Hotel Continental Case Study Essay Essay Example

Hotel Continental Case Study Essay Essay In July 1989. Mr. Oscar Mendoza. proprietor of Triumph Tours read in the newspapers an advertizement for the leasing of Hotel Continental’s installations. During the last six months. Oscar Mendoza has been earnestly believing about runing a hotel to complement his travel bureau concern. Oscar Mendoza had been sing troubles in acquiring hotel adjustments for his circuit groups since last twelvemonth during the peak travel months of December. January. July and August. Hotel Continental is a 27 room hotel located in Diliman. Quezon City along Don Mariano Marcos Avenue. It has three map suites that can sit twelve to forty individuals. a java store. a fast nutrient cafeteria. a formal dining room and a swimming pool. During the last two old ages. the hotel incurred losingss of approximately P2 to 3 million pesos which led direction to the determination of renting out its installations ( See Exhibit A ) . We will write a custom essay sample on Hotel Continental Case Study Essay specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Hotel Continental Case Study Essay specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Hotel Continental Case Study Essay specifically for you FOR ONLY $16.38 $13.9/page Hire Writer The room capacity of the hotel is merely right for Triumph Tours’ demands during the peak months. â€Å"My travel concern can supply one-year capacity use of the hotel to every bit much as 40 % merely. † Oscar Mendoza told his Selling Manager. Ernesto de los Santos. â€Å"How do we make full up the staying 60 % ? Before Cory became President. I read in the day-to-day newspapers that most of these five-star hotels in Metro Manila were underutilized? What led to this state of affairs? Could you gather some informations that will assist me in make up ones minding whether or non I should offer for Hotel Continental? The information could besides assist me in calculating the appropriate command monetary value. † Ernesto de los Santos instantly called his staff after the meeting with Oscar Mendoza. He told his staff to garner natural informations related to the hotel industry. â€Å"Just give me the informations. It’s up to you how you will split the work. I’ll take attention of composing the study for the foreman. † he informed his staff. Several yearss subsequently. Oscar Mendoza found on his desk a package of information jointly submitted by two of the five staff members of the selling section ( See Exhibit B ) . Ernesto de los Santos instantly read the informations to see if he could fix a preliminary study for Oscar Mendoza. Q I.a. ) Central Problem †¢ Should Mr. Oscar Mendoza. proprietor of Triumph Tours. command for Hotel Continental to complement his travel bureau concern? If he would offer for Hotel Continental. how can his travel concern fill up the staying 60 % of the hotel’s one-year capacity which is underutilized? Statement of the Problem:Oscar Mendoza’s trouble in acquiring hotel adjustments during peak travel months b. ) Minor jobs †¢ What would be the appropriate command monetary value?†¢ What factors caused the incurred losingss of Hotel Continental and how Triumph Tours can work out the unprofitable event? II. Aim †¢ To place the factors that affect the use of hotel installations. Cite accomplishable ways on how Triumph Tours will be able to make full up the staying 60 % of Hotel Continental’s underutilized installations. †¢ To weigh the advantages and disadvantages of each option. In this survey. both of the cited schemes will be discussed. †¢ To come up with the best solution. III. Alternative Courses of Action 1. Bid for Hotel Continental 1. Advantages I. It will work out Mr. Mendoza’s job in acquiring hotel adjustments for his circuit groups during peak months. Since acquiring hotel accomodations might do him a batch of clip and command for Hotel Continental will salvage him much. two. It provides better service for his circuit groups. Of the fact that Hotel continental can suit all his groups and still has approximately 60 % installations left for use. three. It allows the bureau to suit more clients. 40 % for the circuit groups and 60 % for other clients. four. It attracts more clients ` ( e. g. travel bundle ) v. It can salvage clip alternatively of looking for other hotels which might stop up in failure and Hotel Continental already being leased by other companies. chances merely come one time. six. Its room capacity is merely right for his circuit groups. dining grosss for the travel bureau concern by fulfilling the demands of the circuit groups. 2. Disadvantages I. Hotel Continental has incurred losingss for last two back-to-back old ages. Victory Tours is challenged of this event and should come up with the best scheme on how to maximise net incomes and avoid. if non possible. decrease the sum of losingss and in clip arrive to a net income by changeless recovery and advanced programs. two. Merely 40 % of hotel installations will be utilized by the travel bureau yearly. this requires them immense attempt to be efficient in their resources and non stop up in underutilized public-service corporations. three. The location of the hotel is non strategic. There are many rivals at present and besides. at future. four. More capital is needed. Capital is a critical component of all organisations if one strives to roll up net incomes and remain in the competition. v. Merely during travel peak months does Mr. Mendoza encounters hotel adjustment jobs. six. 5-star hotels have history of underutilization before Cory Aquino’s term. †¢ Modernize the hotel’s installations Advantage: Modernizing installations and heightening services would exercise a pull on more tourers. increasing hotel tenancy rates. thereby intensifying hotel capacity use. And besides. the fact of a stiff competition among hotels. the action will take to a more competitory Hotel Continental with which clients can take from. Disadvantage: Modernization of installations would ask big sums of costs and affect employee hiring. †¢ Offer more services Advantage: Offer more services such as watering place. beauty salons. fittingness centres. dress shops. different eating houses and conference installations would take full advantage of the hotel’s capacity to provide to more countries of services. thereby maximising net incomes. Disadvantage: Offer more services would necessitate big sums of costs. employees. Besides. many who venture into enlargements fail at maximising net incomes. †¢ Find lesser cost alternate ways of operating concern activities Advantage: Based on the income statement of Hotel Continental. a big part of the losingss was due to the immense sums of operating disbursals. If those operations would be done utilizing lesser costs. there would be a important addition in the income of the hotel. Disadvantage: Searching for lesser cost alternate ways in runing the concern will take a batch of clip and resources. Besides. non all alternate ways are every bit good as what the concern used before. †¢ Advertise the hotel together with the travel agency’s offers Advantage: Ad non merely lets people know about the services rendered by the hotel. it besides creates the demand for them to avail of its merchandises and services. Disadvantage: Ad through a batch of signifiers of media requires a batch of costs. †¢ Expand the hotel into a hotel-resort concern Advantage: The transition of the hotel into a hotel and resort concern would non merely pull those professional clients. it would besides pull both tourers and locals. Since a batch of people are into loosen uping holidaies. providing to their demands maximizes the hotel’s capacity. Disadvantage: The transition of the hotel into a hotel and resort requires a batch of costs and non all ventures into the resort industry win. 2. Command for other hotels 1. Advantages I. There is a possibility of a less bid monetary value. There may be hotels in close bankruptcy or have suffered more losingss than Hotel Continental and is renting their installations at a much lower monetary value. two. There is a possibility that other hotels have non incurred losingss. It is non certain but one may happen other hotels that are in lease advertizement but have non suffered losingss. three. It will work out Mr. Mendoza’s job in acquiring hotel adjustments for his circuit groups during peak months. four. It provides better service for his circuit groups v. It allows the bureau to suit more clients. six. It attracts more clients ( e. g. travel bundle ) seven. There is a possibility that the other hotels are in a strategic location 2. Disadvantages I. It consumes more clip to garner informations and to seek for hotels in rental. uncertainnesss may come and either fulfill their concern or dissatisfy them. two. Room capacity may be excessively much or excessively less. Too much may besides necessitate extra programs in order to make full up the staying underutilized installations and excessively less might ensue to disappointing services and lower grosss. three. There is a possibility of a higher command monetary value. particularly for hotels that have non undergone losingss or other jobs. four. There is a possibility that no other hotels are for rental. 3. Construct ain hotel 1. Advantages i. Mr. Mendoza can decently turn to the demands of his circuit groups. They can stipulate their building harmonizing to the estimated demands of their travel bureau concern and be efficient of their resources ( e. g. adequate room capacity with 100 % use of the hotel installations ) . two. He can take a more strategic location for his hotel. They have the pick to make whatever they may in order to model a edifice that will suit their demands best. three. Complete authorization over the hotel for hey are the proprietor. 2. Disadvantages i. Mr. Mendoza needs most significantly a immense sum of money. Constructing a new edifice is non easy undertaking. get downing from the purchase of land for a strategic location. design and design. building workers. budget. and so on. two. Construction takes clip. undergoes many procedures. It is non a program which can be instantly accomplished. it requires months. old ages to complete. three. He bears all the hazards. Unexpected catastrophes. budget deficit. and some neglected minor jobs at the start that may go a big hinderance for the coating of the building and may impact the minutess of Triumph Tours. four. The entity ( travel bureau and hotel ) will be incurring more disbursals 4. Continue bureau operations without the hotel 1. Advantages i. Mr. Mendoza can concentrate betterments in his travel bureau. Less distractions can take to more concentration on the minutess of Triumph Tours. two. There are merely 4 travel peak months in a twelvemonth. 2. Disadvantages i. Mr. Mendoza continues to see troubles in acquiring hotel adjustments during travel peak months. two. It causes incommodiousness to his travel groups. To clients of the travel bureau. they may happen another travel bureau which they think will function them better because there are many rivals besides of Triumph Tours. IV. Recommendation We recommend that Mr. Oscar Mendoza of the Triumph Tours command for Hotel Continental and he must spread out the hotel into a hotel and resort concern. Besides. upon the transition. he must overhaul the installations of the hotel and he must open newer constitutions in the hotel. V. Conclusion Based on the income statement of Hotel Continental from 1987- 1988. a big part of the operating disbursals was due to the Property Operations. Maintenance and Energy Cost. Due to the out-of-date installations of the hotel. a batch of fixs and care were done which finally led to a strain in the hotel’s resources. Overhauling the hotel’s installations will decidedly cut down operating disbursals. Besides. offering newer and more varied services to the clients would increase the use of the hotel’s installations. Last. the transition of the hotel into a hotel and resort would pull more tourers and locals. thereby maximising the capacity of the hotel. Besides. the transition would set up a stable income for the concern because it would non merely roar in net incomes during peak seasons of Christmas and summer. it would besides offer installations for professional conferences every bit good as watering place. eating houses. fittingness centres among others which are non seasonal in nature.