Management and Problem Solving at The Imperial Hotel, London

Knowledge outcome – On completion of this module you will be able to demonstrate an understanding of the processes, procedures and practices for effective management in organisations.

Intellectual /transferrable skill outcome – Students who successfully complete this module will be developing their competence in using a range of basic analytical and managerial techniques and processes including objective setting, monitoring and evaluation as well as interpersonal skills of successful managers.

The assessment is based on a business and management case study which requires a critical approach to identifying and problem-solving a range of business and management challenges within the case. Throughout the term you will undertake research and analysis which will inform your individual report. Within the individual report you will include a summary and key justifications for the resolution of one of the problems in the case supported by management theories and principles.

The report will be an individual 2,000 words report which will address one of the five specific ‘problems’ identified in the case (e.g. a human resource management challenge, an ethical problem, a performance and productivity issue, etc). You will receive a full briefing in Week 4.

Students will be expected to apply management theory, some of this theory to be identifiable from Moodle resources, lectures and seminars, supported with wider research and reading throughout the report.

Case Study – The Imperial Hotel, London

The Imperial Hotel is a London 500 bedroom hotel, which is owned and managed part of a well-known international branded chain of hotels in the 4 star market – Star Hotels which operates 25 hotels in the UK. The Imperial Hotel, located in the heart of London’s West End, caters for mainly international business and tourists guests who have high expectation in terms of service standards.

The facilities at the hotel include the following:

·500 bedrooms, all with en-suite facilities.

·Conference facilities for  1,000 people

·Leisure centre with swimming pool

·3 Bars and 4 restaurants

·12 conference rooms

·6 Heads of Departments: Food and Beverage; Housekeeping; Guest Services & Concierge; Front of House & Reception; and Human Resources & training.

·450 staff in total (300 full-time and part-time)

·Outside contractors (for specialist cleaning; laundry services; management of the leisure centre;)

A new General Manager, Peter Farnsworth, has recently taken over the management of the whole hotel. He is an experienced manager having worked in several of the other Star city centre hotels outside London.  The previous General Manager, who had just retired, had been experiencing a range of problems in managing the hotel, namely that:

Intellectual / Transferrable Skill Outcome

·There is a very high turnover of staff in all the departments running around 80% a year mainly due to poor staff morale;  

·The hotel is graded the lowest in the whole Star chain in terms of overall guest satisfaction running at a rate of 60% in the company’s benchmark grading system; the overall sales in the hotel are improving,

·Although the hotel occupancy (the ratio of rooms sold against the total number of rooms available) was running at 90% for the year, the actual average room rate (ARR) achieved, currently running at £95 per room per night is relatively low compared to the local competition.

·The poor performance is having a direct negative effect on the costs of the hotel and the hotel’s overall profitability.

The Imperial is an old hotel having been in operation for nearly 100 years. The hotel was last fully refurbished some 8 years ago but is now in need of some restoration and redecoration. There is a programme of staged refurbishment in place which means each floor of the hotel is being closed for building work to be undertaken. The consequence of this is that, at any one time for the next two years, 60 rooms will be out of action. This is putting the hotel under budgetary pressure due to the ongoing building costs as well as the loss of income from the 60 rooms out of action at any one time.

Planned Strategy for Resolving the Problems in the Hotel

Peter Farnsworth is under no illusion as to the challenges ahead and has decided to plan a strategy for resolving the operational, management and business-related problems in the hotel. The first part of the plan is to identify the top five problems for the hotel for the coming year. He identifies the problems as follows:  

·Problem 1: Poor guest satisfaction

·Problem 2: High staff turnover with 80% of the staff leaving within the year

·Problem 3: A negative work culture amongst the staff with high levels of sick leave and poor attendance

·Problem 4: Front of house staff (Reception, Conference & Banqueting, and Restaurant & Bars )– poor team working and inefficient use of IT systems including the reservation and property management systems

·Problem 5: Back of house staff (Housekeeping, Kitchen, Maintenance) – poor operating and control procedures in place with stock being regularly pilfered and evidence of staff not meeting basic Standard Operating Procedures (SOPS) resulting in unusually high operating costs

Assessment Criteria

The Problems in Detail

Problem 1: Poor guest satisfaction

The hotel was graded the lowest in the whole Star chain in terms of overall customer satisfaction running at a rate of 60% in the company’s benchmark grading system. The company average is 78%. In every hotel in the chain the company undertakes a monthly Guest Satisfaction Survey (GSS) with regular guests and this includes a summary of guest cards completed by guests in their hotel rooms, as well as more formal online monthly survey with major business clients. The survey asks clients to grade all the facilities in the hotel (see Appendix 1 for the most recent monthly survey results for the Imperial Hotel).

The most regular complaints received are in relation to issues about checking in and checking out of the hotel, the quality of the rooms themselves and the poor quality of staff. There have been a number of complaints about the reception staff being indifferent and sometimes rude to guests. Other guests have been critical of having to wait in queues at reception both for checking into the hotel as well as checking out. A considerable number of guests have complained of repeatedly being charged incorrectly in their final bill. Most worrying is the fact that some guests are also complaining that there has been little or no timely response to their complaints.

In terms of the accommodation in the hotel a growing number of guest are being critical of the quality of the hotel rooms and in particular the cleanliness of the bathrooms, with numerous  requests for room changes due to showers not working properly, noisy air conditioning, and technology not working in the rooms.

Problem 2: High staff turnover with 80% of the staff leaving within the year

Staff turnover in the hotel sector is generally high due to the temporary nature of employment of, for example: students; foreign nationals from the European Union wanting to work for short periods in London; and generally low pay (on average just at the living wage rate). The turnover of staff is particularly high in the Imperial hotel for front-line staff.

The exit interviews with leaving staff have identified a number of issues around: poor perception of the work culture within the hotel with sometimes aggressive supervisory and management styles in evidence: the unsociable working hours; a lack of proper and regular training; poor pay levels compared to working for example food retailing;  little opportunity for promotion or bonuses; the high cost of travelling to work in central London and difficulties in getting transport home at night; A number of young and talented supervisory staff have also left the hotel to work at competitor hotel companies who offer better pay, working conditions and benefits.

Case Study - The Imperial Hotel, London

The high level of staff turnover puts direct pressure on the staffing budget with staff costs currently running at around 35% of sales for the hotel which is a particularly high for this type of hotel. The need to continuously employ new staff has considerably increased induction training costs as well as had a negative impact of the overall quality of the service to guests, particularly the regular guests who are now reducing in number and appear to be using other hotels.  

There appears to be a cycle emerging which may be linked to the high level of staff turnover which subsequently affecting the whole organisation. In terms of individual members of staff there appears to be decreased job satisfaction and a lack of commitment to the hotel with an intent to leave. This shows itself in attendance problems, decreased work performance, and sometimes stress. As a consequence there is an increased pressure on colleagues to pick up the slack which contributes to routine system problems and a ‘culture of turnover’. This operational staff as well as management as well as this often results in a decreased pool of promotable staff and managers. The result of this for the hotel is that there are managerial succession problems. Other consequences include operational bureaucracy.

Problem 3: A negative work culture amongst the staff with high levels of sick leave and poor attendance

The work culture in the hotel under the previous General Manager was somewhat toxic. The hotel, being a busy London 24 hour and 365 day a year operation, means that there are often long working hours, particularly for those staff covering for staff who may have gone off sick at short notice. Many of the part-time staff are female and have family commitments, and in many cases have other part-time jobs to fit round those family commitments. This has often resulted in these staff turning up late for their work shifts, and there have been many occasions whereby staff ask their colleagues to cover for them for short periods without informing their supervisors. The levels of supervision of staff has been minimal because of the high turnover of supervisory staff.  

In the recent past the style of management could be described as authoritarian and often dictatorial with very little consultation with lower levels of staff in terms of ways of improving performance and minimal feedback in terms of how to improve on working practices or meet the guests’ needs.