The Roccoco New York Hotel: Management Issues

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Introduction

Roccoco New York Hotel is struggling to survive and achieve significant market shares in the competitive hospitality industry in New York. The hotel is under pressure to provide quality and value added services to customers so as to maintain and to attract more customers. It incurred losses of millions of dollars for many years until 1997 when it made significant recruitments in its management and leadership structure in its functional departments particularly in the food and beverage sector (Mattila & Ranjeva 2000). However, lately, the management has been receiving many complaints from its customers regarding the poor services they receive from the hotel.

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Generally, Roccoco New York Hotel is suffering the consequences of poor management quality and poor strategic planning. The problems experienced in the hotel are attributed by many factors but the most significant problem being in its human resource. Surveys carried out by the company indicates employees lack of job satisfaction, low morale and lack of empowerment to effectively perform their duties and better meet the customers expectations. The company has also suffered employee turnover in the recent years losing most of their managers to other more established companies in the hospitality sectors. Strategic planning are ways of positioning an organization by prioritizing the organization’s use of resources in accordance with its identified goals so as to guide its development for a period of time (Kriemadis & Theakou 2007). On the other hand, quality management requires that an organization meets all the expectations of its customers.

Purpose of Study

The purpose of the study is to analyze and evaluate the management problems experienced by Roccoco New York Hotel in meeting and exceeding customers’ expectations and to propose possible management quality approaches and process that can be put in place to ensure quality and value-added services to customers. The main objective of the research is to develop quality management which can help the company overcome customer complaints by achieving customers’ satisfaction and hence drive the company to achieve greater market shares in the hospitality industry. The study aims to make the company more customer-oriented and to better meet the market dynamics that exists in the hospitality industry and therefore achieve sustainable growth.

Literature Review

Financial Review

Comparison of Roccoco’s gross operating income and the average industry’s standard income is below normal considering its asset base. This implies that the company’s management has not been able to identify and implement measures that enable it achieve higher investment returns at lower costs. According to the general manager, measures that can help the company achieve marginal cost-cutting could affect the company’s ability to provide quality services to customers. This shows lack of creativity and innovativeness in developing strategic plans for the company as well as inability to effectively implement quality management strategies in the company’s business processes and operations. As such, the company experienced huge losses averaging at $12 million annually in its first three years and still experiences profit margins which are below the industry’s standards as compared to its property. The company has not been able to achieve its revenue goals since its average daily revenues and annual revenues are relatively low. Its customers have been paying rates which are way below the company’s projected rates.

The management is not able to analyse and evaluate the major causes of its low financial returns and only attributes the circumstances to the differences in patterns between the weekday and weekend patterns. The management does not have proper quality management tools to benchmark and evaluate its financial performance and therefore continues to experience lower revenues from its investments. The strategies that the company has put in place to increase its financial returns do not seem to be sustainable since they are not accompanied by improvements of other sectors of the company which are equally very important in achieving sustainable financial gains. Increasing the prices without improving the quality of services and customer care in the hospitality industry is not sustainable. However, the executive made the right decision by rejecting the proposal of abolishing the hotel’s 24-hour services. Continued employee cutbacks may not help the company improve its financial gains but may demoralize the remaining employees the more considering that the conditions of the job has already decreased morale in employees.

Management System

Generally, the management does not integrate universal best practices in its operations and business process. It does not benchmark its performance against those of international recognized best practices which can better help the company improve its services and make them more customer-oriented. The management is less committed to addressing issues of the company’s market growth y taking advantage of its market presence optimization, securing and attracting more customers and more importantly, upgrading its services and capacity to meet the needs of its local and international guests.

The management has also had several changes in its leadership with most of its leadership migrating to other more established companies. This implies that the company has not had the opportunity to be consistently managed by those who better understand its background, mission, vision and values. Thus the management has also not been able to develop talent, knowledge and skills in employees to better meet the customers’ needs in the hospitality industry. Besides, most of those in the management of company have minimal relevant knowledge and experience in the hospitality industry except for the head of food and beverages and therefore do not clearly understand all the specific business processes in the hotel industry. Thus the company has not been able to effectively achieve organizational alignment and execution of its business processes.

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The management has not been able to meet employees’ expectations in terms improving their capacity to perform their duties. The training and development of the employees does not exploit their full potential. Besides, they lack the relevant knowledge and the capacity to properly guide employees in performing their duties. The surveys carried out by the company shows that the management is less committed to achieving relevant training and providing directions to employees. The management does not integrate employees’ views in its management and in ensuring quality services to customers. The management makes decisions without consulting those who have direct contacts with its customers and therefore implementing them may still be tricky since their decisions do not adequately address all the dynamics involved in its business processes. The management is also less committed to finding ways of implementing strategies which add value to its customers as well as attracting potential customers and as such are less responsive to the dynamism to customers’ demands. Although the management has been receiving complaints and suggestions from their customers, they have not been able to integrate the customers’ opinions in their customer services and tailor their operations to better suit the customers. The management’s major concern is how to increase the number of guests at the hotel and average daily revenue. However, this is not sustainable since less effort is made towards satisfying and maintaining the current customers.

Employees

The results of the surveys and an analysis of the situation at Roccoco New York Hotel show poor performance by employees in provision of services and customer care. The company has experienced serious employee turnover over the years and has only about 10% to 15% of the employees who were there when the hotel was still a Restwell (Mattila & Ranjeva 2000). Job satisfaction among employees is low. Their morale and culture has been compromised by the ever-changing management. They lack committed support from the management and their performance has always been affected by the bureaucratic policies and procedures which have always created red tape in decision making among employees. The rules and regulations in the company do not give employees the opportunity to make right decisions in their customer services without approval from their supervisors who again have to go by the rules of the company. The results show that at some point, employees are forced to bend the rules of the hotel to satisfy customers since in some cases what the guests want contrasts what the management expects from the employees. The management is not in touch with the realities of customer services and sometimes gives directives which are not practical.

The rules and procedures at the hotel limit the ability of the employees to effectively resolve customers’ complaints. Customers request and complaints usually take longer than the normal estimated time to be attended to or resolved since they have to consult and get approval from their supervisors. This implies that employees are not empowered to make quick and appropriate decisions whenever necessary. Thus employees have to deal with customers’ upsets without having the capacity and power to resolve their complaints.

Employee training and development at the hotel is also poor. The management shifted from a more viable and sustainable employee training and development to one that makes employees less prepared and capacitated to effectively meet the customers’ expectations. The employees are not given proper training on hospitality in the practical field but are instead left to learn most of the hotel’s operations and customers services on job. The results of the employees’ performance are a clear indication of the gap between employees’ knowledge and experience and the expected performance. Employees have reported that the operating manuals that they have been given to substitute their training are very complicated and difficult to understand since they don’t receive any prior training. The results of the survey also indicate that the employees are given the right training and direction to carry out their duties and to improve their customer service. The results of the survey show lack of professionalism in most employees. They lack the necessary hospitality skills needed to drive the hotel in achieving its goal which is to realise more returns by increasing the number of guests through maximum customers’ satisfaction.

The complaints received by the management and the survey results show lack of proper coordination and efficiency in employees’ performance. Most of their services are delayed and are sometimes not in accordance with the customers’ requests. This implies that the company does not provide adequate of communication of the company’s strategic intentions to all the staff.

Competition

Roccoco New York Hotel faces stiff competition from other players in the industry. The company faces competition from companies which have embraced personalized atmosphere for their clients and which offer better quality and value-added services to customers such as Leonardo Hotel. The average outcomes of other companies’ returns clearly shows that quality services in the hospitality industry are more important than the size of the company since it enables the company improve its reputation in the market. The company has not been able to develop internal marketing approaches which can give it competitive advantage over other hotels. It has not been able to identify best practices in its marketing and strategic planning. The company has not been able to standardize its amenities, rooms and services to enable it favourably compete with both world-class and hotels of its caliber. Thus the company receives lower daily average guests and income as a result of the lower quality services that it offers to customers. Besides, the company has not been able to develop services and measures that better enhance prestige values and the image of the company which are an integral part in the hospitality industry.

The hotel’s customer profile also indicates that the hotel majorly receives guests from the mature group. This implies that its services have not been able to attract the younger ages which are the more spending group. Its internal and external marketing strategies have not been able to identify better ways of attracting and maintaining diverse ages of customers which is very important for increasing its market growth.

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The company is lagging behind technologically. It has not carried out structural upgrading in its rooms and besides, its room services do not include the modern communication equipment to meet business travelers’ needs. Although the company has also noted this problem, the management is doing very little to bridge the technological gap which is among the factors which give its competitors an edge over it.

Marketing

Roccoco’s poor marketing is also a contributing factor to the company’s low financial returns. The company’s poor customer care and low quality services are reflections of its poor internal marketing. According to the survey carried out by the company among its customers, only 18% of the customers previously served at the hotel are willing to commit their loyalty to the hotel while 4% are not willing to acquire any more services from the hotel due to their perceptions towards the hotel’s services (Mattila & Ranjeva 2000). According Laura Bressner, a customer who had previously acquired the hotels services, Roccoco is little known as compared to other first-class hotels within New York. This means that its external marketing strategies have not been very effective. Its promotional campaigns have not been directed to the potential customers.

Findings

Roccoco’s strategic planning and quality management standards are way below the internationally recognized best practices. Its management system, technological structure, human resource training and development, policies and procedures, communication, financial planning, customer services do not meet international standards of business process and operations. These management problems clearly show that the company’s management does not have the capacity to benchmark and evaluate its performance but only learns about them through its financial results and through the customers’ complaints. The surveys that the company carries out have not helped it either since the management has not done much to improve the situation.

It has also not been able to integrate its management systems with best-in-class management practices. This implies that the management’s limited relevant experience in the industry hinders its ability to identify and develop best practices and critical success factors that can help the Roccoco New York Hotel benchmark successful execution of its operations and to also develop assessment tools for evaluating its operations and performance in providing services to customers. The management has not been able to identify the quality gaps that exist in the company so as to give the company the opportunity to bridge the gaps.

Roccoco’s is more concerned with quick financial returns and is doing very little to make its growth sustainable. It is not focusing on making sustainable development in its business operations rather striving to achieve and attract more visitors when it is doing very little to improve the quality of its services. It is more concerned with strategies which could enable it improve its average daily rates but is not concerned about improving the employees morale to provide better services which could help improve the company’s internal marketing.

The company is also not committed to providing continuous support to its workforce in their operations. Modern strategies of quality management require that the management fully commits itself to supporting the staff under them. The survey results show that the employees are not given the proper guidelines and directions to perform their duties. This implies that the supervisors do not have the relevant skills and experience to provide the necessary support to employees. The workforce is not given proper training that can empower them to meet and exceed the customers’ expectations. The survey results showed that very few of them are able to apply professionalism while providing services to customers.

The company also experiences communication problems between the customers, the employees and the management. There exist bureaucratic policies and procedures that hinder direct communication with the management. The management is therefore not really in touch with the problems that occur in the processes of service delivery to customers. The employees’ and the customers’ opinions are not consulted when making decisions. This creates problems in implementing most of its programs. The management does not communicate customer-oriented standards to employees while the employees are also not able to communicate what they feel about the policies and procedures that are in place and the problems that they face while dealing with the customers under the those regulations.

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As a result of its poor training and development of its workforce, its effective communication and the bureaucratic policies and procedures, it has not been able to provide quality services to customers. The company is less committed to improving its technological infrastructure and the quality of its services by developing the capacity of its employees.

Recommendations

Roccoco has a range of approaches of strategic planning and quality management strategies to satisfy customers’ expectations and achieve sustainable growth. According to Kriemadis and Theakou (2007, p 30) Roccoco should implement a goal-based planning approach and as such should begin its reformations by carrying out external and internal assessment so as to identify its strengths, threats, opportunities and weaknesses (McNamara 2010). This would enable it perform a strategic analysis of its business processes and therefore identify and prioritize the key issues that affect the quality of its services.

In order of priority, the company should be able to design strategies which can enable it bridge the quality gaps that exists in its operations. Roccoco’s mission, vision as well as values should then be restructured to reflect the strategic plans for meeting customer satisfaction and achieving sustainable growth. The company should then redesign its action plans to align them with its vision, mission, values and strategic plans. This involves designing roles and responsibilities for each individual in the company, establishing the resource needs for the new strategies and developing objectives for the operations and functional departments in the company. In order to realise these reforms, the company has to develop an annual operating plan document which should be evaluated at the end of every financial year to check the company’s performance against the benchmarks put in place. The implementation process of the operating document plan should be monitored comprehensively to check and correct variations that might occur during the process (McCawley 2008, p1).

In aligning Roccoco’s restructured mission, vision, values and strategic plans with its management, the company has to adopt quality management strategies such as the Six Sigma as well as total quality management tools in its operations and all its business processes. These would enable the company achieve human efficiency and value-added quality services and hence improve its overall performance. Six Sigma would enable Roccoco benchmark its business processes against those of other leading organizations in the hospitality industry and as such be able to discover those factors which limit its superior performance. This would enable the company better meet customers’ demands and achieve sustainable change. Six Sigma strategies would give the company the capacity to identify critical characteristic quality from the customers’ perspective and therefore help align the company’s services with the customers’ expectations.

TQM tools such as Scatter diagrams, flow charts, histograms, check lists, pareto analysis, check sheets, process control charts, cause and effective diagrams and control charts would give the company the opportunity to evaluate the performance of its business processes such as customer services, management system, human resource, marketing strategies, customer satisfaction, human resource recruitment, training and development among many other operations and processes (Al-Ghanim, 2003). It would therefore enable Roccoco make fact-based decisions for its business processes in ensuring continuous improvement of its performance. TQM tools would enable the company identify the quality gaps that exists in its business processes such as poor training and development of its workforce, marketing gaps, management gaps, communication gaps among others and identify proper ways filling the gaps.

The most effective ways of bridging these gaps is by improving both internal and external communication strategies and channels; employing research and complaint analysis to understand customers’ expectations; and by increasing the interactions between customers and the organization’s managers. Bridging the gap also involves reinforcing, providing technical training as well as communicating customer-oriented service standards through training of all the groups in the organization.

The hotel should employ a stakeholders approach in its management; where stakeholders here include its employees, customers and shareholders. These people have the capacity to positively influence decisions, practices, policies and even the goals of the company (Haggie & Kingston 2003). Integrating their ideas in decision making and in the business processes of the company would most certainly help improve services offered at the hotel. Developing reciprocal relationships with-and-between customers, employees and the management would better help improve the hotel’s competitiveness and overall performance. Adoption of this approach would make the stakeholders of the company feel that their values and needs are being respected. Roccoco’s public relations personnel need to identify and adopt long term ways of managing the hotel’s organizational relationship with its stakeholders and the publics. The company’s public relations personnel should not wait for the customers to complain before they address their concerns. They should be collecting information from the first-line staff and the customers themselves so as to address their concerns.

This would better help market the hotel and therefore help in maintaining and attract more customers. It would also help improve the interactive culture between the customers, the employees and the management. Stakeholders approach would help Roccoco achieve an inclusive leadership by shifting its emphasis on its physical assets so as to realise the creative ideas of its employees, customers and shareholders which can better help the company improve its services.

The company also has to realise that the policies put in place by the management to protect its physical assets are working against its sustainable growth. Employees have the direct contact with the customers and therefore integrating the employees’ and the customers’ opinions would help make the services more customer-oriented.

Conclusion

Roccoco New York Hotel is experiencing management problems that could be easily avoided by implementing conventional best management practices and modern strategic planning ways. The management of the company should consider implementing best strategies which can enable it identify the quality gaps that exist in the company and bridge them to ensure improved performances in its overall operations. The management should aim at achieving strategies that enable it improve the capacity of its workforce to provide value-added services to customers and management practices that enable the company achieve sustainable growth through standardized strategic planning and application of modern and world-class management strategies.

Reference List

Al-Ghanim, A., 2003, The impact of implementing quality management principles of IS09000 on business effectiveness: An applied study at Palestinian businesses. Nablus: An-Najah National University Press

Haggie, K., & Kingston, J., 2003, Choosing your knowledge management strategy. Edinburgh: University of Edinburgh Press.

Kriemadis, T., & Theakou, E., 2007. Strategic planning models, strategic management, public and non-profit sport organization. Sport Management International Journal, Vol. 3, No. 2, p. 30.

Mattila, A. S., & Ranjeva, J. P., 2000, The Roccoco New York Hotel. New York: North American Case Research Association

McCawley, P. F., 2008, The logic model for program planning and evaluation. Idaho: University of Idaho Extension Press.

McNamara, C. 2010, Strategic planning (in nonprofit or for-profit organizations). Web.

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