1. What issues should Jerry and the executive committee address? Why? (Hint: Make assumptions where necessary, including mission and vision statements, as well as goals, strategies, and objectives.) 2. Given the preceding information, what are Jerry’s options? How should they be evaluated? Make assumptions where necessary. 3. What should the hotel do in the short term and in the long term? Make assumptions where necessary to arrive at your decisions
OPENING CASE
The Great Eastern hotel, a privately owned, independent, five-star deluxe hotel located in Hong Kong’s commercial district, is faced with a turbulent external environment owing to the current financial crisis. Since its inception six years ago, the hotel has grown in prominence during the bustling economy from 2003 to 2007, and it has been one of the top performers in the upscale and luxury market segments over the four years preceding the economic crises. The hotel’s main target market segment is the business traveler (75 percent of room bookings) who has no problem with paying USD 350 per night for a room.
During the past six months, however, the hotel has been a victim of the severe economic upheaval, which has led to a significant reduction in room bookings from the business travel segment. This has reduced profits significantly to the extent that the hotel is no longer able to cover fixed costs. The owner, Jerry Kong, has called an executive committee meeting to discuss the future direction the company should take in the immediate term and in the long term to sustain its competitive advantage.
1. What issues should Jerry and the executive committee address? Why? (Hint: Make assumptions where necessary, including mission and vision statements, as well as goals, strategies, and objectives.)
2. Given the preceding information, what are Jerry’s options? How should they be evaluated? Make assumptions where necessary.
3. What should the hotel do in the short term and in the long term? Make assumptions where necessary to arrive at your decisions.
4. Why is it difficult to answer the preceding questions? Do we have clear answers for issues and challenges in real life?
5. Do managers and executives in hospitality and tourism organizations always have sufficient and reliable information to make decisions?
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