Organisational Audit and Recommendations for Hotel Altamont Sydney - Case Study Example

Assessment 2: Report - Organisational audit and recommendations Hotel Altamont Sydney Name: Lecturer: Course: Date: Table of Contents Table of Contents 2 Introduction 3 Analysis of Hotel Altamont 4 Labour and skills shortage 4 Global Financial Crisis 5 Demographic Challenges in Australia 6 Internet and customer driven technology 7 Environmental management and sustainability 8 De-regulation 9 Globalisation 9 Outsourcing 10 Ethics 11 Key Issue Identification 12 Recommendations 13 Conclusion 14 Reference List 15 Introduction Hotel Altamont Sydney is a boutique hotel situated in Darlinghurst, Sydney. It is strategically situated, as it is accessible to the beaches, Sydney Harbour, Oxford Street, and Kings Cross. By description, it is stylish boutique hotel with outstanding sense of heritage. While it does not have its own restaurant, it offers continental style dishes in its cafe. It also has a full bar service. It has relatively basic deluxe and standard rooms, as well as refurbished and well-equipped bathrooms (Chipperfield 2014). Due to the stiff competition in the hotel sector, Hotel Altamont decided to reinvent itself to offer the particular needs of its customers. As a boutique hotel, it offers unique experience to its customer-based compared to the traditional hotel services. Still, while it appears to have greater potential, several factors have affected the whole operation of the tourism and hospitality industry. This assessment seeks to analyze the operational challenges within the context of Hotel Altamont before offering strategic recommendations. Analysis of Hotel Altamont After Hotel Altamont, it identified the changing faces of luxury travellers. It targets the male and female travellers between the ages of 25 and 45 years. It largely appeals to the customers who like trendy restaurants, and creative individuals. Hotel Altamont is frequented by musicians, art lovers, middle-aged couples, as well as customers who look to stay at the hub of Sydney’s café community. The guests may stay in the hotel for work or purposes of leisure, since the hotel also provides conference facilities and long-stay rates. Traditionally, the luxury hotel patrons have largely been males aged averagely 49 years who have annually income that exceeds AU$200,000. They mostly frequent luxury hotels in search of indulgence, entertainment, and excitement. Instead of concentrating on complementary amenities to attract customers during low seasons, the hotel centres on strengthening its positioning as a boutique hotel by providing guests with unparalleled cultural experience not found in its competitors. Labour and skills shortage The labour and skills shortage implies paucity of workers to address the needs of a growing market. Following the steady growth of the hotel sector, Hotel Altamont’s management expects to provide quality services and to benefit from higher productivity in order to meet the diverse needs of customers. Several factors in the industry have made Hotel Altamont to be vulnerable to the imminent crisis such as high turnover rates in the industry, and inflexible working hours. To prevail over the looming crisis, Hotel Altamont has concentrated on hiring the right skilled labour force through aggressive recruitment programs where the candidates are taken through retraining programs. Hotel Altamont initiated diversity management to appreciate the existing differences in its diverse workforce employees. On area or diversity management it has excelled include hiring immigrants and seasonal labour force from various multiethnic backgrounds. Currently, it has an innovative HR programme focused on retaining its diverse seasonal labour force consisting of 25 employees from more than 10 ethnic groups in and outside Australia. Currently, there is a large inflow of immigrants into Australia, which Hotel Altamont targets. It also appreciates that a large fraction of the Sydney population consists of immigrants. Still, its frontline employees are mostly English-speaking rather than multilingual personnel It also leverages on the human resource development and training to motivate its staff and promote job satisfaction. It also offers flexible working hours to ensure that employees balance their work and social life. For instance, the hotel has two three shifts, where employees work from 6 am to 12 pm, 12 pm to 6 pm and 6 pm to 12am. Global Financial Crisis The impact of global financial crisis affected the long-term growth of the hospitality and tourism industry in Australia as the local economic growth declined to nearly 0.5 percent. Additionally, the Australian household wealth had declined by some 10 percent at the end of the crisis (ABS, 2010). According to IBIS World (2014), the tourism and hospitality industry was significantly affected leading to a drastic decline in the number of foreign visitors coming to Australia. Domestic tourism market also experienced ‘real deterioration.’ It also contributed to severe employment problems in the country. This led to decline in sales for Hotel Altamont. To address the issues, the hotel’s management, Because of the implications of global financial crisis, Hotel Altamont experienced low overall financial performance between 2008 and 2012 due to low sales. The hotel aggressively engages in marketing through the internet to drawn visitors from across Australia and abroad. The marketing tools it currently uses include advertising on the internet, public relations, and billboards. The internet has helped reach out to target markets in New Zealand and the United States, which forms a large number of its foreign customers. Demographic Challenges in Australia The Australian tourism and hospitality market is expected to go through an extreme shift over the next four decades (Economy Watch, 2010). Estimates indicate that non-working population will increase by 25 percent while the number of traditional workforce consisting of those aged between 15 and 64 years will drop to zero. This indicates that Hotel Altamont is likely to suffer from calamitous shortage in workforce. This may affect its long-term growth plans in Australia. However, Hotel Altamont has not devised a strategic approach to rise above the imminent challenges. However, the hotel expects to adopt workers that are more flexible and recruit a diverse workforce. Indeed, it has centred on employing a diverse workforce by initiating a high performing value-driven culture based on diversity. It also complements its staff with the immigrants and seasonal staff. Their seasonal staffs are largely drawn from the Generation Y workers, which has tended to trigger diversity problems like low commitment to work and poor communication internally. It has contributed to low employee motivation, and a dismal employee retention rate of 30 percent. As a result, it has initiated career development programs to provide training and support to its immigrant staff to go for further education to acquire reputable certifications. Internet and customer driven technology Over the past decade, an interaction between tourism and technology has promoted momentous changes to the hospitality and tourism industry by leading to greater efficiency in terms of customer service, reduced costs of advertisement and greater flexibility of the working hours (Bethapudi 2013). Hotel Altamont uses customer management applications such as Customer Resource Management (CRM) understand the diverse needs and problems of its diverse customers; Promote passionate interest in creation and sustenance long-term relationship with customers. Ensure employee commitments and better customer service; Promote transparency by ensuring that customers always know the truth Provide customers better after-sales support. The hotel also allows its clientele to make hotel bookings and organise trips. In response, Hotel Altamont has established a formidable online presence by creating a website and using social networking sites such as Facebook and Twitter, which the hotel uses to update regularly information on its offerings and prices. It also plans to design its website in a way that can allow for online payments. The hotel is currently hiring a workforce that can use customer-driven technologies such as CRM and the internet. It also plans to develop mobile apps to improve its services especially to address language barriers problems of customers who speak foreign language and to allow for ‘just-in-time’ information for customer. It also plans to procure computer tablets for use as menus. It has leveraged its websites, blogs, and Facebook to advertise its services cost-effectively. Such tactics have allowed it to communicate in real-time with diverse customers. Environmental management and sustainability Environmental sustainability has escalated into a crucial concern for Australia’s tourism and hospitality industry over the past 20 years (Service Skills Australia 2013). This is due to the growth of demand for sustainable tourism management and awareness by environmental lobbyist, industry regulators, government, and most importantly, the growth in the number of eco-conscious customers (Mensah 2007). Hotel Altamont’s has made efforts to integrate sustainable tourism by emphasising efficient use of scarce resources by integrating sustainable practices in the areas of food security, energy, and ecosystem. These however also comprise sustainable practices linked to work culture and practices: Hotel Altamont’s lighting system strictly consists of energy-saving lamps. It also has large windows to maximise use of natural light and natural control of temperature. It also uses eco-friendly dishwashing and laundry detergent. The hotel also purchases locally made vegetables and manufactured products to save on carbon emission. De-regulation The growing need for labour flexibility is a current issue facing enterprises in the Australian tourism and hospitality industry. Consequently, there has been an accelerated need for deregulation in the industry (Buultjens & Cairncross 2009). Hotel Altamont has supported the need for deregulation since by ensuring high level of that labour flexibility, it can meet the shifting labour market demands where employees look to work flexibly, as well as attain a more competitive advantage and higher productivity by motivating its workforce. The hotel’s management also supports the centralised-wage determination system. The rationale for this is since by introducing individualised bargaining and formalised enterprise bargaining, it becomes able to pursue shared interest with its workforce. Since the operates day and night, it allows the employees to work in their flexible hours and to allow them to avoid the likely penalty rates for failure to report to work as agreed. Globalisation Globalization has heralded extraordinary transformational changes in varied spheres of tourism and hospitality industry in Australia. Hotel Altamont has a modernised outlook and 'modus operandi' that appears well prepared to benefits from globalized tourism and hospitality industry. Mostly, the customers have changed and become more globalised, leading to the emergence of a new breed of customers. Technology has also changed rapidly leading to e-tourism and e-commerce. Due to the effects of globalised, the tourism and hospitality industry currently operates under strict transparent and dynamic environment, which exerts pressures to Hotel Altamont to in its competitiveness and the strengthen customer relations management through internet, as well as service delivery and marketing. For instance, the hotel is aware that the internet has made it possible to advertise to customers in all parts of Australia, and the world. However, it has no website content that provides information on its facilities, prices, and location. This is since a new segment of customers has emerged that must know about the hospitality services and facilities prior to deciding to select a tourism destinations. Due to globalisation, a new market has emerged in Australia consisting of tourists from China, India, Middle East, and Africa, which has marked a shift from the traditional European nations and the larger America. In response, Hotel Altamont had a wider accessibility to customers from the emerging markets hence it has employed a diverse staff as well as offers diverse cuisine from a number of these countries to satisfy the growing diverse expectations and needs of customers from diverse backgrounds. Globalisation has also brought about a great rift between employers and employees, which the company has narrowed down by promoting cordial relations between them to offer an opportunity to both the staff and the management to move closer together to the guests. To ensure this, the hotel organises frequent get-together parties and breakfast meetings. Outsourcing Outsourcing involves hiring service functions, or delegating other agencies to execute operations functions rather than providing it internally. The practice has become commonplace in Australia’s tourism and hospitality industry, particularly the enterprises looking to reduce the overheads and recurring costs (Cullen et al 2005). In response to the marketplace that is rapidly changing, the management of Hotel Altamont has become increasingly aware of how costs continually rise, as well as the negative implications visited on the bottom-line. The rationale for outsourcing is based on the need to cut costs while simultaneously maintaining or increasing quality of services. However, the hotel has not fully capitalised on outsourcing, since it considers doing everything internally. For instance, it performs employee recruitment internally. Additionally, rather than outsource training, it does it internally, through its human resource management personnel. Still, the hotel has outsourced its marketing to advertising agencies. For instance, it has outsourced its social communication strategies, since it lacks the required expertise for critical digital initiative. One example is through hiring consultants from public relations firms to show the management how social media tools such as weblogs, Facebook, Twitter and its website can be utilised to promote social communication. Hence, since it has restricted access to funds, it needs to engage in capital outlay avoidance by outsourcing to expand its business cost-effectively or to use upgraded technology without the need to buy the technology (Lamminmaki 2010). Ethics The Australian tourism and hospitality industry experiences a growing concern for business ethics since the professions practicing in the industry face frequent ethical dilemmas. Hence, by its very nature, the industry has placed the employees and customers in circumstances of temptations. For instance, Hotel Altamont’s management acknowledges that opportunities to steal may come up in several occasions due to prevalent cash transactions. The hotel has code of ethics in place to ensure that the employees uphold integrity, fairness, and discipline in all their operations (Knani 2014). Increased diversity and since the hotel operates in a multicultural background, it acknowledges that upholding ethics may be tricky. It has therefore initiated whistle-blowing policies, to encourage the staff to report unwarranted behaviour. The hotel has also installed CCTV cameras in the hallways and its restaurant. These are to prevent events, where the staff may involve theft, discrimination based on race, religion or sex, and sexual harassment. Key Issue Identification As established, Hotel Altamont needs employees that have pertinent expertise and capabilities to run the hotel in an international competitive business environment is an underlying challenge facing the industry. Additionally, despite the interest to use modern information systems, an underlying challenge the hotel faces is that a number of its frontline employees lack digital literacy-skills. This would require training. The company also lacks an up-to-date website with content on its offering and prices. Next, rather than engage in outsourcing of human resource hiring process, Hotel Altamont has used the traditional method. This has been costly and time-consuming, specifically since the company believe in hiring the right persons. The hotel’s management acknowledges that the process has been tedious. It has also not established partnerships with other restaurant operators to promote its brand. Recommendations Due to the effects of demographic changes, the hotel needs to maintain remarkable balance between the aging and the young consumers because the service needs of these age groups vary. Due to the rise in the need for sustainable eco-initiative in the hotel sector, the hotel will need to engage in eco-design of its facilities, practice energy conservation, water conversation, and eco-green housekeeping. To embrace globalisation, Hotel Altamont will need to expand beyond Australia. It will therefore need to promote its brand, create strategic alliances, and to engage in mergers and franchising to seek entry into foreign markets as well as to compete with foreign hotels. It should also engage in responsible tourism and hospitality management. Therefore, it will need to adopt multifaceted strategy in line with equity considerations, diversification, environmental considerations, and sustainability. The hotel has also specialized and developed its expertise to brace its strategic positioning in the tourism and hospitality industry by creating exceptionality in the hospitality services. For instance, it enhances quality through development of standards such as professional standards, and service and trade skills. It will also need to improve its image as a child-friendly, environmental-friendly and labour-friendly hotel. Staffing with pertinent expertise and capabilities is required to run the hotel in an international competitive business environment is an underlying challenge facing the industry. To overcome the problem, the hotel will need to engage in frequent employee training on necessary skills and expertise. When it comes to outsourcing, the hotel should engage recruitment process outsourcing services to reduce the time it takes to hire new employees as well as to increase the quality of its human resource pool and to enable the management to focus on key operational functions. It should also select to contract out its food service processes to third-party restaurateurs, such as establish long-term arrangements with restaurant operators during events and festivals. Due to globalisation, there is a growing need for diversity. Hence, the hotel should not have only English-speaking front staff at its reception, who cannot speak Chinese, Japanese, or Italian. It needs to have multi-lingual staffs who understand the local cultures and foreign cultures. It should also create website content that provides information on its facilities, prices and location since a new segment of customers has emerged that must know about the hospitality services and facilities prior to deciding to select a tourism destinations. Conclusion As a boutique hotel, Altamont Hotel offers unique experience to its customer-based compared to the traditional hotel services. Still, while it appears to have greater potential, nine underlying factors have affected the whole operation of the tourism and hospitality industry. These include globalisation, ethics, outsourcing, global financial crisis, labour and skills shortage, shifts in Australian demographics, environmental management and sustainability, internet and customer driven technology and lastly de-regulation. The hotel has also specialized and developed its expertise that has supported its strategic positioning in the Australia’s tourism and hospitality industry by creating exceptionality in Sydney’s hospitality services. It promotes quality through upholding professional standards in its service and trade skills. It however needs to improve its image as a child-friendly, environmental-friendly and labour-friendly hotel. Additionally, since it has restricted access to funds, it should leverage capital outlay avoidance through outsourcing to expand its business and employee recruitment. Reference List ABS 2010, The global financial crisis and its impact on Australia. Australian Bureau of Statistics, viewed 5 Feb 2015, Bethapudi, A 2013, "The Role of ICT in Tourism Industry," Journal of Applied Economics and Business vol 1 iss 4, pp.67-79 Buultjens, J & Cairncross, G 2009, “The Australian hospitality industry's response to formalised enterprise and individual bargaining prior to the Rudd government," Journal of Hospitality and Tourism Management vol 16, Chipperfield, M 2014, “Hotel Altamont, Sydney, Australia: review," The Telegraph Travel, viewed 5 Feb 2015, Cullen, S, Seddon, P, and Willcocks, L 2005, “Managing outsourcing: the lifecycle imperative,” MIS Quarterly Executive, vol 4 no 1, pp.229–246 Economy Watch 2010, Australia Economy. Economy Watch, viewed 5 Feb 2015, IBIS World 2014, Tourism in Australia: Market Research Report. IBIS World. Work Permit, (2012). Australia experiencing shortage of hospitality and tourism workers – Apply now!, viewed 5 Feb 2015, Knani, M 2014, "Ethics in the Hospitality Industry: Review and Research Agenda," International Journal of Business and Management vol. 9 no. 3, pp. 1-8 Lamminmaki, D 2010, “An examination of factors motivating hotel outsourcing," Griffith Business School Discussopm Papers Accounting no. 2010-01 Mensah, I 2007, "Environmental management and sustainable tourism development: The case of hotels in Greater Accra Region (GAR) of Ghana," Journal of Retail and Leisure Property vol. 6, pp.15–22 Service Skills Australia 2013, Tourism, Travel and Hospitality, viewed 15 Jan 2014, Read More