Palace Hotel - Customer Relation Service

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CUSTOMER RELATIONSHIP MANAGEMENT

INDIVIDUAL ASSIGNMENT CA001

Steven Octaviano – 00000027192

Question 1

Background

Palace Hotel is a hotel that has been established for quite sometimes in the area. It has been renovated and rebranded to be a more luxurious and ‘new’ in order to maintain its quality of service. The hotel is having profitable period as they have high occupancy rate during weekdays. Majorly the one that stays in the hotel is business travelers as the hotel is located at the strategic place.

However, the hotel goes for a consultation as there will be four new hotels that will be opening in the city and Palace Hotel’s competitor, Grand Hotel is also undergoing a renovation treatment. This situation is known by Palace Hotel and it may fall behind the competition with these competitors. We are provided with the positioning graph in Figure 1.1 below.

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The graph is showing on the price of the hotel rooms against the service that the hotel is offering to their customers. The shaded area is showing the most ‘worth-it’ position for hotels to be at which means more expensive the hotel, the more service is expected to be experienced and the more budget the hotel, the lesser service we will get. It is shown that Palace Hotel is located way out from the shaded area in the graph. The hotel is charging a rate in which it is too high for the service it provides. The same amount of money will enable customers to get hotels such as Grand and Regency which offers them better service than Palace Hotel do. What makes Palace Hotel still be able to compete in the competition is because it is located in the heart of financial district in which it is favorable for business travelers as shown in Figure 1.2.

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Figure 1.3 shows the competition graph after the entrance of the five competitors in the city. The competitors such as Mandarin, Heritage, Marriott and Continental are located far on the top area which offers customers high-service and targets high-end customers a they know that they are located near the shopping district as shown in Figure 1.2. It is shown that Grand is moving upward in the graph after the renovation in which follows the trend of the new hotels. By having such competition, Palace Hotels can consider moving their business strategy, and not relying fully on its location as the competitors can easily dominate the market share by offering customers with services. Business traveler may consider staying at better hotel, with the same price that Palace hotel is offering.

There are move their positioning in the graph by making more services and offering customers better facilities during their stay in Palace Hotel so that it can positin itself in the shaded area and even below the newly opened competitors. In this way, Palace Hotel will be favorable as apart of being located in the financial district, it is also labelled to be ‘worth-it’ as the price does balance out the service they get during the stay. On the contrary, Palace hotel also can offer lower price, with the same amount of service they are giving today. In this way, Palace Hotel is competing in the lower sector of the business which competes with budget-friendly hotels

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If Palace hotel does not make any action towards the upcoming competitors, therefore Palace hotel will need to rely fully on their only advantage which is the location of the Hotel. However, Mandarin and Continental is going to pen its hotels in the area as well and they both offer better service as they are positioned at the higher-end which offers more luxurious facilities than Palace Hotel do. Thus, we can only move up or move down in the luxury aspect of the business whether to move up and compete with Mandarin and Continental or to move down and try to overpower Castle and competing in the lower sector.

However, to move up, Palace Hotel will have to face tough competition as their competitors such as Mandarin and Continental are hotels that has five-star ratings which as facilities and standard of operation that has been regulated by the chain that has been acknowledged by international chain. Another aspect that need to be considered is that there will be more cost if Palace Hotel is going to compete with the five-star hotels as in order to keep up, we need first train our employees, upgrade the utilities in the hotel, provide complimentary foods and facilities for consumers and also maintenance fee which is very costly. This method is very risky as we do not have the experience in managing five-star management and also cost can be the barrier for Palace Hotel.

By looking at the situation above, it is necessary for Palace Hotel to take action to the situation as if they do not make any action and remain on where they are, they may get tougher competition from competitors and will end up filing bankruptcy in the end. This case, we want Palace Hotel to keep up in the competition and avoid bankruptcy. I would suggest few actions that Palace Hotel can consider taking in the section below.

Action

Palace Hotel is rated as a four-star hotel that is located strategically in the heart of the financial district of the city. We can position ourselves with the other two competitors that is going to open their branch in the area by improving and enhancing our service towards our customers like a five-star hotel without adding unnecessary costs. In this case will help us to perform above customer’s expectation.

Giving ‘extra’ facilities to guests. These are the things that guests is excited for, even with facilities that is low in cost, however customers will appreciate such thoughtful service that we can provide to them. For example, providing bottled drinks in the bar area in the rooms, giving free HBO channels, guests can check out by 3 pm, which generally hotels will have the policy that the latest check out time is 1pm. These are few steps that can be taken by Palace Hotel without having to increase their operating cost tremendously. Thus, this may ‘surprise’ our guests as these facilities may not be offered by our competitors and set us apart.

Establishing 24-café or diner. Palace Hotel acknowledged that mostly of their guests are business traveler from around the world and they are located in the business district where working time can end up to midnight. Therefore, by setting 24-hour café enable business traveler to conduct their meeting in the hotel where they are staying as the hotel provides guests with this place where it’s always open, even up at night. With this, it also provides the hotel additional income where the hotel can allocate to upgrade or increase the level of service that they can give to guests.