Case Study: Strategy and HR Planning at the Capital Hotel The Capital Hotel is located in the capital city of a Central European country.

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Case Study: Strategy and HR Planning at the Capital Hotel

The Capital Hotel is located in the capital city of a Central European country. In the past its main clientele has been government officials and administrators in departments of state and managers of heavy industries visiting the capital on official government business. The room occupancy rate was on average 50%. This custom has declined somewhat in the last two years, but it has been more than replaced by business-people from neighbouring countries in the week and by foreign tourists at the weekend. The average room occupancy rate is now 75%; 60% of rooms are sold at 'rack' price and it is not uncommon for the hotel to be fully booked especially at weekends. Generally speaking there is greater demand for catering staff at weekends since many tourists like to take lunch in the hotel's restaurant. However, there is lower demand for housekeeping staff at weekends as tourist customers generally stay for longer periods than business-people and make less demands on this service.

Currently the hotel has 240 twin rooms but an extension is now being built and next year there will be 345 twin rooms altogether plus a revamped leisure club with a brand-new swimming pool and spa (run independently as a franchise). The owning company, European Leisure Resorts, wishes to reposition the hotel, re-designing and re-branding the hotel as an up-market "boutique" hotel. A new name is proposed, "The Garden Court". A new General Manager has been "head-hunted" from one of Russia's top hotels and her mission is to transform the quality of the hotel while ensuring good value for money.

Competitive Pressures and Strategic Responses

During the last two years a number of international hotel groups have opened hotels in the city to cater for the new markets. All of these are known for their high standards of service. Prices are correspondingly high. The management of Capital Hotel believe that to compete they need to improve the standard of service whilst pegging prices some 10% below their competitors. A survey of customers has indicated that customers would like the checking-in process to be made quicker, for service in the restaurants to be speedier and more friendly and for the rooms and public areas to be decorated and furnished to a higher standard.

Hotel Staffing

There are three departments in the hotel - front-of-house/administration, housekeeping/maintenance, and catering. Reception work on a three shift system 'around the clock'. Housekeeping works on a single shift system (from 06:30-16:00) with some overtime working to cover evening cleaning duties. Catering operates a two shift system from 06:00-15:00 and 15:00-24:00. Housekeeping staff are usually idle for about 2 hours of their shift. By contrast catering staff are very busy for their entire shift. Staff in the maintenance division of housekeeping have very variable workloads, often working under low pressure during their normal 07:00-15:30 shift but then having to work under intense pressure, and being paid "double-time", if there is a maintenance fault that needs urgent repair during the evenings or at weekends. Two of these staff are paid a small, out of hours, on-call standby fee.

The management staff are usually recruited from outside the hotel, whilst departmental supervisors are usually promoted from within the department. Training and development is mostly on an ad hoc, as needed "on-the-job" basis although 0.4% of total salary costs are spend on formal training which consists mostly of sending staff on statutory health, safety and hygiene training courses.

Labour Turnover in the Hotel

Until two years ago the average annual turnover rate (i.e. the proportion of staff leaving during the year) was 10%. Half of this figure was composed of employees retiring (retirement age is 65). Over the last two years the annual turnover rate has gone up to 25%. One-fifth of those leaving were retirements. Three fifths of those leaving were in the catering department. Two-fifths of those leaving had less than six months employment.

Staff Profile

Management have recently collated information on the number of employees by occupation and age as a first step in preparing a human resource plan. All staff are employees, mostly full-time; very little use is made of agency staff and only non-routine work is contracted out.

Occupational group

Staff numbers

Ages

The Local Labour Market

Since the international hotels opened there has been a problem in recruiting kitchen and bar staff because the newcomers are able to pay 15% higher wages. It is also difficult to recruit chefs as there is a severe regional shortage of the sort of top class chefs needed to achieve the restaurant awards that the management require to realise the overall strategy of a quality "boutique", hotel.

Group Tasks

Using this case study as a background, as an HR consultant contracted by