Managing Hospitality Resources - Report Example

Introduction This paper is based on a scenario involving a senior manager of a hospitality organisation. The scenario assumes that the is a senior manager in an organisation that is supposed to develop a new concept for a redundant building. The paper examines the main factors that will be considered before the building is changed for hospitality purposes. The new hospitality concept is being suggested on several bases and this is meant to provide a good basis for the redevelopment of the redundant industry. This is quite a complicated system and structure and the paper will undertake a number of activities to suggest an appropriate model. The following activities and factors need to be taken into consideration in this quest and the following steps will be considered in this research: 1. Undertaking of stakeholder analysis 2. Assessment of the redundant building 3. Evaluation of constraints that affect the choice of land use 4. Assessment of the legal matters that will affect the constraint 5. Investor concerns in the land use 6. The assessment of land use option 7. Competitors 8. Technical appraisal of options and final selection. Stakeholder Analysis A stakeholder is defined as a person who affects or is affected by a given business (Morton, 2007). In order to choose a new hospitality concept for a redundant building, a senior manager needs to be aware of the various stakeholders of the company they work for and try to satisfy each stakeholders need. This therefore means that the management of the company will have to do a lot of work to understand what the motivations of each stakeholder group is and try to find the strengths of the stakeholders at each point in time and try to factor everything in the new concept. In the hospitality industry the following stakeholders are likely to be connected to the company in question: 1. Shareholders: These are the people who fund the organisation and are owners of the company. They expect returns on their investments and will expect that the redundant building is put to the highest and best use so that they get optimum returns on investment. This group is powerful because they have the power to authorise and reject any decision taken by management on the use of the land. Investors therefore need assurance of operating efficiency and success or failure of the venture (Lockyer, 2007 p4) 2. Employees: These are existing and prospective workers of the company. Existing workers will want the building to be put to a use that will ensure their job security. 3. Local Customers: These are customers within the UK that will frequent the premises if it is put to a given use. Thus if the building is converted to a hotel, these customers are likely to become the people who will visit the premises regularly. They are likely to be aware of other competitors and can influence the revenue generated by the company 4. International Customers: These include tourists and other foreigners who might want to visit or lodge in the re-developed building. The choice of a new way of using the land is therefore dependent on the kind of arrangements that attracts them to lodge in there, since their patronage will determine the revenue base of the future building. 5. Construction companies: This include the construction companies available on the market who can develop the premises. Any new concept that will be developed must be based on the availability and the quotes of such companies on the market. 6. Competitors: In choosing a given form of hospitality activities, management need to understand the kind of companies delivering similar services. The competitiveness of the new re-development must be assessed in relation to competitors to establish the appropriateness of the new concept that is going to be chosen. 7. The wider community is also very important. This is because the building and new concept will run in the geographical area within which it is located. This means that the trends in tourism, residency and hospitality conditions in the area the building is located will affect the type of concept that can be chosen by management. 8. Government and its agencies: Regulations and constraints that are set by the national and local government is very important. This is because it will affect the kind of permission that can be granted for the operation of a given concept. Thus, irrespective of any choice that proves popular with management, it will be dependent on the legal and environmental regulations operational in the wider community. Assessment of the Redundant Building There is the need for the management to undertake a detailed and critical analysis of the existing building. This implies that they will have to access some technical details of the building to determine the possible uses to which the building can be put. This is because it is not every redundant building that can be gentrified for every purpose. There might be some purposes for which the building cannot be put to. If the business fails to do this evaluation, the management risk legal suits for negligence. This is because when the land is put to a use that proves to be dangerous to people who visit it, they will be liable to pay damages First of all the building needs to be assessed on the basis of what it was built for. Koppelman & De Chiana (1975) identify that legally, every building is set up for one of nine options: residential, manufacturing, transportation, communication, trade, services, cultural/entertainment, resource production or extraction or is an undeveloped land. This implies that the modification of land from one form to another relies on similar restrictions and it will be important to find a professional to analyse the redundant building critically and determine what the building was set up to do. After that, the appropriateness for various land use types should be evaluated. This will be based on a professional analysis of which of the nine categories of land use that the redundant building can be put. This will involve technical details as well as other concerns that management will need to be critical about (they are discussed below). Evaluation of the Constraints that affect the Choice of Land Use After the assessment of the state of the building, it is important for the management to evaluate the various constraints and requirements of the various stakeholders, particularly the relevant authorities or stakeholders who have the power to directly affect a new concept. There are constraints like constraints like legal constraints, environmental constraints as well as other specific demands of other stakeholders. There are also financial constraints and other resource and time demands that need to be taken into consideration. Thus, after analysing the current building, it is important for management to evaluate all the relevant factors and specific demands and expectations of the various stakeholder views. Assessment of Legal Constraints Legally, there are several constraints that can affect a new hospitality matter. They are broadly categorized into four main classes of legal and compliance constraints. The include the following: 1. The land ownership and ownership of the building is important in the hospitality industry (Leung, 2003). The management will have to examine the kind of ownership systems and their opinion and reactions to various hospitality concepts when they are applied to the building. Also, the legal status of the ownership should be ascertained. If there is the chance that the building will be handed to other owners, the implications and attitudes of potential owners should be assessed. Restrictive covenants and indemnities in the title deed of the land should be considered before a new concept can be chosen for the business. 2. The legal requirements of the nation should also be taken into account. The regulation and restrictions that are invoked by the government in relation to land use should be examined critically. This is because such rules can affect the status of the new concept to which the land will be put. Restrictions that are placed on the entertainment industry and hospitality sector should be examined closely and factored into any decision on how the land can be used. 3. Environmental protection laws should also be examined closely. Central amongst the environmental laws for hospitality companies is the discharge of waste (Barth & Hayes, 2007). 4. Also, local government rules and bye laws in relation to alcohol use, historical restrictions, zoning laws fire regulations, age restrictions, health and sanitation in the area must be carefully scrutinized before a new hospitality concept and building are designed. Investor Concerns & Optimum Land Use As identified earlier, investors demand possible returns for their investments in a hospitality business. Returns on investment refers to the ration of money to be earned in relation to money invested (Dopson & Hayes, 2008). This therefore means that investors will expect to break even as soon as possible so that they begin to earn profits. Thus, the higher the returns on investment the faster they will break even and start making profits from their investments. They will therefore prefer to invest in a given project that will earn higher returns on investment. To an extent, when the business brings in the maximum returns, the management and employees also benefit because the business can expand and remunerations can increase for managers and workers. The desire for the growth and expansion of the business is sometimes in conflict with the desire of shareholders to maximise their wealth (Lockyer, 2007). This is because there is the need to invest the returns of a given venture in marketing and infrastructure to ensure growth. However, when a business increases its revenue, the interests of owners and employees can both be honoured in a win-win situation. Thus, the concept that will be favoured by the these two groups of stakeholders must be one that brings the highest possible returns. This is known as highest and best use. “Among all reasonable alternative uses, the use that yields the highest present land value after payments are made for labour capital and capital coordination...” is known as highest and best use (Friedman et al, 2009 p146). This therefore shows that there is the need for the management to analyse the most productive land use type to choose the best that the land can be put to. This will determine the kind of hospitality concept that can best be chosen for the redundant building. Highest and best use is a market force that drives the value and development of a given site (Carr et al, 2003 p166). This implies that the option that will be chosen for the land use must be one that provides the best and most valuable resource base for the company into the future as it is put in operation. Highest and best use is a framework that encompasses legal possibility, physical possibility, financial feasibility and optimum productivity (Floyd & Allen, 2002 p230). This implies that the choice of the highest and best use must identify the highest use based on the location of the building, the financial resources available to the business, the competencies of the employees of the company and the legal restrictions available. Highest and best use can therefore be the basis for several decisions to be taken. However, it will depend on the worth and financial feasibility of the company. It will have to be based on the available market as well as the ability to promote the concept. This is because when there is a big market for a given hospitality concept, then there is a chance that the optimum financial returns can be attained from concept. Thus, there will be the need for the best and most profitable option to be taken and built upon for the business. It must be pointed out at this point that there might be some other uses outside the hospitality industry that might bring in more returns than other hospitality concepts. Being profit oriented, it is likely that shareholders might favour this non-hospitality sector ahead of the hospitality concept. Competitors The competitors include the various players in the hospitality industry that undertake business in a way that is quite similar to the concept chosen by the organisation. This therefore means that in choosing a given concept, the business will need to examine the various competitors in each of the options available. This will help the company to make an honest analysis of the market and competition to come up with an appropriate conception that will ensure the survival of the business and enhance the competitiveness of the new concept. Appraisal of Options and Final Selection After the management gets all stakeholder views and preferences, a number of hospitality concepts could be outlined. When this is done, the company can zoom in on the number of conceptions to which the building can be put to within the hospitality industry to ensure that the building can be put into the best use. The outlined options can be examined more critically and assessed on various grounds and against stakeholder needs, expectations desires as well as other financial and legal constraints. When this is done, the best option can be chosen and the land can be put to that use. Accommodation Design As pointed out earlier, the current redundant building must be examined critically and assessed on various technical, social and cultural bases and in relation to the constraints of the company at hand. When this appraisal is completed, there is the need to come up with an appropriate design that will support the chosen conception available. Leung (2003) identifies a series of factors and situations that affect the design of an entity in the hotel industry. They include amongst other things: 1. Location: Where the entity is to be based is very important. The kind of location often has some important features and factors that affect the kind of building and design that can be put together to attract customers who seek hospitality and relaxation services. Thus, if the location is one that is in the country, the building design must reflect such a setting and provide appropriate luxuries. The design might differ from another building that is meant to be situated in an urban centre. 2. Capacity: The capacity of the redundant building will dictate the number of rooms that the new hotel can have. In other words, there will be the need to identify the kind of uses that the building can be put to due to constraints relating to the size and features of the building that exists. Also, the incremental additions to be building can be aimed at improving the capacity and making the building much more competitive. 3. Conditions of Roads and Infrastructure in the area: This entails the kind of status that the various infrastructure in the area within which the building is situation is in. This will determine the kind of design to which the building can be put. If the redundant building is located in a noisy area, it might be necessary to design the building in a way that the noises can be absorbed and customers desires and expectations will be met as they use the facility. 4. Lighting: The original state of the building will affect the level at which the building can be opened to natural light during the day. Although alterations can be made, this comes at a higher cost which could affect the operations of the business into the long term. 5. Units: The various units of the building will have to be designed to fit the concept to which the building will be put and also be of use to the strategic plan and system of the company. This can be done by ensuring that there are adequately designed kitchen facilities, toilets, baths, water supply washing facilities, lighting and heating that reflects the plans and strategy of the organisation. 6. Maintenance: The design of the building needs to be sensitive to easy maintenance of facilities and the building in the future. Plumbing systems, deterioration issues, sanitary matters and basement conditions should be designed in such a way that customers will feel comfortable and welcomed when they live in there. 7. Occupancy: The kind of design must fit the needs and estimated desires of the targeted market. Room crowding, area crowding, use by disabled persons and security must all be integrated into the accommodation and facilities of the chosen concept. Conclusion In choosing the kind of concept that a hospitality company might want to apply to a redundant building, a business will need to examine the various stakeholder needs and try to incorporate them in the choice. The main stakeholders are shareholders, customers, employees, government agencies and competitors. A business will need to identify all their needs and expectations and make a choice that will satisfy all stakeholders. Also, the design of the building must take into account the reality of the location, existing infrastructure and future needs as well as the strategic plans of the business in question. Reference Barrows Clayton & Powers Tom (2008) Introduction to Management in the Hospitality Industry Hoboken, NJ: John Wiley & Sons Barth, Stephen & Hayes David (2007) Hospitality Law Hoboken, NJ: John Wiley & Sons Carr Dennis, Lawson Jeff & Schultz Carl (2003) Mastering Real Estate Appraisal Dearborn Rea Estate Education Dopson Lea & Hayes David (2008) Managerial Accounting for the Hospitality Industry Hoboken, NJ: John Wiley & Sons Floyd Charles & Allen Marcus (2002) Real Estate Principles Dearborn Real Estate Education Friedman Jack, Harris Jack & Diskin Barry (2009) Barrons Real Estate Handbook Barrons Educational Series Koppelman Lee & De Chiara Joseph (1975) Urban Planning & Design Criteria London: Van Nostrand Reinhold Company. Leung, Hok Lin (2003) Land Use Planning Made Plain Hoboken, NJ: John Wiley & Sons Lockyer, Timothy (2007) The International Hotel Industry: Sustainable Management London: Routledge Taylor Francis Morton, John (2007) Stakeholder Analysis and Strategic Analysis Heinemann Publishing Read More