The Luna Hotel The Luna Hotel in Cape Town has 201 guest rooms, is 4-star rated and employs 128 members of staff. The Luna Hotel was acquired by Mercury, a large international hotel chain, three months ago and is in a period of transition. Prior to the acquisition, the Luna Hotel was implementing a differentiation strategy. However, the Luna Hotel is now pursuing a lowcost provider strategy in line with the strategic direction of Mercury. Two-thirds of Luna Hotels workforce is employed on a full-time and permanent basis, but since the acquisition, managers are seeking to significantly reduce this figure, having claimed the hotel is overstaffed with permanent employees. They plan not to replace employees who leave in certain departments and plan to rely heavily on casual, part-time employees where and when it is necessary. No attempt has been made to train existing employees across a range of tasks to provide greater skills flexibility, nor is there any intention to do so, given the stated desire to keep training costs to a minimum. Employee communication at the Luna Hotel is predominantly one-way. General manager briefings are held for all staff every quarter to inform them about organisational strategy and managerial decisions. Managerial meetings and communication between heads of departments and employees is limited to one-to-one meetings as and when required, instigated by either party, usually to deal with grievance and disciplinary issues. There is no dedicated structure or schedule to these intradepartmental meetings, although some departments impose some formality by holding five-minute chats between departmental heads and staff every month. There is no other provision for employee consultation, suggestions or participation in decision-making. It appears that even the general managers briefing is merely a communicative device with little provision for employee feedback. The Luna Hotel has experienced high levels of labour turnover since the acquisition, some of which is likely to be as a result of the upheaval caused. Regardless, labour turnover is reported to be both problematic and beneficial at the Luna Hotel, depending on the staff involved. On the one hand, employee turnover is considered undesirable because of the costs involved in recruiting new members of staff, especially skilled workers such as chefs and maintenance workers. On the other hand, employee turnover is considered a source of employment flexibility and natural attrition of staff is viewed as positive, especially where poor performing staff are concerned. The general manager claims that the large labour market in which the hotel operates means that staff are readily available, albeit often lacking the required skills. Management cope with this apparent skills shortage by minimising the reliance on particular skills or by providing rudimentary training. The high level of staff turnover often requires management to adopt expedient approaches to filling vacancies, even in important frontline operations (for example, front of house staff) or skilled areas of work. As the human resources manager suggests, When someone leaves just like that, you have a job to fill. You cant afford to wait a week or so for references to come through. You need to take a chance and find someone to fill the job immediately.

QUESTION 1 (20 Marks) Critically discuss whether the Human Resource Management (HRM) practices at the Luna Hotel effectively support the implementation of the hotels low-cost provider strategy.