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Overview of Asset Management for Hotel Facilities

Provide an analysis of refurbishment/renovation needs for Ezdan hotels based on build quality and design needs, renovation/refurbishment of design facilities, economic viability, and environmental sustainability practices implemented within the project, the financial value and return of the development and stakeholders’ needs.

Hotel facilities are special assets that require focused and active oversight.  They are dynamic assets that produce income. If they are wisely bought, developed, operated and disposed within the right period, they bring massive returns to shareholders.  Being that the hotel industry is cyclical and closely follows the economic troughs and peaks of a country, they need to seek specialists’ oversight to drive returns and improve the hotel asset value within the holding period.  This justifies the need for asset management specialist services in within hotel facilities. Ezdan hotel is a 4-star hotel found in Doha and from customer and specialists reviews, it is in dire need of renovations. Renovation/refurbishment is a crucial concept in asset management.  It enhances the value of a facility and maintains a facility in the competitive market. Therefore, this report provides an analysis of refurbishment/renovation needs for Ezdan hotels based on build quality and design needs, renovation/refurbishment of design facilities, economic viability, and environmental sustainability practices implemented within the project, the financial value and return of the development and stakeholders’ needs. Then, the report provides justification of the approach to provide optimum results to all stakeholders.

Ezdan hotel has 196 guestrooms, 3 restaurants, children’s pool, playground on site, daily housekeeping, laundry facilities, conference centre, health club, airport shuttle, and terrace, free Wi-Fi, Air Conditioning, free parking, terrace, and 24-hour front desk and is near the beach. 

The primary focus of facility management is ensuring that customers derive maximum satisfaction from the design and presentation of the facility. Build quality and design are among the parameters used to measure customer satisfaction (Colliers International, 2014). Therefore, it is important to consider these aspects of the facility because they psychologically resonate with customers. They create a feeling of well-being and results to pleasure if one gets what he had hoped for.

Although the main amenities and location of Ezdan looks good, it is in serious need of renovations.  The guests complain that the rooms are of different quality. For example, the bathrooms are quite small thus not leaving room for someone to maneuver.  The tiles have been regrouted and need replacement.  The furniture is stained and old while the curtains and sofas are dirty.  The kitchen has little surface area left for cooking.  Additionally, the housekeepers do not do anything in the kitchen. They just clean the bathrooms, bed sheets and floors.

Refurbishment Needs for Ezdan Hotel

Ezdan hotel has sewer problems. When one walks into the bathroom, it is uncomfortable to the point of feeling the urge to vomit.  The pies are not regularly cleaned and the gas in the sewer makes its way into the room.  The pool tiles are in bad condition.  They are falling off.  This makes it risky for visitors since they could get infected or cut themselves.  Additionally, visitors complain of noise of pipe rooms below the floors caused by the paper thin walls separating the rooms.

The issue of service quality is one of the crucial elements of marketing theory.  It is important for hotel management to understand and meet the consumer’s expectations (Maric et al, 2016).  In hospitality, these factors grow exponentially and most of them are associated with the tangible attributes of hotel facilities like the design, outside appearance of the hotel, contemporarily equipped reception desk, visually appealing brochures, attractively furnished lobby area and  availability of  sporting facilities.

Good design in hotel facilities is about functionality, innovation, creativity, performance, and build quality.  It means that the space functions in a way that adds quality to those who use them.  It gives a sense of identity and community (OGA, 2013).  Additionally, it can improve the health and safety of the user hence enabling him to live a more sustainable life in future. Therefore, to ensure that performance is optimized in the build quality and design needs of Ezdan hotel, asset management expertise is required to help in the layout design and function.

There are three types of renovations: minor, major and restorations. Minor renovations are done to renew or replace non-durable furnishings.  They do not interfere without changing the physical layout and use of space (Uherek-Bradecka, 2015).  Major renovations replace and renew all furnishings and finishes within a space (Uherek-Bradecka, 2015). It may involve major modifications to the use of physical space. Restorations renovations complete replace all systems that are functionally and technically obsolete.  A minor renovation is done after every 6 years; a major renovation should be done after between 12 to 15 years while restorations should be done after 20 to 50 years (Uherek-Bradecka, 2015). Based on the explanations of the different type of renovations, Ezdan hotel needs minor renovations because most problems it is facing can be replaced or renewed.

According to the concepts of asset management, Ezdan hotel needs the expertise of infrastructure asset management. It is a combination of financial, engineering and management. It ensures that a cost-effective approach is adopted in designing, constructing, commissioning, operating, repairing, maintaining, modifying and replacing physical infrastructures.

Relevance of Build Quality and Design Needs

The kitchen area in rooms needs to be updated to allow space for visitors who would like to prepare meals for their families.  The layout should consider the physical location of kitchen equipments that generate cold and heat (Kostyukova, 2015). For example, the ovens, refrigerators, freezers and cooking tops can be placed in different locations within the kitchen to ensure that energy efficiency. The tiles in the bathrooms and along the swimming pool need to be replaced. The curtains and furniture need to be replaced. The drainage and sewer systems need to be reconstructed to eliminate the smell coming into the rooms. Additionally, the walls need to be strengthened in a way that does not allow noise from the pipe rooms to get to the visitors’ rooms.

For the renovations project to be successful, it has to be economically feasible.  The funding must be earned in a legitimate and transparent process.  The renovations should utilize resources and be able to earn the hotel an acceptable rate of return. Also, it should demonstrate ability to adapt to future needs and changes in customers, ownership, regulations and fluctuation rates.

Renovating Ezdan hotel requires a feasibility study to establish the amount to be spent on renovation and finances available for the project.  This will involve the preparation of a market study, development of a concept study and investment appraisal (HNN, 2016).  A market study will analyse the existing supply and demand conditions of Ezdan Hotel.  This includes local, regional and international visitors segments, target market and factors that affect its growth (Xu, 2017).  Then a SWOT analysis will be developed to highlight the strengths, weaknesses, opportunities, and threats facing the hotel with regards to the renovations (OGA, 2013).

After the market study, there will be a concept study.  This will involve an evaluation of the site potential in terms of the mixed use of the hotel’s elements. This will enable asset managers to recommend commercial best use (Goyal, 2017).  Lastly, there will be an investment appraisal which will involve a ten-year profit and loss projection (Drazen Maric, 2016).  This will be based on expected revenues given the market cost, profit ratios, hotel’s occupancy and benchmarking pricing.

All activities in life have impacts on the environment. They include communication, manufacturing, entertainment, and transportation (Kostyukova, 2015).  Within an hour, millions of companies throw release waste into water, air or soil. Fortunately, the concept of ecological sustainability is guiding organizations into activities that support the eco-system and abandoning those that do not (Primlani, 2012).

Types of Renovations

Asset Management provides the triple bottom line approach to sustainability in resources.  It involves balancing the environmental, social and economic aspects of service delivery.  Also, it involves managing resources in a way that derive the best outcome within a long period (Kostyukova, 2015).  This way, asset management provides foundation, framework, enables process and allows rebranding for organizations.


One of the ways to ensure environmental sustainability practices while renovating Ezdan hotel is through implementing sustainable operations and maintenance. This will preserve and extend asset life expectancies (Eichenlaub, 2017).  Ezdan hotel requires the development of predictive life cycle asset management programs. This will promote the reliability of assets at scheduled intervals (AHA, 2013).  For example, heat recovered from laundry machine can be utilised to pre-heat water supplied to the sinks. This will make people who prefer to use the kitchen comfortable while washing (Roedel, 2015).  Similarly, Ezdan Hotel requires energy efficient equipments and lighting refurbishment to effectively match natural lights and artificial lights. Additionally, the hotel needs a centralised system that controls core infrastructure and equipments in the visitors’ rooms.

Research shows that hotels that renovate show growth in performance and quality service delivery. This is because the players in the industry have discovered that failing to renovate leads to decline in profitability, negative reviews and threaten franchise renewal agreements (HNN, 2016). There are also cases when hotel renovations do not result to higher profits.   This is because most hotel managers do not understand that a hotel functions just like the economy; there are times it will be on its peak while there are times it will experience reduction in returns because of rough economic conditions (Kapiki, 2013). The financial value of renovating Ezdan hotel is determined by establishing the age of renovation, the value of what was there before and usage.

 Therefore, renovations/refurbishments will ensure Ezdan hotel’s marketability, profitability, functionality, value, and perception.  Replacing old and stained furniture, fixing sewer problems, using sustainable equipments and improving lighting will market the hotel to external publics. It will improve their interest and induce bookings. An increase in the rate of bookings due to the renovations will increase the value of the hotel in the market (Bachlechner, 2013). Apart from earning higher returns on the investments, renovations will give Ezdan hotel higher profits thus giving it a competitive advantage in the hotel industry.

Renovations/refurbishments affects more than the customers.  It affects staff, management, shareholders, government, and customers.  The hotel customers will be directly affected by the renovations. This is because they may not access the hotel rooms for some time because of the renovations. The management will also be affected by the renovations because they will experience decrease in profitability which will interfere with the supply chain (Haussman, 2016). For some time, they will have to reduce the amount of products in the supply chain since most visitors will not be spending the night.  The government will experience a reduction in income tax since the profitability of the hotel will go down during renovations. Shareholders will experience a decrease in the value of their shares (Marriot, 2016). Some may even decide to sell their shares for fear that the renovations may not result to profitability as projected. However, once the process is complete, there will be an increase in profitability thus benefiting customers, management, and the government.  

Infrastructure Asset Management

To enable efficient renovations at Ezdan hotel and maintenance, there is need to adopt the preventive (scheduled) maintenance approach. It involves periodically taking assets offline, inspecting or repairing them at intervals (Uherek-Bradecka, 2015).  This approach is appropriate for Ezdan hotel because it is easy to set up and execute.  Therefore, the asset manager’s job in this approach is to scrutinize the efficiency of the equipments and schedule to raise overall equipment effectiveness.  

Apart from being easy to set up, this approach will enable the hotel facility to gain returns while being aware of the effectiveness of the infrastructure and forecasting future needs. However, it can be costly because it does not take into account many factors that may affect assets’ productivity.

Conclusion

The purpose of this paper was to provide analysis of asset management based on the renovation needs of Ezdan hotel. The facility has received complaints from customers regarding the pathetic conditions of their rooms and services. The kitchen area in rooms is small, tiles are dirty, there is not enough lighting, the furniture is old and stained while the curtains are equally dirty. This analysis has established that the hotel need minor renovations which involve replacing the affected items. Renovations through asset management will enable the hotel to derive return on investments, improve its marketability, increase profitability and impress customers. Therefore, before hotels can embark on renovations, it is important that they consider the type and needs of the facilities.

References

AHA. (2013). Renovations & Refurbishments. Australian Hotel Associations, pp. 2-5.

Bachlechner, L. D. (2013). To Invest or Not to Invest: Assessing Economic Viability of a Policy and Security. Springer.

Drazen Maric, V. M. (2016). Analysis of Tangible and Intangible Hotel service Quality Components. Industrija, 3-19.

Eichenlaub, M. M. (2017). Digital Asset Management Systems: Open Source or Not Open Source? International Conference on Dublin Core and Metadata Applications, 94-98.

Goyal, S. M. (2017). LOOKING INTO VALUE AND RETURNS FOR A HOTEL INVESTMENT IN THE INDIAN . Journal of Service Research, 55-73.

Haussman, G. (2016, November 3). Five Renovations Tips from a Pro. Retrieved from Hotel Management: https://.www.hotelmanagement.net

HNN. (2016, December 1). The Financial Impacts of Hotel Renovations. Retrieved from Hotel News Now: https://www.hotelnewsnow.com

International, C. (2014, May). Middle East: Hotel Asset Management, Managing the Asset Life Cycle. Colliers International, pp. 4-19.

Kapiki, S. T. (2013, September). Evaluating Economic Viability of the Lodging Industry. Independent vs Chain Hotels. Alexander Technological Educational Institute of Thessaloniki.

Kostyukova, A. (2015, March). Environmental sustainability in hotel business: applying Finnish experience to Russian hotel business. jamkfi, pp. 7-28.

Marriot, S. B. (2016). Considerations For a Hotel Investment. UNLV.

OGA. (2013, February). Good design guide. Government of Western Australia, Department of Finance.

Primlani, K. A. (2012). CURRENT TRENDS AND OPPORTUNITIES IN HOTEL SUSTAINABILITY. HVS.

Roedel, F. R. (2015, April 2). Hotel Expansion: Renovation vs. New Construction. Retrieved from Hotel Executive: https://www.hotelexecutive.com

Uherek-Bradecka, T. B. (2015). Renovation And Modernization Of Hotel Buildings - Case Studies In Silesia. Research Gate, 3-11.

Xu, X. (2017). Evaluating operating and profitability efficiencies of hotel companies. International Journal of Information and Decision Sciences, 315-333.

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