University of Brighton MA in Hospitality ManagementCritical Issues in Hospitality Management Module Leader: Pete Odgers Submitted By: Aditya Joshi Submission Due Date: 25/01/2010 Introduction In order to initiate the systems thinking approach towards any case it is mandatory to understand the meaning of the word systems thinking. Systems theory studies the interrelationship between the components of the system. Its application is known as systems analysis and the important tool for this analysis is the systems thinking. “Systems thinking is a way of helping a person to view systems from a broad perspective that includes seeing overall structures, patterns and cycles in systems, rather than seeing only specific events in the system.” [Online: 2010] It is also defined as “Systems thinking is a way of understanding reality that emphasizes the relationships among a system's parts, rather than the parts themselves.” [ Online:2010 ] Both the definitions highlight the fact that systems thinking is the understanding of the system on the whole including all the parts of it and the relationships they maintain with each other. Systems thinking flow diagram adapted from http://www.systems-thinking.org/sdm/sdmodel.htm Important part of systems thinking is the analyzing and evaluating of the SWOT and PESTLE. SWOT analysis: When we say SWOT it refers to the Strengths, Weaknesses, Opportunities and Threats. This helps designing the framework for the PESTLE Analysis. PESTLE also known as PEST, PESTEL etc. is the abbreviated form of Political, Economic, Sociocultural, Technological, Environmental and Legal. SWOT is defined as “(Strengths, Weaknesses, Opportunities, Threats) is a popular framework for developing a marketing strategy. ” [ Armstrong J.:2004] Threats External Environment Opportunities Confront Exploit Avoid Search Internal Environment Strengths Weaknesses Image adapted from http://www.ifm.eng.cam.ac.uk/dstools/paradigm/swot.html [Online:2010] “A strength is a resource or capacity the organisation can use effectively to achieve its objectives.” The strength defined denotes that the points the organization knows that it has the upperhand over the others having those quality points. A weakness is a limitation, fault, or defect in the organisation that will keep it from achieving its objectives. These also mean the points which the organization tries to overcome or tries to hide them from the competitors. “An opportunity is any favourable situation in the organisation's environment. It is usually a trend or change of some kind or an overlooked need that increases demand for a product or service and permits the firm to enhance its position by supplying it.” These are the points which the organizations try to grab them taking the strengths and weaknesses into account. For example if there is a property being sold out nearby our hotel, no organization would prefer to have one more hotel in the affinity to their hotel. This is the opportunity to increase the business. But again when doing this whole pestel analysis should be done and only then should the property be purchased. A threat is any unfavourable situation in the organisation's environment that is potentially damaging to its strategy. The threat may be a barrier, a constraint, or anything external that might cause problems, damage or injury. Threat is something which may hamper our business in some way or the other. Taking the previous example into account if the new hotel is being introduced in the vicinity which obviously would be a threat as the customers would prefer the new hotel which they feel would have new facilities and trendy rooms and amenities. There are various steps one could handle this situation. This is the place marketing comes into the picture wherein the Organization could suppress the new property with lavishing discounts so much so that the new property would be in loss. This is just one prospect of marketing and has various ways and measures . Pestel analysis is done only with regards to external environment as the full form of PESTEL i.e. Political, Economic, Sociocultural, Technological, Environmental, Legal are the factors which affect only the external environment. PESTEL “It is a strategic planning technique that provides a useful framework for analysing the environmental pressures on a team or an organisation.” [Online: 2010] In other words it helps the organization to analyze the environmental factors that may or are affecting the business. One more definition says “PESTLE analysis is in effect an audit of an organisation's environmental influences with the purpose of using this information to guide strategic decision-making.” [ Online :2010 ] This indirectly tells us that every company should do the PESTEL analysis frequently to make necessary changes in the goals and take appropriate decisions to be alive in the market and to have the upperhand on competitors. Brief Overview of the Property Kamat Hotels a well known for their lavishing range of ecotels i.e. environment friendly hotels. One of them is VITS Mumbai, India the then The Lotus Suites which is situated in a prime location near the Mumbai International Airport. It is a new chain of luxury business hotels in India Promoted by KHIL [ Kamat Hotels India Limited ] [ Online:2010 ] It is a four star property having 190 ensuite rooms to have the upmarket hospitality experience. Vits has proposed to open new branches for VITS hospitality experience in Ahmedabad, Aurangabad, Baroda, Belgaum, Chinchwar, Gujarat, Hubli, Kolhapur, Nagpur, Nasik, Navimumbai, Pune, Solapur, Surat, Thane and 20 more locations in the next five years. SWOT Analysis We would discuss SWOT after the pestle analysis and it facilitates the way of examining the external environment factors such as the opportunities and threats. These would be discussed after the pestel analysis as the opportunities and threats could only be found after evaluating and analysing the external environmental factors on the business. PESTEL/ PESTLE/ PEST Analysis Traditionally PESTEL analysis was known as the PEST analysis and only in the modern times did the use of the word PESTLE came into being. Social part of the PEST is split into environmental factors too as those have a significant role in the strategic management these days. Alongwith that economic factors are split into legal factors for the same previously mentioned reason. Political Environment “These refer to government policy such as the degree of intervention in the economy.” [ Online:2010] The Times of India by Rachna Singh, Jaipur, in a bid to attract international tourists is gearing up with a host of new properties across different segments. [Hospitality Biz India: Dec. 2009] Hotel industry as well as tourism industry has a basic backbone of the government support without which it won’t be able to sustain the competitive world. Government charges huge amount of tax from the star and luxury category of hotels and thus has a huge impact with the political changes that occur. Any small step taken by the government by changing some law it would seriously affect hotel industry. The hotel industry is getting huge incentives and the state governments are supporting the development of the hotels and their growth. This infact answers the question how are Indian Hotels are planning to expand in the economic crunch time. The Terror attack on the city’s [ Mumbai ] renowned hotels Taj and the Oberoi’s had brought a concern on the faces of the hoteliers with a substantial drop in foreign travellers to India taking the terror threat into account. Economic “These include interest rates, taxation changes, economic growth, inflation and exchange rates. As you will see throughout the "Foundations of Economics" book economic change can have a major impact on a firm's behaviour.” [Online:2010] Mumbai being the financial capital of India has many foreign tourists arriving with the whole and sole purpose of meetings, conferences etc. thus Hotels in Mumbai try to capitalise on the foreign travellers who are seen to bring more money to spend along with increasing amount of expectations from the hotels. As seen in the recent past the guests are willing to pay for the services they get and the more the guests pay the more would the hotel and the industry would prosper. With the increase in the paying power of the guests the need for the good and luxurious hotels become massive. The per capita income in India also has rose to a new extent enabling the common man to goto luxurious hotels to have a lunch or a dinner. Economy of India faced one of the most minimal drop in the whole world because of the controlled and sound financial system in the country. This helped hotels to only concentrate on the foreign travellers which had reduced and the local market being stable was much of a relief to the Indian Hotel Industry. Social “Changes in social trends can impact on the demand for a firm's products and the availability and willingness of individuals to work.” Vits being situated near the airport sees the maximum amount of guests who are in for the business meetings and conferences. There are very few FIT guests seen in the hotel as compared to the BTC guests [ Bill to Company Guests ] and the business travellers. This explains the reason why the hotel could be seen having single room guests or a twin bedroom guests more than the double bedroom guests. Being the Business hotel it has maximum males arrivals compared to female arrivals. The Vits could also be seen having layover guests many a times which becomes the revenue generator for the hotel in the slack period of time. Seeing the ratio of the various classes of guests of VITS it could be easily said that the Hotel must strive for the FIT and the group checkins by linking the VITS to the travel agencies in and outside India. This could probably balance the demographic ratio of the arriving guests. Technological As said before the technology used in VITS is way below the standards when it comes to Hotel management software and the Mini Bar system. Some Technologies used are quite old and need to be replaced with the new ones in the technological market. For example: If a hotel used the printed KOT and BOT and the stewards had to give it themselves to each of the departments. It could be substituted with the direct computerized sending of KOT and BOT to the kitchen or the Bar. Technology always has been seen to have reduced the manpower and the energy required by the people. It would always be a boon to mankind and the technological upgrades would also help to show the advances and the progress of the property. VITS does not have the wifi installed instead they provide internet connection to every room personally which should be made wifi which would reduce the guest complaints about the in room facilities complaints and thus VITS could find many guests happy and satisfied with a thought of you get what you pay for. Environmental Factors “The growing desire to protect the environment is having an impact on many industries such as the travel and transportation industries (for example, more taxes being placed on air travel and the success of hybrid cars) and the general move towards more environmentally friendly products and processes is affecting demand patterns and creating business opportunities.” { Online: 2010 ] Being an environmental friendly hotel this factor becomes the most important to the property. Basically when we talk about the environmental factors affecting the business of the hotel the only thing that comes into our minds is the floods which Mumbai saw in 2005 and the heavy rains and showers across Mumbai. The period from June – September is the only period of time when such factors play a role and there are very few things which could be done by the hotel about it. Generally what is done in such factors is to let the guests know the situation outside and making them aware would help them from the troubles they may face when they would be in those heavy rains. Another environmental factor could be an earthquake or any other natural factor which directly affects the occupancy of the hotel and the sales. The solution or the rules of the hotels in India are that they do the drills for the emergency situations frequently to help employees understand what is supposed to be done in hard and emergency conditions. Legal Factors “These are related to the legal environment in which firms operate. In recent years in the UK there have been many significant legal changes that have affected firms' behaviour. ” [ Online:2010 ] This also includes the health and safety laws, the recent outbreak of the Swine Flue [ H1N1 virus] would have been the upcoming serious factors for the VIts and the service they could have provided is the free checkup of the incoming guests for the swine flue. As of now India does not have age discrimination law but does have the disability discrimination law and every star hotel is supposed to provide a room for the disabled guests and having special facilities for the blind deaf and the leg or hand impaired people. This room is generally located on the first floor near the lift entrance and is always taken care of in a special way. SWOT Analysis of The Property Strengths: The major strength of the property is the fact that they are the only ecotel i.e. the environmental hotel around that place which makes them unique in a way. The Property is very close to the international airport and a few kilometres away from domestic airport of Mumbai. The Wellness club which is situated in the lobby area is a well known and a renowned place to be for the local visitors. It is a well maintained all instruments fitted fitness gym which also has a sauna and steam bath. This often is the attraction of the in house guests. Having said that the hotel is very close to the international airport many international airlines prefer the hotel for the compensatory stay to the layover guests. Layover guests are the guests whose flight has been delayed or cancelled for some reason and are offered the fine accommodation and the food and beverage facility to them. The property has six banquets and conference halls which have conducted many successful conferences as well as banquet parties till date. This is the main attraction for many small budget companies to have their conferences in a luxurious atmosphere. The employees are given a certificate of honesty which keeps them motivated to be loyal to the guests as well as the property. The Poolside Restaurant is a well known attraction among the higher middle class families for a peaceful breakfast lunch and dinner facilities. It also conducts food festivals as other hotels do which makes the restaurant even more attractive for the targeted market. The occupancy percentage of the hotel is generally very competitive with regards to its range of hotels which it fits in. The hotels included in the range are Kohinoor continental, Mirador, Bawa International etc. Weaknesses The major weaknesses in and around the hotels are as follows: Basic weakness of the hotel is again the locality. Being situated off the road it may see a significant impact on the FIT guests [ FIT denotes Free Individual traveller ] The Hotel having the best possible kitchen as explained earlier lacks the major departments of the kitchen that is the bakery and the butchery section. There is a small bakery which handles small orders of cakes etc and needs an attention of the management. The solution the management found was to bring the bakery and the butchery items from their sister hotel The Orchid which is situated near the Domestic Airport and is managed by KHIL itself [ Kamat Hotels India Ltd. ] The Hotel also has a basic problem of internet as the wi-fi has not been installed in the property and the internet access has to be given to the guests individually. Also the Internet facility provided is not included in the rack rate and needs a fair bit of attention. The solution the management found was that they have introduced the package of rack rate plus the internet rates which is quite fair in order to reduce the initial installation cost of the wifi. The Hotel as seen has not upgraded the hotel management software and has stuck to PMS i.e. Property Management System whereas the other hotels in the locality may have upgraded it to the Opera or the Fidelio which are the industry’s current softwares which are faster in performance and standards. The hotel also lacks the mini bar technology wherein if the product is removed from the bar and is not kept in 1 minute the product is charged on the guests bill. This technology helps save the time of checkout of the guests as the mini bar handling steward does not have to attend every checkout room on the spot. He gets some buffer time having the room cleaning to be done. The Hotel also uses the whitney rack system and needs to be upgraded to the fully computerized system which would serve the hotel’s motto of saving the environment by reducing the amount of paperwork. This would also reduce the hustles and bustles of the reception staff as they would not have to check each and every bill. This would also reduce the work of the night auditor. The Hotel lacks the proper swimming pool which is located next to the restaurant and there is no privacy for the swimmers which they may feel a bit weird. Opportunities With the upcoming government plans and incentives for the Hotel Industry as explained earlier, the VITS has been one of the hotel chains who are growing their business by introducing more and more properties as explained earlier. This is the part where the Hotel Chain “Vits” has capitalized and has grabbed upon the opportunities. The upcoming opportunities for the chain on the whole are the cricket world cup which is scheduled to be organized in 2011. We have taken this as an opportunity because the hotel has a chance to capitalize on the world cup by targeting audiences from India as well as around the world. They could have special facilities designed for the fans of cricket by introducing the bus service or the special cab service for the fans to the stadiums in and around the world cup venues. Capitalizing on the world cup would help build a new customer profiles and the service the guests perceive would hold the key and would help the business by seeing loyal members in them in the coming years. The concept of the celebrity chefs has not been that popular in India and this could be th opportunity by hiring the celebrity chefs and throwing the celebrity special dinners etc. which the guests would relish. Threats The recent Bomb Blast in Mumbai’s best Hotels would be seen as a biggest threat as the consumers/ guests would have been afraid of the fact that the terrorist activities could be prevalent. But as Indian government came up with the NSG [ National Security Guard] Branch specially for Mumbai, this threat would have been diminished. One more threat for the Hotel would be the local 4 star properties which would obviously be trying to succumb the pressure put by the VITS by introducing their new policies and the discounts. The local Hotels which may try to introduce the competitive marketing plans are the Kohinoor Continental and the Mirador. Even then the Hotel has been doing well with an upper hand in the Occupancy percentages of the local Hotels. The upcoming concern for the Hotel could be the recent changes in the human behaviour towards the health and living. People have started becoming more and more conscious about having low calorie, low salt and spices food which may be a threat if the menus are not worked out for those guests demanding that type of food. “ Studies show that those who reduce their sodium intake have lower blood pressure and are less likely to have a heart attack, stroke or other complications of cardiovascular disease.” [ Online:2010 ] Conclusion The study could be concluded with the following points highlighted: Taking the government incentives into account the Hotel as a chain has been expanding their business with upcoming properties as is becoming the strength of the chain in a way by expanding their brand name within lot of target markets and many more loyal customer/ guest profiles from different parts where the branches are opening. The Hotel could look affirmatively towards the upcoming world cup by targeting the fans of cricket which would help build new loyal customers for the business in coming years with the quality of service they would perceive. The Hotel should introduce the latest trend in the food and beverage industry of the low calorie and low salt [sodium] diets specially designed for the diabetic patients and the Heart patients which could be seen increasing day by day. Introduction of celebrity chefs and celebrity chef nights could be a boom for the hotel restaurant business, the reason being the number of fans of the celebrity chefs is huge and this measure taken could be one of its kind. The hotel should embrace the new technologies which are being introduced which would help reduce the time and the human errors. The Hotel being the ecotel could concentrate and target on the environment enthusiasts as their potential customers and planning their schedule in many nice botanical gardens in and around the city. URL= http://www.hospitalitybizindia.com/detailNews.aspx? aid=6942&sid=41 December 09,2009 issue. References Armstrong J.(2004) Don’t do SWOT: A Note on Marketing Planning, Many world Inc. URL=http://www.cipd.co.uk/subjects/corpstrtgy/general/pestleanalysis.htm URL=http://www.eatingwell.com/recipes_menus/collections/healthy_low_s odium_recipes URL=http://www.ifm.eng.cam.ac.uk/dstools/paradigm/swot.html URL=http://www.improvementnetwork.gov.uk/imp/aio/1033478 URL=http://www.managementhelp.org/misc/defn-systemsthinking.pdf URL=http://www.oup.com/uk/orc/bin/9780199296378/01student/additiona l/page_12.htm Telephonic Interview with the staff and the experience. URL=http://www.thesystemsthinker.com/systemsthinkinglearn.html URL=http://www.vitshotels.com/