Case study – Palm Bay Hotel

Part A: Case study – Palm Bay Hotel

Part A of this TMA will be marked out of 75 marks. Your answer to this question should be no more than 1500 words.

In your work on Block 3 you encountered the example of Palm Bay Hotel, most notably in Session 9, Activity 9.7.

Read through the Palm Bay Hotel Case Study (below)  and answer the following questions:

1. Using the concepts and theories from Block 3, Session 1 and 3, identify the opportunities for innovation in running the Palm Bay Hotel. How might Palm Bay Hotel use innovation strategies to create value?  (25 marks)
2. What are the sources for operational risk at Palm Bay Hotel? What should Palm Bay Hotel do to limit operational failure? (25 marks)
3. One of the ‘fundamental goals’ of relationship marketing is said to be ‘maximising the lifetime value of a customer’. How would you describe Palm Bay Hotel’s relationship with its customers? (25 marks)

The Palm Bay Hotel case study

Written by Paul Walley for the Open University module Shaping business opportunities with contribution from Sandra Cunliffe

Introduction

In this reading you will look at a case study exploring the experience of guests at the Palm Bay Hotel. It follows Sandra who is staying at the hotel while on a business trip visiting a potential client. Although the case study is based on real feedback from internet sources, all the information is disguised, including the name and location of the hotel and those who work there and stayed as guests. Any resemblance to a hotel with a similar name or location is purely coincidental, and this case study is not a review of that hotel.

1 Sandra’s experience at the Palm Bay Hotel

Sandra was visiting the area on a business trip to meet a potential client. It was just at the start of the summer and she’d had some difficulty finding a hotel room that was conveniently located and at a low price, as most near the seafront were already taken or very expensive. However, a booking agency had found a room for her at the Palm Bay Hotel. Although the price was still quite high, it was not as expensive as most other hotels with the same star rating.

On arriving at the hotel, Sandra managed to squeeze her car into the last space, which was furthest from the reception and next to where staff had left rubbish bins ready for collection. She carried her bags through the main door and, as no one was around, rang the wobbly call bell on the reception desk to attract someone’s attention. She could hear loud voices arguing in the back office, but no one came. When she rang the bell again someone eventually shouted through ‘be with you in a minute’. The reception was dark, with paint peeling off the door to the back office. There was a slight musty smell and the faint aroma of stale food emanated from the carpet.

Eventually a rather stressed-looking older man came to the reception and asked Sandra if she was checking in. Sandra confirmed and the man introduced himself as Cedric – the co-owner of the hotel. He checked the booking on his computer, gave Sandra her key and asked her if she wanted to eat in the hotel that night. Sandra reserved a table for 7.30 and went to her room on the second floor.

The room

Sandra carried her bags up the stairs to the second floor and followed the signs to her room. The room was small and filled with large, old pieces of furniture. A large armchair by the window afforded a nice view of the seafront, but it was tatty and looked quite dirty. The bed, covered by a loud, floral duvet and flat pillow, took up a great deal of space. The room had a small en suite bathroom decorated with plain white tiles. The mirror above the sink basin had a small crack in it and so did some of the tiles next to the bath. Sandra decided to shower before dinner and started to run the water. The hot water took a while to come through due to the low water pressure, but she was able to have a moderately hot shower.

Dinner

There were about a dozen tables in the dining room and they were nearly all occupied with other guests. A young waitress asked Sandra if she had a reservation. She confirmed, gave her name and room number, and was ushered to one remaining table and handed a menu. The menu provided a very good choice of starters and main courses, and showed a lot of attention to detail in the use of locally caught fish and vegetables from a nearby organic farm, and offered a nicely selected choice of wines. Sandra ordered a starter of locally smoked trout pâté followed by grilled chicken with a Caesar salad, all with a large glass of Sauvignon Blanc house wine. The waitress quickly took the order, immediately fetched the wine and said the food would be brought to her very soon.

In contrast with the rest of the building the restaurant area was freshly decorated, light, airy and comfortable. There was a real buzz of people enjoying their food. One couple with children were just getting up to leave and thanked the waitress for a lovely meal. They were staying across the road in another hotel but had come across to the Palm Bay Hotel restaurant on the recommendation of other guests.

Sandra’s meal was excellent and the service very good.

The bar

Later that evening Sandra went to the bar and was greeted by Cedric’s wife Irene. Sandra explained that she was a consultant visiting a client rather than a holidaymaker. As it was quiet in the bar, Irene started to chat about her and her husband’s experiences of managing the hotel and the business advice that they perhaps should have taken when buying it.

Cedric and Irene Watson took early retirement from their public-sector jobs five years ago. They had dreamed of owning and running a hotel – so being able to buy the Palm Bay Hotel, which they had honeymooned in many years ago, was a dream come true. Unfortunately it hasn’t turned out to be such a dream since. Irene said that a lot of customers were unhappy about their stay and the hotel had received a lot of bad reviews on websites such as TripAdvisor.  

There were so many complaints that Cedric and Irene didn’t really know where to start in addressing them. They have tried to meet the needs of anyone who wants to stay in the hotel but now they feel as though they are failing to meet the needs of anyone other than older couples without children. Irene commented:

The two types of customer want very different things. The elderly couples are happy with a basic, quiet room and love the proximity to the seafront. They tend to be conservative when it comes to food, preferring the simpler, standard British fare, such as fish and chips or steak and kidney pie. They tend to come in the off peak times most, outside of school holidays. The families coming on holiday arrive with large cars stuffed with seaside gear. They want the nearby beaches but also expect clean, spacious rooms – where their kids can run around when they get bored. The work is much harder than we ever thought. We don’t know if we want to carry on working this hard.

Sandra discovered that Irene was in charge of the restaurant and bar and had recruited a very good, young chef to help her in the evenings. Cooking was one of her passions. Hotel bookings were managed by one administrator who liaised mostly with websites and booking agencies. Cedric took charge of housekeeping and reception. He wasn’t really a ‘people person’ and so generally managed the back office – ‘rather grumpily at times’, said Irene.

2 Online reviews of the Palm Bay Hotel

Sandra said goodnight to Irene and returned to her room. She pondered on Irene’s predicament. Cedric and Irene have to make some important decisions quickly if the hotel is to survive in the longer term. Whether or not to focus on older couples without children and how best to meet their needs has been the cause of many of arguments between them and the guests are starting to notice. The hotel had Wi-Fi so Sandra looked up some of the reviews from customers on the Web. Of the 89 hotels on the web, the Palm Bay was listed in 74th place – not a good result. Sandra read some of the recent reviews (each color refers to a single review).

Just the look of the reception desk is enough to put you off. Old- fashioned patterned carpets, stained with who-knows-what. But at least the place is consistent – there were stains everywhere – on the towels, on the bedding. It’s not the most expensive hotel but it’s not the cheapest – not a lot to ask that it’s clean. Didn’t try the restaurant – well you wouldn’t, would you!

Family of four, two children under 10

Don’t know where the photos on the website were taken – but not at the Palm Bay Hotel – well not in the last 20 years anyway! Either that or the photographer had a special lens that removed all the dirt and repaired all the rips in the curtains and the bedding. I’d buy one of those lenses if I knew where I could buy one.

Couple, mid-30s DON’T BOOK. Not got enough time to tell you all the reasons why –

just don’t.

Lone business traveller, mid-30s

The location was great! Right on the seafront – everything we needed on our doorstep. Yes, it could do with a bit of paint here and there but the owners are lovely and were only too happy to tell us about all the things we could do while in town.

Couple, mid-60s

What a lovely atmosphere – a real family-run hotel. Shame that means that the cleaning isn’t to a professional standard, the owners seems to argue with each other at least once a day and the staff act like sullen teenagers.

Couple, mid-50s

3 Online reviews of competitor hotels

Sandra was able to compare the Palm Bay Hotel with similarly sized and priced hotels in the area. The feedback for the hotels included:

4 Comparison of the Palm Bay Hotel with competitors

Using the information she found online Sandra was able to compile some data, albeit a bit subjective, about the characteristics and performance of each of the Palm Bay Hotel’s rivals.

Conclusion

That night Sandra couldn’t sleep very well. There was a lot of noise from drunken youths making their way home after a night on the town. She worried about her car parked next to the road and whether it would be vandalised. Maybe her lack of sleep was partly caused by her worrying about Irene’s situation.

Sandra thought carefully about the service quality theory she had learned during her MBA and how she could identify the most important aspects of performance the hotel needed to improve from some of the tools she had learned.

Could Sandra advise Irene on some improvement priorities?

Part B: Block 3 mind map

Part B of this TMA will be marked out of 15 marks.

Create a mind map showing how the main themes (leadership and management & leadership and motivation) and concepts on Leadership, relate to each other. Your mind map should bring together the main themes and concepts that explore how leadership builds long-term success. Your mind map should be no more than 250 words.