Reference no: EM132831814

Background ABC hotel is a 5-star hotel situated in a prime area in Hong Kong. Hotel is a 10 years old hotel, has 250 rooms and run at the occupancy of 85% and above all year round. The review of this hotel are positives and they are in the top 20 positions in TripAdvisor. ABC hotel is a business hotel and there are quite a few companies in Hong Kong have term ABC hotel as their official corporate hotel. Many of corporate guests who stayed in the hotel are returned guest, as they love the hotel service, people and environment of the hotel. Hotel are usually busy during weekday and occupancy is a little quite over the weekend with business traveller. Therefore, hotel have run quite a few of the promotions during the weekend to capture leisure traveller for a short getaway. Because of the location, hotel does attract guests walking into the hotel to enquire room rate. During weekend and long holidays, the walk-in business can help to push up the hotel occupancy by 5%. Besides rooms, hotel have a very good business in F&B and events as well. The event spaces are usually pack and full during the weekday. Many conferences are held in the hotel. Crisis - Hotel Occupancy Drop However, since third quarter last year, Hong Kong was facing with major social issues and occupancy started to drop to below 50%. Based on the situation, Revenue department has implemented a few strategies to boost the occupancy by lowering the rate, having flash sales, greater package component and given greater incentives to Travel Agent and OTA to boost the sales of the hotel. Despite the effort, occupancy does not seem to goes up. In the hotel Board of Directors meeting, hotel General Manager (GM) have asked support from all division head to find ways to boost the hotel occupancy and cost cutting in all departments.

Rooms Division Director have called for an immediate meeting with Front Office Managers and Executive Housekeeper for a discussion on cost reduction and how to increase the hotel occupancy. Front Office Manager then have a discussion with the team and decided that they need to push upselling in the hotel and to grab any business that come into the hotel. Front office (FO) Team is advice to take in all walk- in and do not allow guest to turn away. FO team have come up with all actions to attract the walk-in guests such as throwing in value added benefits over at the counter such as complimentary breakfast, departure limo or even lounge access. In addition, especially at night after 10pm, Front Office team will offer room discount since guest will be staying only for few hours. In terms of cost cutting, Front Office Managers have decided to cut all amenities which they used to give to guest for special occasion such as welcome amenities, birthday, wedding anniversaries, honeymoon and even kids' amenities. As for Housekeeping department, in order to reduce the cost per room, the in-room amenities are changed. According to the hotel brand standard, the hotel is providing A-Class amenities in all their rooms and suites. However, hotel is now decided to change the in-room amenity brand to middle class range. Hotel have also decided to reduce the number of bottles water from 4 bottles to 2 bottles per room, remove some less use amenities in the room such as comb, mouth wash and sewing kits. However, these items are available in Housekeeping. Guest can call and request for the items. After 3 months of these changes, the cost per occupied room is reduced by 30% and the occupancy increase to 60%. With the price that is offer, hotel is manage to capture more tour groups. However, the number of complaints increase by 20% and the compensation cost increase by 30%. Further analysis was conducted and most of the guest's complaints are their loyalty guests of the hotel. The content of the complaints is about the changes happen in the room which are different from before and lesser amenities offered including the welcome amenities, unfairness on the price offer over at the reception is much cheaper than what they pay and often have noise complaints.

1. Would hotel willing to lose their regular customer and change the hotel marketing businesses?

2. Would there be a way to meet the balance between the 2 businesses?

3. The issue has diverted from one area (financial issue) to another area (customer complain). In order to solve the issue, you need to involve all department heads. How are you going to address the issue and what is your plan?