IMPERIAL HOTEL – LONDON
Introduction to Management QAB020C414A 2017-2018
Summative Assessment: Instructions to students
Assessment Case Study – The Imperial Hotel, London
The assessment is based on a business and management case study which requires a team-based 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.
The report will be an individual 2,000 words report which will address one of the six 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 an initial briefing about the case study in week 1 seminar and a full briefing in Week 4..
Students will be expected to apply management theory to practice 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
Staff
- 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: there was a very high turnover of staff in all the departments running around 80% a year mainly due to poor staff morale; the hotel was graded the lowest in the whole Star chain in terms of overall guest satisfaction running at a rate of 65% in the company’s benchmark grading system; the overall sales in the hotel are improving, and 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 was relatively low compared to the local competition. This 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 six problems for the hotel for the coming year. He identifies the problems as follows and Peter has put forward some initial suggestions for resolving each of the problems:
- 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: Ineffective leadership and management by previous Heads of Department and supervisory staff including poor monitoring and control procedures
- Problem 5: 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 6: 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
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 65% in the company’s benchmark grading system. The company average is 74%. 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.
Initial suggestions by Peter Farnsworth to manage the problem:
- Analyse the problem from the customer’s perspective
- Make staff aware of the customer expectations
- Train staff to respond to customer complaints
- Feedback to complaining customers how the problems are being dealt with
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.
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 an 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.
Initial suggestions by Peter Farnsworth to manage the problem:
- Attract and retain staff to key supervisory positions
- Offer pay packages and bonuses that encourage staying with the company through a robust reward strategy
- Benchmark pay scales against the competitor hotels
- Offer regular training and performance appraisals and encourage the promotion of talented staff
- Manage the staff more effectively and supportively through ‘hard and soft’ HR practices
Problem 3: A negative work culture amongst the staff with high levels of sick leave and poor attendance
The organisational culture of working within Star Hotels is performance driven. The General Manager, and the Heads of Departments are under continuous pressure to increase sales month-by-month by increasing the occupancy of the hotel as well as pushing up the average room rate. The hotel is assessed on a monthly basis and managers’ bonus schemes are directly linked to the financial performance of increasing sales and reducing and controlling costs. The espoused values of Star Hotels is about excellence in customer service and hence performance is also linked to the results of the Guest Satisfaction Surveys (GSS). The London hotels consistently perform worse than the other hotels in the Star Group and this is linked to guests’ perceptions that London hotels are overly expensive and offer poor value for money. The managers and Heads of Department often complain that that the guest surveys put them at a disadvantage because comparing experiences and views of guests staying in a London hotel is completely different to say a leisure-based hotel in Scotland whereby guests are more relaxed.
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.
Initial suggestions by Peter Farnsworth to manage the problem:
- Improve the standard and levels of supervision within all departments
- Improve a culture of collaboration and respect amongst colleagues
- Get staff regularly involved in planning and problem-solving operational challenges
- Reward good customer service and good attendance
- Better training of staff of company-wide standards and values
Problem 4: Ineffective leadership and management by previous Heads of Department and supervisory staff including poor monitoring and control procedures
The poor leadership and management by the previous General Manager has left the hotel in a precarious position. The high levels of staff turnover, the disappointing sales performance and the poor results on the Guest Satisfaction Surveys has identified a number of issues about the quality of leadership and management within the hotel in all departments.
The Heads of Departments (HODs), whose bonuses are linked to their own department’s performance are often hostile in in terms of defending their own department’s position in HOD meetings. Several of the HODs have been in their post at the hotel for over 10 years and many have left the hotel as a result of the previous General Manager retiring. In reviewing the monitoring and control procedures through the hotel, Pater Farnsworth has identified many instances of supervisors and managers failing to monitor the standard of work undertaken daily in housekeeping, in the kitchens and the hotel’s reception. There are weak reporting practices and when considering the specific complaints by guests there seems to be a disconnect between what is reported and what happens in reality.
Peter Farnsworth now sees the gap in good management as an opportunity to attract talented managers and leaders to help turn round the performance of the hotel. He sees that the past management is somewhat impoverished and tended to be purely task oriented. He sees the importance of departments working as teams but also there is a need for strong leadership and collaboration between departments. Many of the complaints from guests are as a result of poor communication between key functions and there has been a distinct lack of leadership and supportive management.
Initial suggestion by Peter Farnsworth to manage the problem:
- Lead by example
- Review monitoring procedures and IT support
- Incentivise supportive management
- Devise cross-department collaboration
Problem 5: 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
The front of house staff, particularly in the Reception have a pivotal customer-facing role in offering service and support to guests. The Reception needs to be open 24 hours a day and is the first point-of-call for guests as well key staff in all Departments to have up-to-date information and data on guest arrivals and departures, specific guest needs and guest billing data. The Reception staff at the Imperial Hotel work three, 8 hour shifts working in teams. Each team has a supervisor and they have a particularly challenging function of managing Reception teams as well as in passing on important guest information and data on to the next shift. The hotel uses a Micros Fidelio reservation and Property Management System (PMS) which provides up-to-date information on real-time and prospective guests and their reservations. The other departments including the kitchen, restaurants and conferencing are dependent on Reception for guest numbers and data.
Some of the key Reception staff have been in conflict with the other Departments after numerous complaints about wrong and inaccurate information being provided. Housekeeping have been given wrong or out-of-date data on room availability, and whether a guest is staying on in the hotel. Reception have also failed to inform Housekeeping about early and late arrivals and subsequently rooms have not been cleaned in time with guests having to wait for long periods to get their room keys. The conference and banqueting staff have complained that they have not been provided with proper data on numbers of guests coming in for meetings and conferences. This, combined with complaints from guests that Reception staff are often abrupt or even rude in dealing with even the most basic request has caused a lot of animosity within the Reception staff and other staff throughout the hotel. The Reception Department has become somewhat dysfunctional and there are examples of Reception shift teams arguing with in the incoming teams about not providing proper handover information.
A new Head of Department of Front Office and Reception, working closing with the General Manager, is aware of the conflict issues within the department as well as with the other departments within the hotel and intends to undertake a stand to manage the conflict quickly and efficiently. The Reception teams’ dynamics are not good, and there is a blame culture with staff not working constructively and there is a clash of some strong personalities within the Department. He is going to review: the way the teams are structured; the individual performance of staff in terms of performance and productivity; the rewards and benefit being offered for good performance; and training and development needs. He also intends to develop and co-ordinate a team-based approach to managing the staff. The poor data issues can be dealt with through improved use of the IT systems (PMS) although the animosity within and between working teams will be more difficult to resolve
Initial suggestions by Peter Farnsworth to resolve the problem:
- Training into IT systems
- Cross-team building exercises
- Review of team bonus schemes
Problem 6: 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
Staffing the Housekeeping Department at the Imperial hotel is always a challenge. There are up to 400-500 rooms to service a day, and this overseen by the Executive Housekeeper and 12 supervisory and administration staff. In the past year, it has proved very difficult to recruit room attendants, and those who are employed only tend to stay for no longer than 6 months. The staff turnover in the department is currently 60% a year. The hotel therefore resorted, two years ago to using a recruitment agency, ABC (International) to fill 30 of the 50 room attendants jobs in the departments. The 20 in-house staff are a hardcore of long-term employees who have worked for the company for many years.
ABC (International) is a recruitment company run by Charles Santos who has considerable experience in the hotel industry in England and Spain. Each candidate is interviewed and assessed on their English before they are included on the database. All candidates produce three references which are checked by ABC prior to their departure from Spain. They must have considerable practical experience of working in a hotel housekeeping department before taking up a post. If the hotel cannot provide staff accommodation then ABC will organise it for them.
The quality of the Spanish staffs’ work is good overall, and the cost of employing the staff through the agency is only marginally more expensive that employing home staff. The Spanish staff tend to stay with the hotel for up to a year. The Spanish staff prefer to work together in their shifts with other Spanish staff, and are supervised and provided on-the-job training as to the brand standards for the hotel by the in-house Assistant Head Housekeeper, herself a fluent Spanish speaker.
There has been considerable discontent from the in-house room attendant claiming that the Spanish staff are un-cooperative when asked to work with non-Spanish staff. The Spanish staff are used to working in teams in their shifts, working together in pairs who are allocated 20 room a day to service. The standard of the in-house staffs’ working has been dropping. The hotel uses the Texlon system, which is a hand-held tracker system whereby a supervisor will undertake a sample check of the room standards and rank and score the standards of a serviced room. The results are subsequently plugged into the hotel computer and each member of staff is given a ranking out of 100. The Spanish staff (75%+ scores) consistently score higher than the in-house staff (60%-65%), which again has caused considerable resentment. The attendance of the in-house staff, all employed on full-time contracts, is getting progressively worse which has put pressure on the housekeeping budget.
There have recently been a number of complaints from hotel guests, who have not been happy with the general level of cleanliness in the hotel bedroom and in particular the bathroom. There have also been a number of complaints about housekeeping room attendants being abrupt and sometimes rude. When these cases have been investigated, it is becoming clear that full-time staff have poor motivation levels.
Initial suggestion by Peter Farnsworth to manage the problem:
- Consider using other contacted staff through specialist agencies
- Employ students on zero hour contracts only
- Offer a range of incentive and bonus schemes to encourage staff to perform to a higher standard
Tasks
As an independent consultant, you have been asked by Peter Farnsworth to take responsibility for analysing the problem, commenting on Peter Farnsworth’s initial suggestions and putting forward a joint set of resolutions for the listed problems. You are therefore to put forward and prioritise proposals for the resolution of the problem. The expectation is that within 12 months there should be dramatic improvement and change in performance in all six areas. You have asked to write a 2,000 word report addressing your single problem topic to attempt to resolve that problem in the hotel.
Each person in your group will be investigating a different problem.
Staff Incentive Schemes
There are currently a number of incentive schemes to encourage staff to meet excellent standards of work, and to improve productivity. These include: Employee of the Month (for the whole hotel – £200) and employee of the month for each department (£50); staff (including agency staff) consistently meeting individual and performance targets in three consecutive months within the department (£200 vouchers towards staying in any one of Star Hotels); department, end-of-year parties (funded by the hotel); college fees being paid (NVQ levels 2-4).
End of case
