College Group work

University of the Philippines Diliman

College of Home Economics

Department of Hotel, Restaurant and Institutions Management

Strategy Formulation for

Submitted by:

Darleen May B. Alcantara

Vida Margarette D. Andal

Danica Mara R. Bermudez

Kim Floyd F. Suvilla

Prof. Germaine Salvador

1^st Semester, AY 2009-2010

HRIM 190 Strategic Planning for Hotels, Restaurants and Institutions

HOTEL SALCEDO DE VIGAN

CASE ANALYSIS

CONTENT

I. Hotel Salcedo Background

II. Long-Term and Short Term Objectives

III. Situational Analysis

IV. TOWS Matrix

V. Strategic Map

1. Financial Perspective
2. Customer Perspective
3. Internal Perspective
4. Learning and Growth Perspective

VI. O.G.S.M. Table

VII. Recommendations

VIII. Conclusion

I. BACKGROUND

Hotel Salcedo de Vigan is the newest hotel in the UNESCO World Heritage City of

Vigan in the province of Ilocos Sur. It is an old mansion renovated to become a 23-room hotel with state-of-the-art facilities. It opened in April 2009 and is currently one of the preferred hotels catering to tourists belonging to Classes A, B and C. Being a new establishment, Hotel Salcedo de Vigan is currently experiencing tough times as the management is still getting a grip on the operations of a hotel. This paper attempts to identify the strong and weak points of Hotel Salcedo de Vigan and formulates possible courses of action for the hotel.

HOTEL AMENITIES AND FACILITIES

Hotel Salcedo de Vigan has 23 rooms including two dormitory rooms that can accommodate 8-10 people and one drivers’ quarters. The hotel has a honey moon suite, junior suites, executive suites and deluxe rooms. Each one is beautifully decorated and offers generous living spaces with high ceilings, large windows, and furnishings of old Spanish design. It has a function room that can accommodate 100 people, a business center, massage and laundry services as well as Wireless Fidelity or WiFi access to its guests. It also has its in-house restaurant called Bistro Amarillo that offers local Filipino dishes.

II. LONG-TERM and SHORT-TERM OBJECTIVES

Since Hotel Salcedo de Vigan is new and the management is still aiming for stability, the hotel does not have any formulated long-term or short-term objectives. Herein, the group proposes that the hotel urgently implement objectives to direct the business’ path. The following are objective propositions that Hotel Salcedo may adapt.

Short-Term Objectives

To create a distinction from the competitors and efficiently market the unique experience of staying in Hotel Salcedo.

Long-Term Objectives

To build on a reputation as Vigan’s most luxurious historic lodging facility and satisfy the hotel’s investors by building long-term financial stability.

III. SWOT ANALYSIS

1. STRENGTHS

• New and well-designed facilities are superior to other hotels in the city
• Its distinctive theme is appropriate with Vigan’s character (Spanish Architectural Design)
• Bistro Amarillo offers delicious Filipino food.
• Elegant look heightens the experience of the guests
• Accessibility to tourist spots. Calle Salcedo, Vigan’s main tourist spot, is just a block away.
• The presence of online reservation system makes it easier to book in the hotel thus capturing the online market
• Having dorm type of rooms that cater to tourist groups on a budget.
• They are the only hotel in the city that has a ballroom and function hall.

2. WEAKNESSES

• Management is not stable. Some shows incompetence in the field.
• Absence of Vision, Mission, Objectives, and Core values. This in turn deprives the hotel of imbibing a culture to its employees.
• Absence of Employee Manual or handbook to ensure consistent service
• The location is inferior to its competitor
• Parking space is located at the back of the hotel thus guests have to cross a block to enter the hotel.
• Standards needs polishing and strict implementation
• Excessive expenses are not compensated by revenue (assumption based on constant financing by investment of owners and acquisition of liabilities)
• Insufficient marketing efforts. They only use sales blitz and internet marketing. The website’s search engine is not optimized. When one googles hotel Salcedo, its main website does not appear on the first results.
• Too simple website. Only minimal information is available.
• Absence of financial statements makes it difficult to analyze the financial situation of the hotel and identify its problem areas.

3. OPPORTUNITIES

• Vigan has a stable influx of tourist arrivals for its well-known historical and leisure tourist spots and numerous festivals. The city has a steady influx of tourist almost for the whole year.
• Online market is growing and the hotel is keeping up with this by maintaining their own website.

4. THREATS

• The main competitor, Vigan Plaza Hotel, has already established a name and has an excellent location
• Political connections give its competitor a large advantage.

4. TOWS MATRIX

External and Internal Factors	Strengths	Weaknesses
Opportunities	MAXI-MAXI: SO Strategy Partner with tour operators Offer tours to guests	MINI-MAXI: WO Strategy Improve marketing gimmicks Advertising more aggressively in the internet as they are now sited in different travel websites.
Threats	MAXI-MINI: ST Strategy Create more distinction from the competitor by showcasing excellent quality Vigan cuisine Add uniqueness to guest relations by training staff to provide the “historical feel” in their service	MINI-MINI: WT Strategy Target tourists that do not have cars by partnering with Vigan’s bus terminals. Hotel Salcedo may have a marketing stall in the station and offer transportation to Hotel Salcedo via horse carriage or sophisticated car

V. STRATEGY MAP

1. Financial Perspective

1. Productivity Strategy

1. Improve Cost Structure

• Open hiring to competent applicants and limit pirating from Vigan Plaza so as to reduce labor costs.
• Set operating standards to ensure that all resources are efficiently used thus lowering wastages and unnecessary costs.

2. Increase Asset Utilization

• Improve the visibility of the souvenir items such shirts, fans, key chains, mugs that are on sale in the lobby.
• Maximize use of function rooms by pursuing intensive marketing efforts to acquire bookings.
• Incorporate the concept of the hotel as a museum by labeling antique items on display and in use or even highlighting the history of the building site.

2. Growth Strategy

1. Expand Revenue Opportunities

• Partner with tour operators so as to grab the market of smart tourists.
• Partner with Rotary Club of Vigan and other clubs to have their weekly meetings in the function rooms of the hotel.
• Host events to be held inside the hotel such as a casino night such as those gambling meetings held in mansions during the Spanish era, a museum and fashion show featuring old Filipiñana dresses, poetry reading night and other cultural activities during lean months or peak seasons so as to further enhance the vacation experience of the guests and invite locals to visit their hotel.
• Offer shuttle services that will fetch guests from Laoag International Airport
• Partner with Fort Ilocandia Resort Hotel to book transfer their guests to Hotel Salcedo when the latter visits Vigan after a tour in Laoag.
• Extend facilities to exude the Spanish Era Feel by putting up a small casino and a pictorial room where guests can take Old-Spanish-themed photos.

2. Enhance Customer Value

• Add more “inclusive” in packages. For example, they can offer packages that include dinner for couples on honeymoon. This adds to value perception.
• Provide variety by offering more packages that will cater to different tourist groups visiting Vigan.

2. Customer Perspective

• Create more distinction from the competitor by showcasing excellent quality Spanish- Vigan cuisine and service instead of serving usual home-made dishes. They can research on different menu items served during the Spanish colonial times in their locality and highlight its distinction from other dishes in the country.
• Add uniqueness to guest relations by training staff to provide the “historical feel” in their service.
• They can devise a loyalty system with their guests by providing discounts and privileges for frequent visiting guests.
• Strive to become more friendly to international tourist by posting multi-lingual signs and advisories in their rooms or probably hire manpower that are knowledgeable in common foreign languages.
• Implement events adding up to the distinct “Spanish era experience” like “Governador’s Ball” and Historical presentations/plays/poetry readings

3. Internal Perspective

• Target tourists that do not have cars by partnering with Vigan’s bus terminals. Hotel Salcedo may have a marketing stall in the station and offer transportation to Hotel Salcedo via horse carriage or sophisticated car.
• Improve marketing gimmicks such as participating in social events such as fiestas so as to make their presence more felt in the locality.
• Advertising more aggressively in the internet as they are now sited in different travel websites.
• Keeping a record of guest wants by using comment cards so to encourage repeat guests.
• Making necessary adjustments based on guests’ comments.
• The management and owners should have a clear distinction of their duties and responsibilities so as not to confuse employees and achieve a unified and single source of command.
• The financial statements of the owners and the hotel should be separated. This is step is a crucial one because the absence of Hotel Salcedo’s income statement and balance sheet makes it difficult to forecast their sales, determine their payback period, monitor their sales performance and keep track on their expenses.
• Employ locals with sufficient competence so as to support the labor supply of the community.
• Apply the principles of HACCP in their operations to ensure safe and high quality products and services to be delivered to their guests.
• Tap schools to conduct events like historical plays or presentations and poetry readings in Hotel Salcedo.

4. Learning and Growth Perspective

• Come up with an employee or training manual that will standardize the training that every employee will undergo
• Make necessary adjustments as recommended b guests though Comment cards
• Imbibe a distinct culture to employees so as to set them apart from other hotels in the locality.
• Research on the Spanish-era customs and apply some concepts to the hotel’s operations.

VI. O.G.S.M. TABLE

(Objectives, Goals, Strategies and Measures)

WHAT
OBJECTIVES	GOALS
To create a distinction from the competitors and efficiently market the unique experience of staying in Hotel Salcedo and to satisfy the hotel’s investors by building long-term financial stability.	Increase profitability ratios for the following years. Develop good working relationship with its potential partners.

HOW
STRATEGY	MEASURE
Focus on improving the over-all “guest experience” upon their stay in Hotel Salcedo	Remake the old Spanish-colonial period by modifying the menu, staff uniforms, greetings and customs.
Standardize operations	Devise training manuals and standards handbook
Boost effectiveness of management	Formulate Mission, Vision, Objectives and Financial Statements, and use these to analyze the hotel’s situation and make necessary actions
Increase influx of guests	Partner with tour operators, employ marketing stalls in bus station and shuttle service in airport; partner with rotary clubs and partner with Fort Ilocandia.

VII. RECOMMENDATION

Hotel Salcedo’s theme is very apt for Vigan’s heritage. The group recommends that the hotel take a separate path from its competitors by targeting the higher class market and travelers seeking for the “Vigan or Old-Spanish era experience.” Thus they should focus on selling a “unique guest experience” as a bouquet hotel. To achieve this, they may standardize their menu, staff uniforms, greetings and customs to exude the Spanish theme. They may also invest on Spanish-era-themed facilities like casino and a historic pictorial room.

Among the first concerns is strengthening the hotel’s management team, workplace culture and product and service standards. Herein, the group suggests the hotel hire experienced managers and conduct intensive training for its staff. The management should also implement standards, and these can be established through trainings, policies and manuals. The management should also realize the importance of budgeting, formulating and analyzing financial statements, and making necessary adjustments based on these records.

Hotel Salcedo de Vigan should also effectively sell its brand. To heighten the influx of guests, the hotel may partner with tour operators, bus terminals, airports, hotels from other nearby cities, rotary clubs and schools.

VIII. CONCLUSION

The hotel is located in a locality that has a big and steady market. Their market visits

Vigan not just to marvel on the view of the old houses that have been well preserved but to experience the feel of travelling back in time and having an appreciation of the culture there was. Therefore, Hotel Salcedo de Vigan must gear towards improving their product and delivering their promise of providing “the ultimate Vigan experience”. There is so much potential in this hotel and it only takes proper choice of strategies to employ to make it reach its full potential.