Week 1 Hospitality Extraordinaire Case
Study Grading Guide
BIS/303 Version 4
Managing Information Technology in the Hospitality Industry
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Hospitality Extraordinaire Case
Study Grading Guide
BIS/303 Version 4
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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.
Hospitality Extraordinaire Case Study in Technology Strategies for the Hospitality Industry, Ch. 2
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
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
The student explains which IT tool or strategy
they think has made the biggest impact on the
The paper is 1,050 to 1,400 words in length.
Hospitality Extraordinaire Case
Study Grading Guide
BIS/303 Version 4
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.
7. Case Study and Learning Activity
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.
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
The examples cited previously are only a small sampling. There are many others and ...
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