answer those 4 question by reading this case study. words between 800-900.
KEY CONCEPT CASE STUDY new GM is brought in. This one was a real efficiency expert. Big on cost control. Reorganizes again, downsizes the staff, changes some department heads, cuts budgets, reduced costs-must have been the type that really excels at financial controls. The problem was, revenues declined along with the costs, and as a result, the profits declined as well. The owners liked the operating ratios, but were even more upset with the results than before and then you were brought in. "So Damario, what do you think now?" asked Sofia Davidson, the GM at the Barcena Resort. Damario was the newly hired revenue manager at the 480-room Barcena Resort, a five-year-old, Four Star vacation property located on a pristine Caribbean beach. The physical setting was stunning. To date, the resort's financial results had also stunned its owners, but not in a good way. Sofia Davidson, the resort's GM, was also new. She had only recently been selected by the property's owners and had arrived at the resort just eight weeks earlier. Damario was one of her first hires and was the first individual at the resort to hold the title of revenue manager. He had just completed his first week on the job. "Well, here's what I have learned so far," replied Damario. "The resort opened five years ago, had decent volume, but didn't perform as well financially as the owners planned. Two years later, there was a new GM, a reorganization of the staff, and some strategic cost cutting. Revenues improve some. But profits not so much. So another "We do have some real challenges," replied Sofia. Sofia had just finished her weekly staff meeting with the hotel's executive operating committee. As the property's newly appointed revenue manager, Damario had attended and been introduced. As Sofia and Damario walked back to her office, they were discussing the highlights of that meeting. "I think you did a good job explaining our owner's disappointment over the current performance of the property and how that El . could affect all of our hotel departments operating budgets next year," said Damario. "Thanks, replied Sofia. "I knew the managers wouldn't be happy about it. But here's what I have observed so far in the eight weeks I've been on site. On the food side, our food and beverage product cost percentages are right where they should be "So Sam's department is doing great?" asked Damario, referring to the hotel's food and beverage director "Not really." replied Sofia, "It's operating break-even at best. The food quality and service is outstanding, but his labor cost is so high it eats up all of his departmental profit. It's the same thing on the rooms side, continued Sofia Beverly has her amenities costs per occupled room right on target and room cleanliness inspection scores are superb "So Bev's area is O.K.?" asked Damario, referring to the resort's very experienced executive housekeeper. "Well, there are problems in that area, too. Bev's cleaning times per occupied room are great-35 minutes per room; right at her targeted budget. But you know how we sell out nearly every weekend? Well, Bev often has to pay her employees overtime on Saturday, Sunday, and Monday to take care of the weekend stayovers and then get the rooms back in shape for the coming week. That really drives up our cleaning costs per occupied room. In that area, we are way over budget Why doesn't she just hire more staff? asked Damario, that would eliminate the weekend Overtime "What would she do with them through the week?" replied Sofia. "In the eight weeks I have been here, we have only had two weeks where our Monday through Thursday occupancy exceeded 55 percent." "Hire them part-time?" asked Damario. "Good luck in this labor market, said Sofia. "Besides, I have real concerns about our ability to maintain high quality room cleanliness standards with large numbers of part-time room attendants. Especially when we are extremely busy." "So, do I hear you saying that those two departments are doing a good job?" said Damario. Ora bad job?" "They are controlling what they can with what they have. And remember, between them they employ over 80 percent of the resort's entire staff," said Sofia. "And account for most of the property's operating budget." "And that's why they reacted like they did when you told them the owner's were considering asking you to submit operating budgets for next year that reflected 10 percent across the board cuts in all department budgets?" asked Damario. "Right." replied Sofia. "No one likes budget cuts. And from what I can see, this group has been downsized, reorged, and outsourced to the point that there is not much fat left to cut. I think we are already down to muscle. And bone. I'm concerned that more budget cuts will have a really negative effect on our guests' experience. I don't know of any hotel that has had great succes expanding its market share by reducing the quality of its guest services. Our problem isn't inefficiency its insufficient income "So what do we do now?" asked Damario. "Now that you have met the executive committee, that's where you and the entire revenue management task force I want you to assemble comes in," said Sofia. For Your Consideration 1. Under what scenarios could a foodservice operation achieve excellent food and beverage cost percentages, yet incur excessively high labor costs? Which of these different scenarios do you think is occurring at the Barcena Resort? Upon what case facts do you base your assessment? 2. Assume you were Beverly. What specific actions would you likely undertake if you were given a 10 percent cut in your operating budget for the coming year? What impact would each of these actions likely have on your guests' view of the value they receive for the money they spend while staying at the property? 3. Assume Sofia is an experienced and talented GM. From the point of view of new guests arriving at the resort, how important to them will be her ability to reduce the resort's operating costs? Alternatively, how important to them will be her ability to find ways to increase the number and quality of the resort's guest service offerings? 4. As a savvy GM, what do you think Sofia will seek to gain from the work of Dama- rio and the revenue management task force she has asked him to assemble? KEY CONCEPT CASE STUDY new GM is brought in. This one was a real efficiency expert. Big on cost control. Reorganizes again, downsizes the staff, changes some department heads, cuts budgets, reduced costs-must have been the type that really excels at financial controls. The problem was, revenues declined along with the costs, and as a result, the profits declined as well. The owners liked the operating ratios, but were even more upset with the results than before and then you were brought in. "So Damario, what do you think now?" asked Sofia Davidson, the GM at the Barcena Resort. Damario was the newly hired revenue manager at the 480-room Barcena Resort, a five-year-old, Four Star vacation property located on a pristine Caribbean beach. The physical setting was stunning. To date, the resort's financial results had also stunned its owners, but not in a good way. Sofia Davidson, the resort's GM, was also new. She had only recently been selected by the property's owners and had arrived at the resort just eight weeks earlier. Damario was one of her first hires and was the first individual at the resort to hold the title of revenue manager. He had just completed his first week on the job. "Well, here's what I have learned so far," replied Damario. "The resort opened five years ago, had decent volume, but didn't perform as well financially as the owners planned. Two years later, there was a new GM, a reorganization of the staff, and some strategic cost cutting. Revenues improve some. But profits not so much. So another "We do have some real challenges," replied Sofia. Sofia had just finished her weekly staff meeting with the hotel's executive operating committee. As the property's newly appointed revenue manager, Damario had attended and been introduced. As Sofia and Damario walked back to her office, they were discussing the highlights of that meeting. "I think you did a good job explaining our owner's disappointment over the current performance of the property and how that El . could affect all of our hotel departments operating budgets next year," said Damario. "Thanks, replied Sofia. "I knew the managers wouldn't be happy about it. But here's what I have observed so far in the eight weeks I've been on site. On the food side, our food and beverage product cost percentages are right where they should be "So Sam's department is doing great?" asked Damario, referring to the hotel's food and beverage director "Not really." replied Sofia, "It's operating break-even at best. The food quality and service is outstanding, but his labor cost is so high it eats up all of his departmental profit. It's the same thing on the rooms side, continued Sofia Beverly has her amenities costs per occupled room right on target and room cleanliness inspection scores are superb "So Bev's area is O.K.?" asked Damario, referring to the resort's very experienced executive housekeeper. "Well, there are problems in that area, too. Bev's cleaning times per occupied room are great-35 minutes per room; right at her targeted budget. But you know how we sell out nearly every weekend? Well, Bev often has to pay her employees overtime on Saturday, Sunday, and Monday to take care of the weekend stayovers and then get the rooms back in shape for the coming week. That really drives up our cleaning costs per occupied room. In that area, we are way over budget Why doesn't she just hire more staff? asked Damario, that would eliminate the weekend Overtime "What would she do with them through the week?" replied Sofia. "In the eight weeks I have been here, we have only had two weeks where our Monday through Thursday occupancy exceeded 55 percent." "Hire them part-time?" asked Damario. "Good luck in this labor market, said Sofia. "Besides, I have real concerns about our ability to maintain high quality room cleanliness standards with large numbers of part-time room attendants. Especially when we are extremely busy." "So, do I hear you saying that those two departments are doing a good job?" said Damario. Ora bad job?" "They are controlling what they can with what they have. And remember, between them they employ over 80 percent of the resort's entire staff," said Sofia. "And account for most of the property's operating budget." "And that's why they reacted like they did when you told them the owner's were considering asking you to submit operating budgets for next year that reflected 10 percent across the board cuts in all department budgets?" asked Damario. "Right." replied Sofia. "No one likes budget cuts. And from what I can see, this group has been downsized, reorged, and outsourced to the point that there is not much fat left to cut. I think we are already down to muscle. And bone. I'm concerned that more budget cuts will have a really negative effect on our guests' experience. I don't know of any hotel that has had great succes expanding its market share by reducing the quality of its guest services. Our problem isn't inefficiency its insufficient income "So what do we do now?" asked Damario. "Now that you have met the executive committee, that's where you and the entire revenue management task force I want you to assemble comes in," said Sofia. For Your Consideration 1. Under what scenarios could a foodservice operation achieve excellent food and beverage cost percentages, yet incur excessively high labor costs? Which of these different scenarios do you think is occurring at the Barcena Resort? Upon what case facts do you base your assessment? 2. Assume you were Beverly. What specific actions would you likely undertake if you were given a 10 percent cut in your operating budget for the coming year? What impact would each of these actions likely have on your guests' view of the value they receive for the money they spend while staying at the property? 3. Assume Sofia is an experienced and talented GM. From the point of view of new guests arriving at the resort, how important to them will be her ability to reduce the resort's operating costs? Alternatively, how important to them will be her ability to find ways to increase the number and quality of the resort's guest service offerings? 4. As a savvy GM, what do you think Sofia will seek to gain from the work of Dama- rio and the revenue management task force she has asked him to assemble
