖

❖

❖

❖

of the Complimentary items, as well as the level of In-Room Entertainment offered to its guests. Accessibility: the area that the hotel resides has a solid infrastructure, which includes accessible roads, rails, bus links and facilities Establishment is in all-around good condition: Guest Rooms are currently in Good condition, and are in the process of being refurbished. Conference Rooms, Front Desk & Bar are all in Excellent condition, the Restaurant is also in Good condition. Spacious & comfortable accommodations: Rooms can accommodate singles, couples & families. Therefore the hotel can market to many different segments. Positive Guest Feedback: The comments provided by guests on our HOTS Reviewers and Social Media page suggest that overall guests feel that the hotel is fairly priced, clean and comfortable, and that the staff is helpful and friendly. Sufficient Parking: 120 parking spots available on the premises, and additional parking is available nearby. OPPORTUNITIES

❖ Additional facility offering: The hotel is the first out of its competitors to have completed the addition, before the beginning of the second year of business, of a conference center to its product offerings. The hotel can now

to 8%. ❖ Inconsistent Staff Satisfaction & High Employee Turnover: staff satisfaction on the property fluctuated frequently over the course of Year 1, as a result the hotel experienced high levels of employee turnover. ❖ Low Marketing Expenditure: In year 1, the hotel spent only 3.4% on marketing. This needs to increase to between 5-7%.

THREATS ❖ Competition: Competitors have access to the same capital expenditure options. ❖ Seasonality ❖ Value perception: New Dawns competitors appear to be providing greater value to their guests than The

5

appeal to conference business/guests. ❖ Franchising ❖ Local Town Growth: the change in the local population adds new opportunities to expand the economy ❖ Growing Tourism Industry: tourism has been growing which has resulted in it becoming one of the fastest growing economic industries. In 2015, tourism worldwide grew by 4.6% and is expected to grow by another 3.5% to 4.5% in 2016 (UNWTO, 2015).

New Dawn hotel. ❖ Saturated Market: the presence of multiple hotels in the area affects the market share. There is the availability of other substitutes. ❖ Increase in Minimum Wage

Market Analysis: Current Market Demand : The extra rooms being added to New Dawn hotel has become an investment to increase the occupancy and thus ADR. Through this increase of space, the team HOTS for JESA plans to reach out to a new target market. This additional target market suggests that New Dawn should invest time and marketing into the health services with will be installed in the beginning of year 2. An advantage for New Dawn Hotel is being on the seafront, and gives HOTS for JESA the great opportunity to continuously increase their market and expand their services where necessary. As shown on the following chart “Occupancy Year 1, Year 0, Year 2”, the occupancy has increased by 83.5% in January (slowest month), and by 26.86% in August (busiest month). This has shown HOTS for JESA that the marketing strategies, and pricing strategies have been effective in the decisions made, and thus gives the team the chance to forecast a reachable goal of an increase of at least 15% in the slowest months, and an increase of at least 8% in the busiest months. This gives an estimate of an increase of 10% for Year 2. Due to the construction-taking place at the beginning of Year 2, it will affect occupancy at the start because of noise, and no repeat guests due to disruption caused during their stay. However, once rooms begin being added, the occupancy will start to slowly increase and give New Dawn the opportunity to accommodate additional guests, especially with their newtargeted market.

6

Year 0 Occupancy

Year 1 Occupancy

Forecasted Occupancy Year 2

January

10.30%

18.90%

23%

February

21.20%

29.10%

34%

March

34.20%

44.90%

48%

April

37.50%

51.90%

56%

May

30.70%

45.10%

50%

June

36.60%

52.70%

55%

July

48.80%

59.60%

65%

7

August

55.10%

69.90%

74%

September

47.30%

66.50%

70%

October

32.20%

45.70%

52%

November

19.50%

37.70%

42%

December

26.50%

53.60%

60%

Target Market: By expanding the restaurant through adding more seats, and adding the healthy club which includes a pool, sauna, hot-tub, and gym, it will help HOTS for JESA develop a marketing strategy to target families and couples within the 30-50 years age range. Through the installation of two conference rooms, HOTS for JESA plans to cater to an additional target market of bigger groups, while through marketing, it will allow potential customers to be constantly updated of the additional spaces New Dawn offers. This will spark an interest for event planners, and allow for more guest arrivals and therefore higher occupancy. This will also impact New Dawns weekend business because of the higher probability of events happening during a Friday, Saturday or Sunday. Market Mix New Dawn’s desired marketing mix for Year 2 is comprised of increased services and facilities, through an increased value in food and beverage, additional guest rooms, quick check-in/out, business center, and conference rooms. With direct methods of marketing by the hotel website, and indirect methods by travel agents, the promotions will be most effective when communicated through: Sunday National Newspaper Having an ad for the New Dawn Hotel in the Sunday National Newspaper will increase the probability of people seeing it, as it is a daily newspaper that comes out every Sunday. Seeing as there are hundreds of thousands of the weekly newspapers that come out every week, even though the ad may not be large, it will still definitely be seen by most readers. Hotel Website Today’s generation is constantly using the Internet in order to access information. This shows that the hotels website is extremely important as it will be the initial impression of the hotel to potential guests. The hotels website will always have to update with the

8

correct information as most of their guests will access their website for any information they would like to know. The website should look professional and provide high quality photos of the hotel in hopes of attracting the guest’s eye. Local Weekly Paid-for Newspaper By creating an ad to have posted in a local weekly newspaper would also help to get the New Dawn hotel’s name to a wider public. There is a higher chance for people reading the hotel’s advertisement in the paper since it has already been paid for rather than if there was no cost at all. There is no real number of readers for free newspapers as it is not for sure whether or not they actually read the paper if they grab it as it simply doesn’t cost them anything and they might just skim through it, whereas if someone is paying for the paper they are much more likely to read it all. Direct Mail: Using direct mail to help advertise for the New Dawn Hotel will significantly help to attract new potential visitors and guests as our advertisement would be going directly to their home or directly to them and so they would have almost no choice but to acknowledge the ad whether they like too or not. This would at least inform hundreds of people what the New Dawn hotel is and where they are. Independent Local Radio. Seeing as there are around 33,000 people who listen to an independent local radio show in the morning usually on their way to work between 6am and 9 am, it would be extremely beneficial to the New Dawn Hotel to invest in creating an ad to play over the radio. This would be a great chance and opportunity to catch people right before going into their workplace, which would resonate with them during the day. The hotel needs to take into consideration the peripheral services outside of their own, with growing competition and hotels of the same category, it is important to divert close attention to personnel and excellence in work performance. With a product mix that incorporates the surrounding services, it will help New Dawn create an optimal product and become a point of attraction. The hotels promotion mix requires successful marketing that will concentrate on the updated and upgraded quality of services, while also promoting the business in a way that focuses the attention towards the new target market.

Pricing Strategy New Dawn’s room rate and pricing will vary depending on the value that needs to be given. The restaurant will be required to charge a lower price, so customers can receive the same value for their price. While these costs vary, they need to be priced competitively so the guests do not reject New Dawn’s hotel services, and decide to go somewhere else. During peak season June-August, the services will be at a peak value and will need to charge higher prices while adding more staff. During the off season, it is essential that New Dawn introduces discounts, reduced rates, and implements a good marketing strategy.

9

New Dawns Average Daily Rate has seen a decrease from Year 0 to Year 1 in the months of January to May, November and December, and an increase from April to October. HOTS for JESA presents a forecast of an increase of 10% from the months January to May, an increase of 15% in June, an increase of 20% in July and August of the increased occupancy, an increase of 5% in September, an increase of 3% in October, a 10% increase in November to reach the same ADR as Year 0, and an increase of 20% in December because of Christmas events that are going to take place in New Dawn’s new conference centers.

Year 0 ADR

Year 1 ADR

Forecasted ADR Year 2

January

105.05

83.78

92.16

February

106.36

79.7

87.68

March

98.2

76.08

84

April

85.42

75.96

83.5

10

May

92

86.8

95.5

June

87.16

89.23

103

July

78.12

92.12

110

August

75.21

89.18

107

September

77.92

91.98

96

October

89.34

93.72

100

November

105.33

96.05

105

December

83.58

78.72

95

The highest priority for New Dawn Hotel is to concentrate their efforts on instigating a marketing strategy to help with updating guests of their new services. Through advertising the new investments including conference centers, health facility, business service, data point, quick check in/out, and refurbished and increased rooms, the main goal is to target a new market and meet their demands. This market includes business groups, families, and individuals looking to spend a few nights at a hotel by the seaside. With marketing being a big objective throughout Year 1, with a goal set of 5%, it is important to continue and increase the marketing strategies in Year 2 and include the new offerings. With a target of a new demographic, New Dawn plans to increase its occupancy from 47.8% to 52.4%, and an increase of ADR from $86.73 in Year 1, to $96.57 in Year 2. This will then increase the revenue from $1,863,781.25 to $ 2,575,715.04. This occupancy and ADR increase results from the higher expenses New Dawn forecasts because of the continuous refurbishment of rooms, bar, restaurant, and new facilities that will be installed before Year 2. In the term of 36 months, New Dawn plans to continue their marketing strategies, and make sure their new expenses are less than their income. In order to do this, it is important to continue the optimization of the renovations, and ensure that our guest arrivals can help with meeting the revenue projected.

11

Competitor Analysis: Comp Set Analysis Currently, New Dawn Hotel is in the marketplace with 4 other hotels. These 4 other hotels can be seen as our major competitors as they are in the same location and have the same opportunities for expansion, additional amenities and marketing. These 4 hotels are challenging each other for the customers that are visiting the location. Therefore, HOTS for Jesa has completed a thorough competitor analysis in order to evaluate The competitors strategies, strengths and weaknesses relative to are own.

From this competitive set analysis, HOTS for Jesa determined that we are currently sitting at a 47.77% occupancy, which puts us in third place across the 5 hotels. This leaves New Dawn Hotel only 0.04% change between the highest hotel, which is at 49.89%. Hotel 1 achieved the highest total revenue of 4,500,628. Total revenue for New Dawn hotel was 15% less than Hotel 1 however was still the second highest total revenue overall. This gives New Dawn hotel room for improvement on their overall revenue from the new and current facilities that are in the hotel. New Dawn hotel has the 3rd highest room revenue of 1,917,493. However there is a 94% difference between New Dawn hotel and the hotel with highest room revenue being Hotel 2. This shows us that HOTs for Jesa can be achieving increased revenue in the rooms department as the market and customers are available. In order to achieve higher room revenue HOTS for Jesa management must match the room rates to the value that New Dawn’s guests are being given in order to attract and retain more guests to New Dawn Hotel. Even though New Dawn’s room’s revenue is not the highest in comparison to the other hotels, we are at the same rooms department expense % as Hotel 1. This only leaves Hotel 3, at 33%, which is roughly 1% lower than New Dawn’s room department expense %. This is a very small change, however New Dawn hotel will continue to strive for a low room...