FINAL PRESENTATION. - Copy

SOLBERRI HOTEL : 

SOLBERRI HOTEL NMIMS UNIVERSITY TEAM MOSIAC

INTRODUCTION : 

INTRODUCTION Solberri Group was established in the mid 1980’s by Richard Berriman. It started off with two hotels and expanded over the years. ACHIEVEMENTS Expanded to 12 Hotels by year 2000. Listed on the European Stock Exchange in 1998. Considered as benchmark for quality by the other hotel chains. DIFFICULTIES Fall in occupancy levels between 2003-2005. Made its first ever operating loss in the year 2005, followed by an operating loss in the year 2006. Ever since then the company is on its path to recovery.

MAJOR ISSUES : 

MAJOR ISSUES OCCUPANCY LEVELS – Marketing Budget FINANCE AND SHARE PRICES REFURBISHMENT PROGRAMME INFORMATION TECHNOLOGY CUSTOMER SATISFACTION

MINOR ISSUES : 

MINOR ISSUES OUTSOURCED SERVICES HUMAN RESOURCE CORPORATE SOCIAL RESPONSIBILITY SOLAR PANELS STAR RATING

MAJOR ISSUES : 

MAJOR ISSUES

OCCUPANCY LEVEL : 

OCCUPANCY LEVEL ISSUES To increase the occupancy level to 85 %. To increase the average stay of the customer from 10 nights to 12 nights. SOLUTIONS Provide existing customers with complementary stay during non–peak season. Collaboration with Airline companies for a bundled package stay in the Solberri Hotels. Tie-up with global tourism travel agencies and websites. Promote Direct Marketing and focus on retaining Customers.

MARKETING BUDGET : 

MARKETING BUDGET Increase the marketing budget from 22 million Euros to 25 million Euros for the year 2008. Allocation of these funds – 20.5 million Euros for the existing marketing operations. 3 million Euros for increasing television advertisements highlighting all the features of the hotels. 1 million Euros as additional commission to travel agents. 0.5 million Euros for promotional booklets on flights.

EFFECT ON OCCUPANCY : 

EFFECT ON OCCUPANCY

COSTS : 

COSTS The fixed costs of the hotels will remain the same even when the occupancy levels increase. Fixed costs = 95 million Euros The variable costs will change as shown in the following table. The total revenue = 207.32 million Euros (Calculation) The total cost = 158.8 million Euros Hence the gross profit = 48.52 million Euros Gross profit % = 23.4%.

FINANCE : 

FINANCE ISSUE Raising Capital and Funding Investments SOLUTIONS No need to raise further cash. The Hotel can utilize earnings of 5 million Euros of profits and revaluation reserve of 20 million Break up of estimated investment in the year 2008-2009

SHARE PRICES : 

SHARE PRICES ISSUES Fulfilling shareholders expectations. Threat of being taken over by competitors. SOLUTIONS The Hotels with its enhanced plans will be able to earn higher revenues and profits which should satisfy shareholders expectations. Rise in share prices of the Hotels from the lows in December 2007 @ 3.97 euro to 7.28 euro in the beginning of May 2008. The Hotels should start raising internal share holding to at least 51 % by 2010.

REFURBISHMENT PROGRAMME : 

REFURBISHMENT PROGRAMME ISSUES Viability of Investments Low ROCE (Return on Capital Employed) SOLUTIONS The company should go ahead with its refurbishment programme. If the company can go ahead and attain the estimated occupancy level then the ROCE will increase. The ROCE is calculated on peak season occupancy levels only, hence they do not provide the real scenario of the case.

INFORMATION TECHNOLOGY : 

INFORMATION TECHNOLOGY ISSUES Problem with the Bookings Management System. Further Investment in I.T. systems of 5 million Euros. SOLUTIONS Upgrade the current BMS system in 2009 non-peak season. Creation of an “information hub,” this will help hoteliers implement numerous value-added solutions. RF technology for cashless payments and location services. Customized guest experiences. Investment of 2.5 million Euros in the current year for upgrading the website.

CUSTOMER SATISFACTION : 

CUSTOMER SATISFACTION ISSUES Unsatisfied customers. Gap between the Actual and the Target results of customer feedback. SOLUTIONS Training and development for employees and improvement in I.T. Aim to achieve awards like BS 5750 or ISO 9000. Start Customer Care Centre.

ESTIMATED CUSTOMER FEEDBACK FOR 2008 : 

ESTIMATED CUSTOMER FEEDBACK FOR 2008 The results of the customer feedback survey do not show accurate results. The survey criteria can be shortened and made to the point so as to avoid wastage of time of the customers. Also the survey forms can be mailed to the customers.

MINOR ISSUES : 

MINOR ISSUES

OUTSOURCED SERVICES : 

OUTSOURCED SERVICES ISSUES Outsourced operations are not upto the standard required. Conflicts amongst General Managers and Outsourcing company. Anna Roet put her personal interest before the interest of the Solberri Group of hotels. SOLUTIONS Start an Audit Committee. Approach a new Outsourcing company.

HUMAN RESOURCE : 

HUMAN RESOURCE ISSUES Poor service provided by short-term employees. Conflicts amongst higher authorities of the group. SOLUTIONS Employee Empowerment strategies should be used like Myers-Briggs Type Indicator. Set a target to employ around 85% local employees by the year 2010. Skilled Employers should be taken from Hotel Management Institutes. Recruitment Procedure should be stricter. Quality of services should be assessed regularly.

CORPORATE SOCIAL RESPONSIBILITY : 

CORPORATE SOCIAL RESPONSIBILITY ISSUE Meeting CSR targets by 2010. SOLUTIONS To resolve unethical issues and meet its deadlines for CSR report by 2010. The first step should aim at sourcing about 80 % of its produce sources from local suppliers by the end of 2008. The company should also employ about 70 % of temporary staff from local population and attain a level of hiring 85 % local population by 2010. Continue further support to local charitable organizations. Aim at recycling about 75 % plastic and saving 70% towels for changing after second day by the end of 2008. Focus on training for staff. Suzanne De Loore’s proposal of providing training to 4 permanent staff members of every hotel should be considered and implemented in this financial year.

SOLAR PANELS : 

SOLAR PANELS ISSUES Introducing Solar Panels in each hotel. Investment of 6 million Euro across 12 Hotels unavailable. SOLUTIONS Solar Panels should be introduced in a phased manner starting 2009. This will benefit the hotels with 30 % savings in energy costs. Help the company increase profitability and get Energy Star Rating. Promote itself as an environment friendly hotel chain. Self financed project over longer term period.

STAR RATING : 

STAR RATING ISSUES Non-participation in any star rating system SOLUTIONS Participate in International star rating system. Participate in Energy Star Rating system, this will allow the Solberri group to get a differentiated look that is of an Eco-Friendly Hotel and also give them a competitive edge.

SUPER PLUS HOTELS AND PARADISO HOTELS : 

SUPER PLUS HOTELS AND PARADISO HOTELS ISSUES Accepting Proposal A, B, or C. Considering taking over Paradiso Hotels. SOLUTIONS The company will fetch a Return on Investment in about 5 years and 4 months for Proposal A. The ROI for Proposal B will be in about 6 years and 1 month. Proposals C is not acceptable over Proposal A: Since the group estimates to add profits of 4.6 million every year under Proposal A. The amount of 15 million can be recovered over a period of only 3 years and 2 months internally by the hotels. We do not recommend the company to acquire PARADISO HOTELS.

BENEFITS OF ACCEPTING PROPOSAL - A : 

BENEFITS OF ACCEPTING PROPOSAL - A SHORT – TERM The company will boost its peak season occupancy to 75 % with an increase in per room rates by 60 Euros. Generate additional revenues of 3.76 million Euros. Minimal impact on Balance Sheet. MEDIUM AND LONG TERM Return on Investment of about 5 years and 4 months. Diversification into family resorts markets. Increase in customer base.

FUTURE OUTLOOK : 

FUTURE OUTLOOK The company looks well poised to achieve its estimated revenue target for 2008. The company can achieve additional push in revenues in the year 2009, with 2 new hotels added to premium category and family resorts up for operations. The company should get further more add 2 more hotels in premium category by 2010. Implement complete IT solutions, put Solar Panels in place and achieve its CSR responsibilities. Further look for opportunities for future growth by opening a new hotel or acquiring some hotel business.