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Case Exercise IV – The Squire Hotel Group Case exercise:
The Squire Hotel Group
The Squire Hotel Group (SHG) runs a chain of 20 hotels, with between 40 and 120 bedrooms, in locations that include Oxford, Warwick and Southport. SHG sees itself in the three-star market, with hotels that have their own personality and style, providing high-quality food and service at an affordable price. The majority of mid-week guests are commercial clients. The normal mid-week occupancy rate is about 80 per cent. Weekend occupancy is about 30 per cent, comprising mainly weekend break packages. The company does not have any major expansion plans but is trying to strengthen its existing market position. Squire’s managing director, Justin Palmer, believes that it has a high degree of customer loyalty in the commercial sector. He explains: The hotel managers are expected to integrate with their local community through Chambers of Commerce and Round Tables, primarily to gain visibility but also to demonstrate a local and caring attitude. The image they try to create is a good-quality, small and friendly hotel that local business can rely upon for their visitors. The hotel managers are expected to work hard to develop personal relationships with local firms and may also try to promote other hotels in the chain for any ‘away’ visits. We get most of our repeat bookings because of the reputation we have developed for the quality of our food and attentive and courteous service. The Squire Hotel Oxford has 41 bedrooms and is situated close to Magdalen College. The entrance lobby is small but pleasantly decorated. The room is dominated by a grandfather clock and an elegant mahogany desk. ‘I do not like the traditional counter arrangement,’ explained Charles Harper, the hotel’s manager. ‘I like a simple, open and friendly situation with a clear desk to demonstrate our uncluttered and caring attitude. Even our computers are kept in a small room just off the lobby, out of sight. I want my guests to feel that they are important and not just one of the 70 that we are going to deal with that evening.’ SHG’s hotel managers are totally responsible for their own operations. They set staff levels and wages within clear guidelines set by head office. Although pricing policy is determined centrally, there is scope for adjustment and they can negotiate with local firms or groups in consultation with head office. Charles Harper added: ‘Every year, each hotel manager agrees the financial targets for his own operation with head office, and if the manager does not reach his target without good reason, he may well find himself out of a job. I believe that it is my job to be constantly improving and developing this business. This is naturally reflected in the yearly profit expectations.’ The hotel managers report performance to the group monthly on four criteria: occupancy, profit, staff costs and food costs. The information provided allows senior managers to drill down to the costs of individual people and meals. Charles Harper explained: My job is to try to get and maintain 100 per cent occupancy rates and keep costs within budget. During the tourist season Oxford has more tourists looking for beds than it has beds, so in the peak season, which is only two months long, we expect to achieve 100 per cent utilisation of rooms. Indeed, I am budgeted for it. This has been a bad year so far. The high value of the pound has kept many American tourists away and our occupancy has sometimes been as low as 90 per cent. In the off-season our occupancy drops to 60 per cent – this is still very good and is due to our excellent location. In the peak season we charge a premium on our rooms. This does not cause any problems, but our guests do expect a high standard of food and service. We get very few complaints. Usually these are about the food, things like the temperature of the vegetables, though recently we had a complaint from two elderly ladies about the jukebox in the bar. We don’t have any formal means of collecting information about quality. Head office may come and check the hotel once or twice a year. We always know when they are coming and try to look after them. We don’t use complaints or suggestion forms in the bedrooms because I think it tends to get people to complain or question the service. However, I do try to collect some information myself in order to get an indication from guests about how they feel about the quality or the price. I don’t document the results, but we know what is going on. Our aim is to prevent complaints by asking and acting during the service. I have 40 staff, most of whom are full time. Ten work mainly on the liquor side, 20 on food and 10 on apartments. There is a restaurant manager and a bar manager. Staff turnover is 70 per cent, which compares very well with most hotels, where turnover can be as high as 300 per cent. In general, the staff are very good and seem to enjoy working here. The restaurant at the Squire Hotel in Oxford has 20 tables with a total seating capacity of 100. The restaurant is well used at lunchtime by tourists and visitors to the local colleges and by local business people. However, there are several excellent and famous restaurants that tend to draw potential customers and even hotel guests away from the hotel restaurant in the evenings. The restaurant managers have considerable discretion in menu planning, purchasing and staffing, providing they keep to the budgets set by head office. These budgets specify, for example, the food and staff costs for an individual breakfast, lunch and dinner. Overall food costs and staff costs are reported weekly to the hotel manager. The style of restaurants in the hotels varies considerably from carvery to à la carte, with the decisions made on the basis of the type of hotel and the requirements of the local community. Elizabeth Dickens, the restaurant manager, explained: My job is concerned with keeping to food and staff budgets and so most of my time is taken up with staffing, purchasing and menu planning. At lunchtime, for example, I provide four items, three traditional and one vegetarian, and these change weekly. We aim to serve a main course within 15 minutes of taking an order. I am constantly looking for new ideas for our menus and better ways of serving but I am constrained by continually tightening budgets from head office. I think we have now reached the point where we are starting to lose many of our established customers. We really do need to respond to the changing demands of our customers in terms of speed of service, particularly at lunchtimes, and changes in diet together with the desire for a greater and more interesting range of meals. I think head office is out of touch with reality.
1Evaluate the performance measures in place at the Squire Hotel Group.
2What improvements would you suggest?
3.Evaluate the performance measures in place at the Squire Hotel Group (SHG).
4. Provide suggestions for improving SHG’s existing market position.
Use at least two scholarly sources,