Acme Hotels Case Study Traditional Hotel in the Sharing Economy Mark Anglin, B.Eng MBA PMP PCI-ACP Introduction to Strategic Problem Pria, as CEO of Acme Hotels, was reflecting on the monumental changes that have occurred in the hotel industry over the past few years. She was up late Saturday night putting together a plan to pull her executive team together for a 2 -day off-site \ Acme was the 2nd among all hotels in US and 3rd in the world in revenue and # of bookings. As one of the top Hotel operators and employers worldwide there was an untapped collective depth of know how and expertise that could be leveraged to help with the problem of the industry rapidly changing with Acme's revenues and # of bookings decreasing across the portfolio of offerings from midrange to luxury accommodations and vacations. The sharing economy was growing and threatened the traditional hotel industry. Pria considered that Acme did have great assets, such as historical excellent relations and loyalty with over 410,000 corporate clients, whose relationship with Acme should be enhanced to make sure these important clients stayed with Acme Hotels. The business travellers however were double sided coin, for all the positives and given the direction of the industry, Pria felt Acme was too reliant on the business traveler, especially if there is a recession. With the monumental changes in the hotel industry she was looking to hire a strategy consultant to lead the team in a 2 day offsite where the objective of the off-site was Problem and Opportunity definition and understanding of the external and internal environments as a basis to determine a go forward strategy to address fundamental business problems. Industry Disruption Caused by the disruption from AirBnB and now a growing number of sharing economy competitors, the team needed to address declining bookings and revenues, increasing costs, unclear understanding of todays customer segments and what they expect when looking for accommodations away from home. Disruption occurs when a new marketplace is created that has a lower cost base than the incumbent, and Airbnb's and its peers story is no different To add complexity to this current state, all customer segments were looking for value for money. All this points to the number 1 most strategic issue : how can Acme provide more of what each customer wants at a lessor cost, or, provide differentiated, valued services compared to the competition and make Acme the preferred choice and allow at least some higher priced offerings. How does a hotel succeed in this age of disruption? How can you make the sharing economy work to your advantage while maintaining ground against your traditional competition? AirBnB and Hotel Pros and Cons While hotel brands typically offering standard rooms, Airbnb allows users to rent out rooms in residents' homes or larger properties like villas and houses to enjoy a more unique, personalized, and community-oriented travel experience. Airbnb offers a more affordable and local alternative to travelers and has gained major momentum from its popularity among younger Millennial travelers. While Airbnb states that there's plenty of room in the hospitality industry for both their business and hotel brands, many hotels are concerned that this new sharing economy will reduce their overall share of tomorrow's travel market. Against this negative backdrop however the reliable and industry statistics are showing there is a constant year-over-year rise in travellers globally. The hotel industry is forecast to grow 5-6% but continued growth is never guaranteed. As part of this great growth are those with increased mobility and AirBnB is growing around the world taking market share for the increasing mobility of from all parts of the world. The growing market of travellers from all parts of the world, especially the substantial and increasing wealth from many countries throughout Asia, India and a growing mobility of people from all over Africa is an enormous opportunity but also presents the challenges of determining how to obtain these as first time and repeat customers. The mindset of Acme Hotels is US-centric and that has got to change. Many employees do not have the cultural awareness knowledge to provide services in a graceful, user-friendly manner. But even brand loyalty with the promise of repeat customers is changing from long-term relationships to consumers' needs for instant gratification and personalization. By directly competing with Airbnbhighlighting how they are the superior optionhotels can preserve their bottom line and remain the first choice for tomorrow's travellers and Acme was determined to be the preferred choice for all segments of travellers. Also there were numerous Strengths, according to Boston University research, one-third of consumers aware of the sharing economy say they trust hotel brands much more than accommodations like Airbnb. These travelers cite the many attributes of hotels, which include: Security Cleanliness Consistent quality Familiarity Comfort To combine with this trend and set of opportunities it presents that Pria was absolutely determined to take advantage of is costs can be offset with technology and margins can be increased by adding technology-enabled value -added services to the different customer segments. She knew technology and felt also technology can enable customer loyalty and her team her team could implement strategic decisions on the basis of data that is collected from disparate online sources and upturn their Acme hotel business. As AirBnB and sharing economy competitors have extremely low fixed costs Pria knows that there is so much room to lower the cost of running a hotel. Industry experts say that Airbnb's popularity is due to a number of important factors that are extremely important to travelers. Many prefer Airbnb for the following reasons: Affordability Personalization Sense of community Local culture Personal hospitality Technological ease Strong ethical roots Market Trends Pria believes that she can flip the fact that the problem is that the hospitality industry has been fairly staid and slow to adopt innovative technologies to improve the overall experience and operational execution and is an opportunity. For example, in a mobile and technology-driven world, consumers demand a customized, personal experience that they can also manage through their smartphones, tablets and computers. A Magnani Caruso Dutton study found that 70 percent of travelers indicated that a hotel's website, app and other digital tools impact their decision to book a stay. Only a small percentage of hotels offer digital tools. Pria knows the gap can certainly close to enhance the guest experience. Today there is little view from data on the customer journey in each stay. Half of the guest's journey is a blind spot to them, relying on effective staff training to ensure a good experience.This has to change. Pria worried that there was a lack of innovation abilities and the required technology know-how within the current employee base. While the peer-to-peer lodging marketplace is a value alternative when seeking lodging, hotels still provide better amenities, service and standards that are not matched by Airbnb. History and recently more studies have shown that consumers are more than willing to pay top dollar for a better experience. Pria was reminded that with a lot to build on in a traditional hotel, customer segments wanting more value for money does not necessarily mean they are demanding lowest cost. Whether the customer spends $200 or $2000 for the room, they are always looking for the value of money. And the high end, luxury market is changing. Luxury is a term which has many definitions now and changes around customer perception more than ever. Brand or a well-designed hotel is not enough anymore. It's about the experience. Change in guest expectations is one of the biggest challenges in hotel industry. You've witnessed that now-a-days guest demand a lot more from the hotel. Free WiFi, entertainment system, unique stay experience and swift check-in check-out services. While certain types of travelers prefer staying at hotels, many of today's travelers are seeking a different type of travel experience. Airbnb offers these new and novel types of experiences, which has propelled the company to incredible popularity, especially among the coveted Millennial travel market. The appeal of the concept can be attributed to a number of economic, social, and technological shifts in the tastes and tendencies of travelers. Many favor Airbnb because it reflects these societal shifts and offers more of a exciting, personal, "home away from home" experience instead of a standard hotel stay. It allows guests to have more personal, localized, and memorable travel experiences. Cities focused on finance and business are increasingly aiming to enhance their tourism and leisure potential, becoming "bleisure cities" (business + leisure). In addition, segments such as millennials, which will account for 50% of the workforce in 2020, require a mixed experience for their business trips, extending and adapting their stays to discover and enjoy their destinations. City hotels therefore need to increasingly merge the leisure and lifestyle experience with modern workspaces equipped with the latest technologies. And as part of lifestyle the emphasis is on "access-based consumption" which has put a spotlight on wellness and well-being, beyond materialism. All of this suggests A co-everything world where work, play, and life blend into one seamless mosaic: Technology has changed the way we live our lives, and how we are connected to work, to each other and to the things that drive us. An upcoming 5G world and the IOT is only likely to accelerate the pace of change. Take LiveZoku (https://livezoku.com/), for example: is it a residence? A hotel? A WeWork? A space for the local community? A thriving food and beverage destination? It's all of these things. What do these trends mean? They require marketers and experience designers to re-think what the travel experience means to the customer. The notion of the experience economy was created by Pine and Gilmore in 1998, and included four dimensions: escapism, education, entertainment, and esthetic. Leveraging one, or ideally, more of these dimensions creates memorable experiences for customers, which in turn results in brand loyalty. This dynamic has been fairly well-established in the academic literature. However, Airbnb has changed the game for the experience economy by emphasizing the sharing lifestyle and a sense of community, cleverly incorporating the above highlighted trends into its communications with customers. Because of Airbnb popularity and success, six new dimensions have been incorporated into the experience economy, in the context of the travel experience: personalization, communitas, localness, hospitableness, serendipity, and ethical consumerism Reservation and New Services System The Reservation System will be the core of the new services because this will house all the information for management to run Analytics against. A reservation system tracks guest reservations accepted up to two years in advance; determines all guests' costs; produces guest bills; processes guest payments; tracks current rates for services within the hotels; manages the schedules for the services including availability; validates guests and to provide billing totals due to Services - the vision includes linking the new innovative services to the reservation where the project (see below) will be cell-phone and iPad based services for personalization, entertainment and education. Snapshot of Current State Acme Hotels Acme Hotels STP (Segmentation, Targeting, Positioning) Tagline/ Slogan We will take you to the World Unique Selling Proposition Consistent service excellence on everything Target Customer Segments Luxury to Economy Segments . Business travelers as well as leisure travelers belonging to luxury, upscale, mid-market and economy segments Positioning A global, powerful brand that provides innovative, high-quality service to all hotel customers and partners Traditional Competitors 1. Wyndham - offers brands in lodging franchising, vacation ownership, vacation rentals and vacation exchange. It is composed of more than 9,000 hotels under 21 brands spanning more than 75 countries in six continents, competing in brand markets ranging from economy to upscale Esplendor Boutique, Wyndham Grand, Days Inn, Ramada, Travelodge 2. Choice - As of 2018, Choice Hotels franchised 6800 hotels in about 40 countries worldwide which is one of the largest hotel chains in the world, owns several hotel brands ranging from upscale to economy, including the Ascend Hotel Collection, Cambria Hotels, Comfort, Sleep Inn, Quality Inn, Clarion 3. Hilton Hotels Corporation - As of 2017, there were more than 570 Hilton Hotels & Resorts properties in 85 countries. he brand is targeted at both business and leisure travelers with locations in major city centers, near airports, convention centers, and popular vacation destinations around the world 4. InterContinental Hotels Group PLC 5. Marriott International 6. Starwood Hotels & Resorts Worldwide, Inc. Adapted from - https://www.mbaskool.com/brandguide/tourism-and-hospitality/2897-Acme -hotels.html The Project Technology is the foundation of growing the millennials' business in beating out the AirBnB offerings in the marketplace. Technology is the enabler to provide services today'straveller is looking for - personalization, education, entertainment, access to quick and relevant events and locations in the surrounding area including ticket purchases, etc. The central application that will provide many of the technology based services will be an upgraded hotel reservation system. Pria sees this as the critical component that will initially provide the services guests' are looking for and then the hotel can branch out from there for more innovative technology-based services. Pria has said objectives must be : "Providing value-added technology-based services to meet guests needs will greatly improve revenues and allow us to capture more market share" "I think our hotels could make use of personal data captured to secure repeat business additional business." The current reservation system used by the hotel chain are a decade old. Each of the hotels has its own set of processes, procedures and computer systems that interface back to the head office functions. At the head office some computing facilities exist for typical business functions such as General Ledger, Payroll, Human Resource Management, Sales and Marketing etc. As the computing facilities used by each of the hotels are heterogeneous, there is no integration and as a result, there is a huge amount of wasted effort and cost in conducting the day to day business functions of the hotel chain. Pria has expressed a number of concerns about the hotel chain's ability to survive in the increasingly competitive environment with such decade old computing facilities. By have a project for upgrading the reservation system and providing technology-enabled services linked to cell phone and iPad Pria's objectives are to : "I believe that our efficiency in the hotels themselves could be raised so that we can cut costs and show a greater profitability." "I think that our image and customer satisfaction index is falling, relative to other hotels as they become more efficient." The main areas where the benefits are expected include: Guest services Staff and Administration Marketing information with Analytics The projects' implementation will allow for a turn in declining revenues and bookings around from decreasing to increasing 6% yoy starting in fiscal 2021 with additional $ 5,000,000 in revenue in year 2 and growing at 4% for the next 4 years. Become the no. 1 hotel for 20 and 30-somethings in North America by 2023 as measured by having at least 20% of all bookings from that key market segment Cell Phone based Hotel Services Integration of cell phone services with the Reservation system : With every new generation, more and more travelers prefer using their smartphones for bookings. According to Booking.com research, 50% of journeys start on a mobile device. Now that Millennials and even Generation Z are already grown up enough to travel by themselves (and plan trips for their parents), they want to use all these fancy-schmancy mobile apps to make hoteliers and other entrepreneurs dance to the tune of their own flute. 68% of hotel guests prefer checking-in using their smartphones, avoiding the front desk all together, as reported by the High Tech For High Touch: 2016 Hospitality Vision Study. Even those who are 50+ are much "younger" and technically savvy than their parents were at this age and use gadgets during their trips. In your business, you will have to think about how to use digital elements and technology to satisfy their needs. With mobile technologies, you can automate routine services in your daily interactions between hotel staff and guests. This project will make a "wow" effect and provide your guests with total remote control over their hotel services. Downloading a mobile app on their smartphones, your guests can get such benefits as shown in the High Level Scope below..... High Level Scope You have determined the following high level scope for this project: 1. Integration of Cell Phone with Reservation System for New technology-enabled services through the reservation system for : a. Personalization upon check in (what do guests want to make their stay better?) b. accept on-line queries for room and service availability c. accept on-line reservations of rooms and services d. provide extensive information including virtual tours of the surrounding locales e. find and implement co-marketing opportunities with other travel & tourism vendors in the area for "experience"-based travellers f. automatic notification on the readiness of their room for check-in g. self-check-in and check-out without reception formalities h. ordering special services on mobile i. sending event reminders j. sharing a restaurant a menu k. getting a final bill on their account l. mobile room key access m. heating and cooling controls n. online restaurant reservations and pre-order access through the menu o. information on receiving discounts and coupons 2. Establish process for measuring customer satisfaction with the new services 3. Analytics for management decision-making Deliverables for the Project For deliverables you can See CAPSTONE document posted in BB called "Information for MS Project and filling in Project Budget Template" Acceptance Criteria You are to list 2 Acceptance criteria for the project - 1 criteria for a deliverable produced during the project (eg. Design drawing) and 1 criteria for the final deliverable These must be measurable Milestones See the additional information on schedule to show milestones Risks Risk Event Contingency Plan Who Owns the Contingency Plan Documentation risk: This kind of risks may affect proper documentation of the critical information about the project To ensure that the risk is managed, the development team will have a dedicated person who will be in charge of documenting on the critical and relevant information about all the aspects of the project Project Administrator Technological Risk: These are risks that involve the use of technology in the four functional systems that are being created. They may affect the installation of the system, maintenance and proper alignment with the existing structures. A contingency plan to be used in dealing with the risk will require the team to always work with a technology expert during the purchasing, installation and maintenance of the systems The project manager and the involved Project Administrator will be in charge of the contingency plan Assumptions, Constraints The following six assumptions were made when this project charter was being developed: 1. The required funding for the project will be available at the beginning of the project 2. The required personnel and resources will be made available at the start of the project 3. The project manager and the development team will give the project the attention and seriousness that it deserves 4. The quality of the items and resources supplied will be of the required standards 5. Existing staff will be trained on how to work with the new systems 6. The resort management will support the project team throughout the duration of the project The following constrains and limitations have been identified to be relevant to this project: 1. Work will only be done from 8.00am to 6.00pm 2. The involved stakeholders can follow the agreed schedule but will not guarantee quality The project will have to be done within the agreed budget 3. PLEASE ADD FROM THE CASE STUDY HERE PLEASE Table of Contents When to Use this Template When to use this Template2 2. Executive Summary4 3. Project Background5 4. Project Description including DELIVERABLES6 5. Environmental Analysis7 6. Alternatives (Options)7 7. Business and Operational Impacts8 8. Technology Assessment8 9. Project Risk Assessment9 10. Cost/Benefit Analysis9 13. Conclusions and Recommendations10 14. Implementation Strategy10 15. Review and Approval Process10