Week 1 Hospitality Extraordinaire Case Study Grading Guide BIS/303 Version 4 Managing Information Technology in the Hospitality Industry Copyright Copyright © 2016 by University of Phoenix. All rights reserved. University of Phoenix® is a registered trademark of Apollo Group, Inc. in the United States and/or other countries. Hospitality Extraordinaire Case Study Grading Guide BIS/303 Version 4 Microsoft®, Windows®, and Windows NT® are registered trademarks of Microsoft Corporation in the United States and/or other countries. All other company and product names are trademarks or registered trademarks of their respective companies. Use of these marks is not intended to imply endorsement, sponsorship, or affiliation. Edited in accordance with University of Phoenix® editorial standards and practices. 2 Hospitality Extraordinaire Case Study Grading Guide BIS/303 Version 4 Individual Assignment: Hospitality Extraordinaire Case Study Purpose of Assignment This assignment will allow students to apply the principles learned this week to a case study. The students will apply basic knowledge of IT and the ability to evaluate quality systems. Resources Required Hospitality Extraordinaire Case Study in Technology Strategies for the Hospitality Industry, Ch. 2 Grading Guide Content Met Partially Met Not Met Total Available Total Earned 7 #/7 The student defines Hospitality Extraordinaire’s strategy and how IT factors into this strategy to support or enable it. The student identifies the core technologies used by Hospitality Extraordinaire, including discussing the value each contributes and any competitive advantage derived. The student discusses traits that they would find most admirable in Hospitality and what they would do to complete. The student identifies challenges and makes recommendations for new technology initiatives or directions within Hospitality Extraordinaire. The student discusses the key teaching points in the case and how they will apply to their professional career. The student explains what tools they would use to leverage the power of information in Hospitality Extraordinaire. The student explains which IT tool or strategy they think has made the biggest impact on the company’s success. The paper is 1,050 to 1,400 words in length. Comments: 3 Hospitality Extraordinaire Case Study Grading Guide BIS/303 Version 4 Writing Guidelines Met Partially Met Not Met Total Available Total Earned 3 #/3 10 #/10 The paper—including tables and graphs, headings, title page, and reference page—is consistent with APA formatting guidelines and meets course-level requirements. Intellectual property is recognized with in-text citations and a reference page. Paragraph and sentence transitions are present, logical, and maintain the flow throughout the paper. Sentences are complete, clear, and concise. Rules of grammar and usage are followed including spelling and punctuation. Assignment Total Additional comments: # Comments: 4 7. Case Study and Learning Activity Case Study IT, when used effectively, can truly transform an organization and extend the organization’s reach and capabilities. What follows is an example of how one company is using IT to leverage its resources and create unparalleled advantages across the company. Its continuous investment in IT and innovativeness are providing sources of sustainable competitive advantage. The case is based on an actual company, but some of the names and facts have been changed to protect the identity of the company. Today’s marketplace is filled with tumult, new development, increased market segmentation, and merger mania. In other words, the environment is hypercompetitive, and in such an atmosphere, companies must continually refine their strategies and develop new competitive methods in order to survive. With more sophisticated and demanding consumers, investors seeking better ROIs, and a transient work force, companies cannot rely on their traditional methods or rest on their laurels because there are no sustainable advantages and because the competition is becoming increasingly more formidable. The only constant in such an environment is change. Therefore, companies must continuously seek new methods and IT to compete and stay ahead of the competition. They must break the rules and create new ones. One such company leading this wave of innovation is the Paris-based Hospitality Extraordinaire International. Hospitality Extraordinaire is highly revered in the hospitality industry. Often a pioneer, its operating philosophy is simple: to be the best. The company is constantly seeking new ways to apply IT to streamline its operations, increase revenue, attract and retain guests, and create competitive advantage. With over 1,200 properties and 165,000 rooms spread across major international cities in fortyfive-plus countries, Hospitality Extraordinaire has a property to meet almost any guest’s needs. As a global industry leader, it is exemplar in its ability to provide consistent service and maintain high service standards across its entire portfolio of products, which runs the gamut from select service to luxury hotels, not to mention time shares and short-term apartment rentals. At the heart of the company’s success are its employees (including a corporate IT support team of over seven hundred people), a seasoned management team, a great set of products, a tight franchise network, a sophisticated portfolio of IT applications, and a very capable technology infrastructure. Each of these items and those listed in Figure 2-5 are, in and of themselves, impressive, but when combined, they create many competitive advantages, both explicit and tacit, for Hospitality Extraordinaire that are hard to duplicate, and help to explain why the company is the envy of the industry. FIGURE 2-5 With such impressive results, one might ask the question, “How does Hospitality Extraordinaire do it?” With industry maturation and performance tied to the economy, a company like this must be creative yet cautious regarding the technology initiatives it pursues. There is no simple answer to the company’s success story, but a strong commitment, a dedicated and unrelenting focus, and a culture that supports quality service and the use of IT to accomplish its strategic objectives play important roles. The company’s ability to leverage its workforce and its IT are also instrumental in creating success. IT and business strategy are carefully aligned. IT projects must be customercentric, leverage the firm’s core competencies, and focus on delivering value to the bottom line. If an IT initiative cannot demonstrate enhanced customer service or loyalty, improved employee productivity and capabilities, reduced costs, increased revenues, new business opportunities, and/or increased shareholder value, the project is not funded. For every business decision, the company’s executives will do their homework to understand the competitive landscape and consumer trends. Once they understand the opportunities, competitive threats, and consumer needs, they will take calculated risks and consistently invest in the initiative to make it a success. Based on the company’s performance to date, its model works—with very few exceptions. Hospitality Extraordinaire has long led the industry in technology initiatives. It was among the first hotel chains to implement and standardize PMSs. Its ROOMSnet reservation system has led the industry in functionality and booking capabilities and set the trend for two-way interfacing with PMS. Its RevMax Revenue management system also leads the industry in terms of capability and sophistication. With these systems, Hospitality Extraordinaire has been able to achieve rate and occupancy premiums over its competitors. Its Thank You Rewards loyalty/frequent travel program is one of the largest in the industry and has among the most loyal following of any hotel company. Even the company’s centralized payroll system provides advantages that its rivals envy. It processes payroll for employees around the world at a cost per check that others wish they could match. Hospitality Extraordinaire’s success comes largely as a result of the company’s ability to redefine itself and effectively use its resources in response to changing business conditions and market needs. Pushing new limits, the company is aggressively working to create an uneven playing field that will lead to a prolonged period of unmatched competitive advantage. Over the years, the company has expanded its lodging portfolio to include Extraordinary Hotels and Resorts, Humble Inns, Simplicity Inns and Suites, Xtra-Night Stay, Efficient Inns, Corporate Touch Apartments, and Outstanding Vacation Villas. With such a diverse and complementary portfolio, the company has sought ways to eliminate duplication. Rather than have each hotel brand operate as a separate entity (or strategic business unit, in Hospitality Extraordinaire’s parlance) competing with one another, the company decided to embark on a strategy that would unify its lodging initiatives to leverage its resources and capabilities and create a stronger presence in the market place. To explore Hospitality Extraordinaire’s new focus for competitive advantage, we will turn to a concept referred to as cluster management. The company borrowed a page from the strategy handbooks of retail marketing giants like Proctor and Gamble, CocaCola, and PepsiCo, each of which owns a number of competing products or brands within their respective markets. While stressing brand equity, these companies cluster their “families” of products on the same shelf in a grocery store or within geographic proximity in a market to build associations that drive market positions and opportunities and ward off competition. The premise behind this approach is to deflect consumer attention away from price competition and focus it on product or concept differentiation for products that have achieved commodity status. Hospitality Extraordinaire has come to realize that in order to continue growth and prosperity, each product line (or lodging brand) must collaborate rather than compete with the company’s other brands. Today, the company simply recognizes that each brand represents a player on the same (Hospitality Extraordinaire) team, not opposing teams. With this revelation, the idea is that, in highly competitive markets, it is better for a Hospitality Extraordinaire product to win business rather than to forfeit that business to a non-Hospitality Extraordinaire brand. Accordingly, the orientation shifts from optimizing individual hotel occupancies and revenues, which could lead to suboptimization for the company, to optimizing an entire cluster (or market) of Hospitality Extraordinaire hotels by managing each hotel as part of a larger entity for the benefit of the entire extended organization (including the corporate entity, franchise partners, owners, etc.). The company’s reservation system (ROOMSnet), revenue management system, PMSs, and INN Touch executive information system are all integrated to support this initiative. The fundamental principle behind Hospitality Extraordinaire’s large-scale organizational change effort is leveraging resources and using teamwork and technology to gain economies of scale and new-found market efficiencies. This philosophy is essential for the company’s survival because it cannot hire enough resources to fuel its growth. It needs more resources and must find other ways to achieve its aggressive growth strategy without compromising service, quality, and consistency standards. Plus, things must be done faster, cheaper, different, and better than before. The mantra, especially in a tight economy, is doing more with less. For years, Hospitality Extraordinaire has shared resources across multiple facilities in several areas including reservations, marketing, advertising, procurement, laundry, and transportation, among others, but its technology capabilities are fostering new, creative approaches to collaboration, resource sharing, efficiencies, and economies of scale. Using IT, not only are resources and costs shared across product lines but so are expertise and information. In turn, these equate to better, more consistent services across properties, a better cost structure, and new sources of revenue. By using technology effectively, Hospitality Extraordinaire can track and segment its customers, maintain brand integrity, reduce its operating overhead, and find new business opportunities. Helping to make the logistics of this possible is Project Connect, a companywide initiative as part of its PeopleSoft implementation to track the sharing of resources across all of the company’s entities and bill the appropriate parties (e.g., properties and owners) for the services rendered and for their fair share of the resources consumed. This is an important initiative because Hospitality Extraordinaire is comprised of a complex ownership structure. Many of its hotels are franchised or owned by others but managed by Hospitality Extraordinaire. Since these contracts typically assess fees for services, it is important to keep an accurate accounting of these. As a result, the company can expand its management services to include consulting on a wide variety of topics and best practices and share its cost structure across all who benefit to keep individual property costs down. This provides Hospitality Extraordinaire’s properties with a cost advantage over competing brands. At the field level, total integration is the desired goal with shared data, systems, and other resources (e.g., laundry facilities, van service). Because Hospitality Extraordinaire equips its corporate, regional, and field staff with laptops and smart phones and corporate Web-based applications, an executive information system with a scorecard of measures, and the company’s data warehouse (which culls data from such core systems as accounting, property management, guest history, central reservations, and the company’s Thank You Rewards loyalty/frequent traveler database), Hospitality Extraordinaire’s employees are equipped with up-to-the-minute operating results, company policies and news, and the latest in consumer trends analysis—anytime and anywhere they need such access. Armed with such sophisticated IT tools, decision makers can quickly “slice and dice” data to compare, analyze, and troubleshoot performance at a particular property, in a given market, across a specific brand, or throughout the entire chain. Using these IT tools and the company’s technology infrastructure (including its ubiquitous high-speed corporate network and wireless capabilities) to gain access to key systems, management in the field and at corporate can oversee multiple departments, properties, and markets at a time; share best practices; and keep better tabs on the business. Real-time alerts and red flags notify management of pending problems so they can intervene and seek resolutions before they get out of control. They are never out of touch, regardless of where they are and what they are doing. Clearly, these systems enhance Hospitality Extraordinaire’s resources and capabilities, and because many of the benefits are behind the scenes, it is difficult for competitors to identify the contributing factors to the company’s success and copy them, thus extending Hospitality Extraordinaire’s competitive advantage. Cluster management provides the company with unprecedented opportunities through economies of scale and resource sharing to create competitive advantages that other hotel providers will have great difficulty matching or countering because they lack the structure, technology, and wherewithal to make it happen. One example is revenue analysts who are responsible for monitoring supply and demand patterns within markets and for adjusting sales strategies and room inventory controls when appropriate. Revenue management is a sophisticated science that requires powerful systems and a high degree of expertise. This knowledge can now be easily shared across multiple hotels—complete with the booking patterns for each hotel in the area—so that all hotels within the cluster can more effectively manage their room inventory, rate structures, and selling strategies to avoid lost market share. Perhaps upscale hotels will be less inclined to discount their rates if they know that their sibling hotels in the economy or midscale sector are still projecting room availability. Sales associates are also responsible for multiple brands. The sharing of resources here goes well beyond lead generation, referrals, and overflow business. Instead of having several sales representatives call upon the same clients in what may have appeared as a disjointed and disorganized sales strategy from the customer’s perspective, one sales associate or a team of sales agents is assigned to clients or geographic region to sell a complete portfolio of products covering all of their lodging needs: budget, extended stay, full service, meeting and conventions, or luxury. No longer are multiple properties competing for the same business and confusing the customers with multiple requests for proposal (RFPs) from the same company. Equipped with desktop and wireless sales force automation tools, these agents have instant access to rate and availability information for any hotel in the system—from almost anywhere, including the client’s office. This information can then be shared through the sales system to other hotels seeking to bid on conferences that travel from year to year. Having such historical data readily at hand, sales associates can submit more accurate bids, ones that take into account actual versus projected business in prior cities, pick-up rates, special needs, and so on. The system is not only a great booking resource but also a great client relationship building tool. Reservation agents are also shared across hotels in a given geographic area. Because these “mini” reservation centers are located within a given market, the agents are more qualified to answer questions regarding hotel facilities, local attractions, and upcoming events than a person sitting in a remote office trying to locate the information on a computer screen in the central reservation system. The information which they provide and the efficiency with which they provide it enhances the customer service and favorably sets a guest’s initial impression for his or her upcoming stay in the area. Just as reservations and sales staff can be shared across properties, so too can accounting and human resources staff. This allows better access to specialized resources and expertise. By sharing these resources, individual hotels no longer need to have their own accounting or human resources departments. Cluster offices, located at one of the larger hotels in the region, can provide accounting services, budgetary oversight, recruiting services, benefits administration, and other human resource functions for all properties within a cluster. The company’s accounting information system provides detailed access to company expenditures. This information can then be used to tighten cost controls and negotiate better discounts with suppliers. Human resource systems aid not only in the recruitment but also in retaining employees. Capable of career tracking and progression and succession planning for the entire company, the system helps identify candidates ready for promotion—those who have completed the requisite training classes for a given position, held prior positions that serve as stepping stones, and completed stints in other product lines or functional disciplines to ensure a truly cross-functional workforce. The examples cited previously are only a small sampling. There are many others and the potential is even greater. The number of collaborative efforts such as these can only increase as groupware applications, such as Lotus Notes, become more commonplace. Furthermore, few hotel companies can match the diversity, consistency, and quality that Hospitality Extraordinaire exemplifies. It is the company’s core informational technologies like ROOMSnet, revenue management, PMS, Thank You Rewards, accounting, payroll, and human resources and the company’s common hardware, software, and communications platforms that support data exchange and afford Hospitality Extraordinaire the opportunity to manage across product lines. For Hospitality Extraordinaire, the competitive advantage is created by its resources (i.e., employees, capital, and technology). Complementing these resources are the relationships forged with the company’s franchisees and the company’s commitment to quality and product consistency (e.g., service delivery, cleanliness of facilities, amenities, program implementation and execution). In the end, the competitive advantage is a structural and cultural one created by innovative leadership and complementary resources and processes. Because it is difficult to duplicate, it provides Hospitality Extraordinaire with a decided and lasting advantage. Although many leading lodging providers enjoy heavily segmented lodging portfolios, their zeal for growth and market share has resulted in loose contracts, lax standards, and blurred distinctions between their concepts by overlapping product positioning, so much so that customers cannot easily distinguish the advantages of one product over another. Confounded by low switching costs and inconsistent product quality, amenities, and service delivery within a product line, the problem of brand identity is exacerbated. Consequently, the barriers to implementing cluster management for competing chains are high should these organizations consider following or copying Hospitality Extraordinaire’s lead. For Hospitality Extraordinaire, a blurring of product lines is not much of an issue—at least not yet, though this could change as the result of recent additions to its product offerings. At present, the company maintains a unique identity for each of its brands in order to build customer loyalty and prevent such blurring from occurring. Since each brand has a distinct identity and target market, Hospitality Extraordinaire is able to uniquely position itself in any given market without the risk of cannibalization prevalent in other companies. Hospitality Extraordinaire’s use of technology and market data allows it to select appropriate sites and determine the right product for that site. This is an important benefit that contributes to the success of cluster management and the acceptance by many of the company’s franchise partners and outside owners. The unsung hero of Hospitality Extraordinaire’s technology capabilities that makes the cluster management concept possible and affordable is the infrastructure, which is somewhat transparent—especially to those outside. The company’s use of standardized systems (which are defined in management and franchisee contracts), common technology architecture, and a pervasive communications network makes connectivity and integration possible. Hospitality Extraordinaire is an exciting, dynamic company. It has its act together and is well aligned with the external environment. Its IT usage is state of the art and well aligned with its business strategy. Together, these create the many successes Hospitality Extraordinaire has enjoyed over the years. They will continue to create the basis of success for years to come. If Hospitality Extraordinaire is not a company you carefully track, you should be sure to put it on your radar screen. It is one to watch! 
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