You are the general manager of a hotel situated along a beautiful stretch of beach on a tropical island. One of the oldest of six large resorts in the immediate area, your hotel is owned by a group of foreign investors. For several years, it has been operated as a franchise unit of a large international hotel chain, as are all of the other hotels on the island.

For the past few years, the hotel’s franchisee-owners have been taking most of the profits for themselves and putting relatively little back into the hotel. They have also let you know that their business is not in good financial health and that the revenue from the hotel is being used to offset losses incurred elsewhere.

In contrast, most of the other hotels on the island have recently been refurbished, and plans for two brand new hotels have been announced for the near future.
A team of executives from franchise headquarters has just visited your hotel.
They are quite disappointed in the property, particularly because it has failed to keep pace with other resorts on the island. They have informed you that if the property is not brought up to standards, the franchise agreement, which is up for review in a year, will be revoked. You realize that this move would be a potential disaster because you cannot afford to lose the franchisor’s brand name or access to its reservation system.
Sitting alone in your office, you identified several seemingly viable courses of action:
1. Convince the franchisee-owners to remodel the hotel. You estimate that it will take $5 million to meet the franchisor’s minimum standards and another $5 million to bring the hotel up to the standards of the top resort on the island.
2. Convince the franchisor to give you more time and more options for upgrading the facility.
3. Allow the franchise agreement to terminate and try to succeed as an independent hotel.
4. Assume that the hotel will fail and start looking for another job. You have a pretty good reputation but are not terribly happy about the possibility of having to accept a lower-level position (say, as an assistant manager)
with another firm.
Having mulled over your options, do the following:
1. Rank-order your four alternatives in terms of probable success. Make any necessary assumptions.
2. Identify alternatives other than those that you have identified above.
3. Ask yourself: Can more than one alternative be pursued simultaneously?
Which ones?
Develop an overall strategy for trying to save the hotel while protecting your own interests.