In September 1989, Mister. Oscar Mendoza, owner of Triumph Travels read inside the newspapers an advertisement for the rental of Lodge Continental’s establishments. During the last 6 months, Oscar Mendoza has been seriously thinking about working a hotel to complement his travel agency organization. Oscar Mendoza had been suffering from difficulties in getting hotel places to stay for his tour organizations since this past year during the top travel several weeks of Dec, January, September and September.
Hotel Ls is a 28 room resort located in Diliman, Quezon City along Put on Mariano Marcos Avenue.
They have three function rooms that can seat a dozen to forty persons, a coffee shop, an easy food cafe, a formal dining room and a swimming pool. During the last two years, the hotel received losses of approximately P2 to three million pesos which led management for the decision of leasing away its features (See Demonstrate A).
The room capacity in the hotel is just right for Sucess Tours’ requirements during the optimum months.
“My travel around business can provide annual capacity utilization of the hotel up to 40% simply, Oscar Mendoza informed his Promoting Manager, Ernesto de los Santos. “How can we fill up the 60%? Ahead of Cory started to be President, My spouse and i read inside the daily newspaper publishers that most of such five-star accommodations in Community Manila had been underutilized? What led to this case? Could you accumulate some data that will help myself in choosing whether or not I will bid for Hotel Ls? The data could also help me in figuring the appropriate bid selling price.
Ernesto de los Santos immediately known as his staff after the meeting with Oscar Mendoza. He told his personnel to gather raw data associated with the resort industry. “Just give me the information. It’s under your control how you will divide the work. I will take care of composing the survey for the boss, he informed his staff.
Several days and nights later, Oscar Mendoza found on his workplace a packet of information with each other submitted simply by two of the five staff members of the advertising department (See Exhibit B). Ernesto de los Santos instantly read the data to see if he could prepare a preliminary record for Oscar Mendoza.
Q
I.
a. ) Central Trouble
¢ Will need to Mr. Oscar Mendoza, owner of Success Tours, put money for Motel Continental to check his travel company business? In the event he would bet for Resort Continental, how could his travel around business fill up the remaining 60 per cent of the hotel’s annual capability which is underutilized?
Statement from the Problem:
Oscar Mendoza’s difficulty in receiving hotel accommodations during peak travel a few months
b. ) Minor challenges
¢ What would be the suitable bidding cost?
¢ What factors caused the incurred failures of Hotel Continental and how Triumph Trips can solve the unprofitable event?
2. Objective
¢ To identify the factors that affect the utilization of hotel establishments. Cite attainable ways how Triumph Travels will be able to fill the remaining 60% of Lodge Continental’s underutilized facilities.
¢ To consider the advantages and disadvantages of each substitute. In this examine, both of the cited strategies will be talked about.
¢ To come up with the best solution.
III. Substitute Courses of Actions
1 . Bet for Resort Continental
1 ) Advantages
my spouse and i. It will solve Mr. Mendoza’s problem in receiving hotel places to stay for his tour teams during optimum months. Since getting resort accomodations might cause him time and effort and bidding process for Hotel Continental helps you to save him very much.
ii. It offers better services for his tour organizations. Of the fact that Hotel continental may accommodate every his groups and still features about 60% facilities still left for utilization.
iii. It allows the agency to allow for more clients, 40% pertaining to the tour groups and 60% to get other customers.
iv. It appeals to more consumers `(e. g. travel package)
v. It can save time instead of trying to find other hotels which might land in failure and Hotel Continental already getting leased simply by other companies, chances only come once.
mire. Its place capacity is merely right for his tour teams, booming profits for the travel agency business by fulfilling the demands of the travel groups.
installment payments on your Disadvantages
we. Hotel Continental has sustained losses to get last two progressive, gradual years. Triumph tours can be challenged of this event and really should come up with the best strategy means maximize profits and avoid, in the event that not possible, minimize the amount of failures and in period arrive to a net income by constant restoration and impressive plans.
ii. Only forty percent of hotel facilities will probably be utilized by the travel agency annually, this requires these people huge efforts to be efficient inside their resources but not end up in underutilized utilities.
3. The location of the hotel is not strategic. There are many rivals at present and also, at foreseeable future.
iv. Even more capital should be used. Capital is a vital element of all businesses if one strives to amass profits and remain in competition.
v. Simply during travel peak months will Mr. Mendoza encounters lodge accommodation problems.
vi. 5-star hotels have got history of underutilization before Cory Aquino’s term.
In the event that Triumph Trips will put money for Resort Continental, alternativesare:
¢ Modernize the hotel’s facilities
Benefit: Modernizing features and enhancing services will exert a pull on more vacationers, increasing hotel occupancy rates, thereby rising hotel potential utilization. And also, the fact of your stiff competition among hotels, the action will lead to a more competitive Hotel Continental with which buyers can choose from.
Disadvantage: Modernization of facilities might necessitate considerable amounts of costs and require employee selecting.
¢ Offer more solutions
Advantage: Providing more services such as gyms, beauty salons, fitness centers, boutiques, several restaurants and conference establishments would make the most of the hotel’s capacity to appeal to more areas of services, thus maximizing earnings.
Disadvantage: Offering more companies would need large amounts of costs, employees. Also, many who venture into expansions fail for maximizing income.
¢ Locate lesser cost alternative techniques for operating business activities
Advantage: Based on the income statement of Motel Continental, a big portion of the losses was due to the vast amounts of15506 operating expenditures. If these operations will be done using lesser costs, there would be an important increase in the income of the hotel.
Drawback: Searching for smaller cost alternate ways in operating the organization will take a lot of time and solutions. Also, not all alternative methods are as effective as what the business used before.
¢ Advertise the resort together with the travelling agency’s provides
Advantage: Advertising and marketing not only allows people learn about the services made by the hotel, it also produces the demand to enable them to avail of usana products and companies.
Disadvantage: Advertising and marketing through a wide range of forms of mass media requires a lot of costs.
¢ Expand the hotel right into a hotel-resort organization
Advantage: The conversion from the hotel into a hotel and resort organization would not just attract those professional clients, it would as well attract equally tourists and locals. Seeing that a lot of people enjoy relaxing vacations, catering for their demands boosts the hotel’s capacity.
Drawback: The conversion of the resort into a hotel and vacation resort requires a lots of costs but not all endeavors into the holiday resort industry be successful.
2 . Put money for different hotels
1 . Advantages
i actually. There is a possibility of a much less bid value. There may be accommodations in around bankruptcy or have suffered even more losses than Hotel Ls and is procurment their features at a far lower price.
ii. There is a likelihood that other hotels never have incurred losses. It is not particular but one may find different hotels which have been in lease contract advertisement but have not suffered losses.
iii. It will resolve Mr. Mendoza’s problem in obtaining hotel accommodations for his tour organizations during peak months.
iv. It provides better service to get his travel groups
v. It permits the organization to accommodate more customers.
ni. It attracts more buyers (e. g. travel package)
vii. There is a possibility that the other accommodations are in a strategic area
2 . Drawbacks
i. That consumes additional time to gather info and to seek out hotels in lease, questions may come and either meet their business or dissatisfy them.
2. Room capability may be too much or also less. Too much may also need additional plans in order to fill the remaining underutilized facilities and too much less might result to unsatisfying companies and decrease revenues.
iii. There is a possibility of a higher bid price, especially for hotels that contain not been subject to losses or perhaps other complications.
iv. There is also a possibility that no different hotels are for lease.
3. Construct own motel
1 . Positive aspects
i. Mr. Mendoza can properly talk about the requirements of his tour teams. They can identify their development according to the predicted needs of their travel agency business and be efficient of their assets (e. g. enough room ability with 100% utilization of the hotel facilities).
ii. He can choose a even more strategic position for his hotel. Theyhave the choice to perform whatever they may in order to mold a building that will suit their needs best.
iii. Full authority within the hotel intended for hey are the owner.
installment payments on your Disadvantages
i actually. Mr. Mendoza needs most importantly a huge amount of cash. Constructing a new building will not be easy task, beginning from the getting land for a strategic area, blueprint and design, structure workers, spending budget, and so on.
ii. Construction does take time, undergoes many processes. It is not necessarily a plan which is often immediately completed, it requires a few months, years to end.
iii. He bears each of the risks. Unexpected calamities, spending budget shortage, and a few ignored small problems at the beginning that may be a large hindrance for the finishing in the construction and might affect the ventures of Sucess Tours.
iv. The organization (travel firm and hotel) will be taking on more bills
4. Continue agency functions without the hotel
1 . Advantages
i. Mr. Mendoza may focus advancements in his travel company. Less distractions can lead to more concentration on the transactions of Triumph Excursions.
ii. You will discover only some travel top months in a given time.
2 . Down sides
i. Mister. Mendoza continue to be experience difficulties in getting motel accommodations during travel peak weeks.
ii. It causes trouble to his travel groups. To clients of the travel company, they may find another travel agency which they think will serve them better because there are many competitors also of Sucess Tours.
IV. Recommendation
We all recommend that Mister. Oscar Mendoza of the Sucess Tours wager for Resort Continental and he must grow the hotel into a hotel and resort business. Likewise, upon the conversion, he or she must modernize the facilities with the hotel and he must available newer companies in the hotel.
V. Bottom line
Based on the income declaration of Motel Continental via 1987- 1988, a large part of the working expenses was due to the House Operations, Protection and Energy Cost. Because of the outdated facilities of the motel, a lot of repairs and maintenance were done which eventually resulted in a strain inside the hotel’s solutions. Modernizing the hotel’s establishments will definitely reduce operating bills. Also, giving newer and even more varied companies to the clientele would raise the utilization of the hotel’s facilities.
Lastly, the conversion from the hotel right into a hotel and resort could attract more tourists and locals, therefore maximizing the capability of the resort. Also, the conversion would establish a secure income to get the business as it would not only boom in profits during peak seasons of Holiday and summer, it would present facilities to get professional conferences as well as spas, restaurants, fitness centers among others which are not in season in character.
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