Good Hotel: Doing Good, Doing Well?

Good Hotel was taken over by a San Francisco based Hotel Management Company owned by Joie de Vivre in 2008 and was rebranded, modeled after the triple bottom line framework that focuses on Social, Environmental and Financial. A concept that is adopted, in evaluating performance from a broader perspective to create greater business value. Good Hotel became known “as the first to be branded as a “hotel with a conscience” – encompassing a positive attitude, environmental sensitivity and philanthropy” (Pierce and Robinson, 2013).

 

The Vision and Mission behind the Good Hotel concept

The mission and vision statements behind the Good Hotel concept are as follows: –

Mission

Good Hotel as a hotel is focused on enriching the quality of life for its host communities, with a positive approach that inspires the “good in us all” ideology being the most eco-friendly hotel.

Part of its mission statement states – “As we practice philanthropy and believe in doing good for the planet, we are committed to operating in an economically, socially and environmentally responsible manner while balancing the interest of diverse stakeholders, promoting sustainable lifestyle and differentiating our guests personal experience”.

Good Hotel endeavors to make a difference in the lives of its guests and associates through a shared passion for life, work and personalized experiences

Vision

Good Hotel, being customer focused, endeavor to be a leader in hospitality industry that intends to exceed customer’s expectation, have passionate employees and owners while striving to be a responsible steward of the environment and sustainable development of society.

 

Reflect on the pros and cons of the alternatives Pam Janusz is considering for her recommendation to the new ownership of Good Hotel.

“During 2007-2009 economic downturns, occupancy levels dropped because of declines in the demand for lodging accommodation. As a result, it led to declining in both revenue and profits, and dramatically led to decreasing in net income. Hotel management team were able to reduce operating expenses in response to declining levels of occupancy and revenue” (Pierce and Robinson, 2013).

Pam Janusz ran a SWOT analysis on the business and was considering recommending to the new Good Hotel management between continuation and expansion of the business or suspending the current business model that Good Hotel is currently using for its management style. Continuing the concept would mean not to introduce new variables in the hotel’s operations, as the staff are trained and happier, the guests were giving positive reviews more often, and the financial gains have surpassed the goals.

According to the considerations to continue, Good Hotel had good customer service. · High customer satisfaction and loyalty. · Unique hotel design to attract customer · Caters to a wide variety of customer’s needs and wants. · High employee commitment and satisfaction. · Employees are well trained and aware of the hotel’s safety and green program · Strong Online customer review

Another argument to continue with the business model is, San Francisco tourism were mostly influenced by Caucasian. “As of 75 % of Caucasian, 62% were green consumers. Responding to green consumers, Good Hotel can get consumers to think of the products as their needs and wants” (Pierce and Robinson, 2013). Also, the consumers can feel that by staying in such eco-friendly hotel like Good Hotel, they are doing their part to make life more sustainable. Also, Good Hotel can focus on Caucasian as targeted customers.

However, there were cons in continuing the business model. “During the period 2008 – 2010, the industry experienced the longest downturn which was expected to drop occupancy level about 55%―the worst since the Great Depression” (Pierce and Robinson, 2013). Continuing the business model would mean Good Hotel will be susceptible to a high level of uncertainty in the ever-changing business atmosphere, and this could change and hurt the business. In addition, Good Hotel was considered as not aggressive enough in marketing, rely heavily on internet booking, with a potential for staff turnover after the change in management. The new management could also disband current concept and identity of Good Hotel entirely.

 

The impact of ‘sustainability’ on businesses in general and the U.S. lodging industry in particular. Is it high, medium, or low? Analyze and explain the reasons.

As of October 2009, the U.S. lodging suffered from chronic overcapacity with about 4.8 million rooms―approximately one room per 64 U.S. residents. This has since been improved on.

First, the threat for a potential new entrant is considered weak in this lodging industries. If there are new entrants to the lodging industries, there are some hurdles that they must overcome. “The barriers to new entrant are due to the high capital investments that are required to start and operate a hotel. They also need many efforts to differentiate themselves from those who are already existing, recognized by customers and accomplish customers” (Pierce and Robinson, 2013). Due to these factors, the threat of new entrants is weak for the lodging industry.

Hotel business has the advantage of controlling suppliers in their hands. As business is being hospitality and tourism industry, there are many suppliers that are able to supply hotels with the essentials needed to operate the business. For example, hotel face low switching if they want to change the suppliers such as the suppliers of hotel’s furniture and fixtures, and the suppliers of food and beverages.

Furthermore, In lodging and hotel industry, buyers have a strong bargaining power. First, the cost of switching to a competing hotel is low. In addition, the buyers’ power is strong because the buyers demand for using hotel rooms have decreased while there are greater number of rooms are offered. Another thing that makes the buyers’ power strong is that hotels rely on unpredictable travelers.

On the flip, the threat of substitutes in the lodging industry seem to be strong. This is because there are always good substitutes that are available to be used by consumers. “For instance, there are always the availability of cheaper priced lodging places. If substitutes offer consumer comparable features that they would receive at hotel, consumers are more likely to change. Also, the switching costs to use the substitutes are very low for buyers” (Pierce and Robinson, 2013).

In addition, continuing the business model without a variation of change also meant that in the lodging industry, hotels are open to rivalry among competitors. This force seems to be strong because the customers’ switching cost is low. They can change their mind to stay at a different hotel at any time. “Due to economic downturn, hotels began to notice a declining RevPAR rate. The RevPAR rate offers a convenient way for a company to see how well the fill its rooms as well as how much they are able to charge for using them” (Pierce and Robinson, 2013).

Based on analysis using SWOT on the lodging industry, I believe the impact on sustainability of businesses in the lodging industry is medium and very sustainable.

 

If you were the new the new owner, would your team discontinue, continue or expand the Good Hotel concept? Why?

If I were the new owner, I would recommend that Good Hotel should continue and expand by maintaining and further developing the hotel concept, and also adhere to the strategic formula recommendation. The strategic formula include

  • Create different activities and services to please the customers and make them feel that it is worth choosing Good Hotel.
  • Good Hotel should focus on developing their green programs and their energy-saving activities in order to reach LEED certification
  • Create a membership system that allows customers to accumulate points in exchange for special gifts, services, or a discount.
  • Use effective marketing as a tool to alternate solution to increase occupancy rate within a targeted budgeting.
  • Advance and update the hotel’s website to attract more customers because most customers plan their trip using internet.
  • Employ other low-cost method of marketing

 

Adebola Oyinloye

California Miramar University

References

Strategic Management: Planning for Domestic & Global Competition. 13th ed.

by John Pearce & Richard Robinson. McGraw-Hill Irwin. 2013

ISBN:  978-0078029295

Paige Baltzan M: Information Systems. 3rd ed. McGraw-Hill 2015

ISBN:  978-0073376912

Schroeder, R. G., & Goldstein, S. M. (2018). Operations management in the supply chain: Decisions and cases. New York: McGraw-Hill Education.

Operational strategy and business strategy. (n.d.). Retrieved from

http://www.simply-strategic-planning.com/operational-strategy.html

 

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