Successful Factors of Malmaison Hotel Chain Essay Example for Free

Successful Factors of Malmaison Hotel Chain Essay I had worked in Malmaison hotel chain for 2 years in various departments taking up different roles, and over the two years, Malmaison hotel chain as an organization has demonstrated potential future market leader quality and showed excellent growth rate, good profitability and increased market share. However, the hospitality industry as a whole, over the past a few years has been far from as optimistic as the Malmaison hotel chain has been. In the West Midlands, for example, it has been common for bars, restaurants, hotels to changed ownership, merged, be acquired, or go bankrupt. Indeed, bars and restaurants are three times more likely to go bankrupt than other businesses in the UK, according to Accountants UHY Hacker Young (2007), Their report revealed that 15. 5% of businesses in the UK hospitality and catering sector (restaurants, pubs, and hotels) fail every year in comparison with just 5. 2 % for the economy as a whole. UHY Hacker Young (2007) had investigated over 150,000 businesses that had failed in the past one year, and found out lots of anecdotal warnings about the high failure rate of restaurants in the first year to be true. In the hospitality industry the owners and managers were struggling with raising second round financing; market research and financial planning were not completed in a proper fashion; loyal customer base that protects against fast changing consumer tastes in bars and restaurants was not developed entirely, all of these have contributed to the high failure rate in the UK hospitality industry businesses. In such an economic and market environment, why Malmaison hotel chain has been a success becomes an interesting subject to study. Malmaison hotel chain was founded in 1994 along with its sister hotel chain Hotel du vin which is also owned by the same company MWB, there are 21 chain hotels that are under the same ownership and there are 3 more hotels which are just opened by the end the 2007 and a further 4 more Malmaison hotels are due to open by the end of 2008. The company is also in negotiation for another 7 sites. Malmaison hotel chain is recognised as the UKs leading lifestyle hotel group that is top of the brands in a recent survey. According to Caterer ; Hotelkeeper (2008), the survey of 2000 business and leisure travellers by BDRC, revealed that 53% of all travellers said they preferred to go to Malmaison as their first choice, 46% chose Hilton and 40% chose Marriott. Malmaison has over 1,500 bedrooms across the UK. The gross value of these hotel property assets in the Groups latest published accounts to 30th June 2007 was ? 553 million, not to mention the reputation which has gained the group a valuable brand image that worth millions. Over the years the group has won a number of awards, such as best hotel groups in the UK, also it won the best place to work for in the hospitality industry 5 years in a row. It is believed that a key reason for Malmaison hotel chain’s success lies in its efficient and developed human resource management system, productivity and performance measurement and monitoring system, market research team work, strategic management, adaptability to changes and its financial control. These will be investigated and discussed in detail later in the research. . 0 Aim The aim of this research project is to explore what has Malmaison hotel chain done to accomplish such a success while operating in the current UK economic and market environment. 3. 0Project Objectives ?To review the current teaching and practice regarding human resource management, marketing management, financial management, and operational management in relation to the hospitality industry. ?To analyze the management fashion and operation processes of Malmaison and their impact on the performance and productivity of Malmaison. To make recommendations to the management team of Malmaison Hotel Chain to increase the efficiency, effectiveness and the performance of the organization. 4. 0 Literature Review 4. 1 Introduction There are obviously a large number of factors, ultimately all contributing to the success of Malmaison, however, in this research, a limited range of key issues will be addressed which are believed to be the most significant contributing factors behind for Malmaison’s success. The literature review research was supported by electronic resources and library research. There has not been much work been done on the reasons for the success or failure of the UK hospitality industry, and there is even far less attention being paid to hotels. Both strategic marketing management and human resource management are broad concepts, it is therefore, necessary to focus upon a few critical issues within these subjects that have particularly been focused upon in the operation and management of the Malmaison group. 4. 2 Job Satisfaction Job satisfaction is a critical factor that contributes to better performance, Professor Stephen Robbins’ study shows that happy workers are more likely to be productive workers. As a result, the correlation between job satisfaction and job performance is also rather strong (Robbins, 2007). However, George and Jones (2008, p93) pointed out: â€Å"job satisfaction is not meaningfully associated with job performance†. A study that was conducted by Iaffaldano and Muchinsky (1985) in the 1980s in this area concluded that job satisfaction only accounted for 2 percent of the difference in performance levels across employees. Another more recent review indicated a very similar result that job satisfaction only accounted for 3 percent of the difference in performance level across employees. (Judge, Thoresen, et al. , 2001) George and Jones (2008) also mentioned that work attitudes such as job satisfaction affect work behaviours only when employees are free to vary their behaviours. The study suggested that most of the employees are not free to vary their behaviours at work because organizations spend a considerable amount of time and effort to ensure that members perform their assigned duties dependably regardless of whether they like their jobs or not. However, it is worth mentioning that the hospitality industry might be an exception to this rule simply because the work attitudes of the employees account for a very heavy portion of the level of the service in delivering satisfaction to customers’ needs. It will, therefore be worth carrying out further research to study the correlation between job satisfaction and job performance in this particular industry. 4. 3 Motivation, Job Design and Goal Setting Wagner Hollenbeck (2005) suggested that: â€Å"one way for an organization to gain a competitive advantage over its rivals is to generate a more motivated workforce†, â€Å"a person who is highly motivated will start work sooner and leave work later relative to someone is unmotivated. While engaged at work, a highly motivated person will work faster, take fewer breaks, and be less easily distracted relative to someone who is unmotivated†. Job design and goal setting are two of the major factors contributing towards creating motivation, George and Jones’s (2008) study suggested that: â€Å"Job design can have a profound effect on employee motivation. The specific goals employees strive for and the more general corporate objectives that an organization pursues over time are important sources of motivation for employees. † Wagner Hollenbeck (2005) pointed out that the methods of work design developed with the motivational perspective in mind include job enlargement and job enrichment. Callinan, Forshaw Peter’s (2007) studies showed that a job’s core characteristics, which are skill variety, task identity, task significance, autonomy and feedback are believed to be key influences on employee motivation. Goal setting is also considered to be â€Å"communicating accurate information on work performance† and these â€Å"can be positive motivators for employees. † George and Jones (2008) have similar opinions on this subject. They believe that â€Å"two major characteristics of goals that lead to high levels of motivation and performance, one is specificity, the other is difficulty†, â€Å"specific goals lead to higher performance than do vague goals or no goals†, and â€Å"difficult goals (not impossible) lead to higher motivation and performance than do easy or moderate goals. However, there are limits to goal setting theory, Thus, studies by George and Jones (2008) show that there are three particular circumstances under which setting specific, and difficult goals will not lead to high motivation and performance, they are goals which involve employees’ skills and abilities, tasks which require employees’ complete attention and a considerable amount of learning, and when creativity is needed to perform the task. In hospitality, these 3 circumstances do happen very often, this research will be carried out with heavy focus upon these circumstances and issues to review how Malmaison Hotel balance these pros and cons within their organization. 4. 4 Groups and Teams A large amount of work has been done regarding group dynamics and team effectiveness. However, there is one area that is most interesting and related to, not only Malmaison hotel chain, but to the whole hospitality industry, that is the correlation between cohesiveness and performance of groups or teams. George and Jones (2008) suggested there are five factors that influence a group’s level of cohesiveness: 1. Group size, as it gets bigger, members tend to be less satisfied, group between 3 and 15 people are believed to be the right size that promotes cohesiveness. 2. Similarity/diversity of group member, depending on the tasks and situations, similarity and diversity can be beneficial to group cohesiveness. 3. Competition between groups, generally competition will be facilitating group cohesiveness but occasionally it can be dysfunctional and impair effectiveness when there is too much competition within a group. 4. Success, members will be more attracted to a successful group and proud to be a member. 5. Exclusiveness, when it’s difficult to get in a group, and the group has a high status, group cohesiveness tends to be high. However, they also pointed out that occasionally, too much cohesiveness within a group can impair the organization’s effectiveness if the group’s goal is not aligned with the goal of the organization or other groups within that organization, for example waiting staff‘s goals of providing good service in order to get decent tips are aligned with the restaurant’s goal of satisfying customers, but not aligned with bar tending staff’ goals. 4. 5 Leadership Leadership plays an important role in a hotel organization success. Thus, Peter Jones and Steven Gross-Turner pointed out in Managing Projects in Hospitality Organizations, hotels are in a turbulent environment, and â€Å"managers are in fact in the best place to identify what changes need to be made since they are the people who have direct contacts with employees and customers† (Jones et al, 1991). 4. 6 Organizational Structure Centralizing and decentralizing organizational structures are two most used structures nowadays. A decentralized structure will decentralize authority to lower level managers and non-managerial employees, give them the responsibility to make important decisions, keep the problem of slow and distorted communication to a minimum and make the job more interesting and rewarding while, at the same time, fewer managers are needed. (Blau and Schoenher, 1971) However, too much decentralization provides employees with too much authority and they might pursue their own goals at the expense of the goal of the organization. A centralized structure generally has more levels within the organization and provides employees with more opportunities to gain promotion and progress. For the hospitality industry, where employees perform primarily physically, more opportunities clearly will be attractive for those who desire a less physically demanding position. 4. 7 Conclusion Kotler (2001) pointed out that â€Å"today’s successful organizations to a certain degree all have one thing in common, that is they are dedicated to sensing, serving and satisfying the needs of customers in well defined targeted markets†. In the hospitality industry, when service is their major product, this philosophy is obviously critically important. However, how Malmaison strategically positions itself to compete with its rivals is an even more crucial and difficult issue that the proposed research will focus on. 5. 0Methodology 5. 1 Introduction A number of approaches will be taken to collect the needed data and information in order to serve the purpose of this research project, increase the quality of the results and findings and enhance the credibility of the research project. Malmaison hotel chain has over 20 hotels throughout the UK, each individual hotel will be unique and differentiated in terms of their focus and priorities depending on their local customs and culture. However, what this research project will be concentrating on is what the common factors are for the Malmaison hotel chain as a whole that turns the organization into a success. Therefore the Birmingham Malmaison will be the subject of the investigation. Birmingham is a multi cultural city and operating in a multicultural organizational environment has been becoming a trend for organizations world wide. The researcher gained two years working experience in this hotel, and therefore it is especially worthwhile doing the research project in such an environment. (Cox, 2001) To complete this research project, three stages will be taken in order to process the project, they are desk based research, field based research and the preparation of a detailed case study. 5. 2 Desk Based Research At this stage of the investigation, a heavy focus will be upon the articles that address the hospitality industry, hotel management, hospitality strategy, as well as the paper work that states hotel policies, financial and management accounts, board of directors statements, stock control data, and general manager’s letters to all the staff. These secondary data contain enormous amounts of information that indicates the hotel’s management style and attitude and forms the fundamental policy to the customers and market. These data are absolutely the first key for this research and will provides valuable information and evidence on the reasons for the Malmaison hotel chain’s success. In addition to that, some of these data are available to the public and can be quickly and easily collected. Some of these data are not available to the public, but, as a former member of staff, I could still gain access to this information. With the information and evidence collected, the primary data collection work will be much more focused and relatively easier having the support and assistance of the secondary data collected. 5. Field Based Research A series of interviews (8-12 people) will be carried out to gain a first hand insight of the impacts which the management style of Malmaison hotel chain has on its employees, and how it affects the performance of the organization. The interviews will take place in various departments across the organization in order to gain a full understanding of the operation sy stem in the Malmaison hotel chain. Some of the board of directors, the general manager, department managers, sector supervisors, and staff that work at the front line and have direct contact with customers all will be interviewed. The total number of interviews will be between 8 to 12. This will give the evidence and information on how each department functions and what are the impacts of them on each other. One or two suppliers will also be interviewed to provide evidence on how the Malmaison hotel chain cuts deals with suppliers and how they interact with each other and how is it affects the organization financially and what impact it has on the marketing and sales strategy of the organization. However, caution must be taken while conducting these interviews. Thus, Saunders (2002) suggests that it is in the researchers’ own interest to seriously consider the reliability, forms of bias, validity and generalisability of the information obtained. Therefore, carefully prepared interview questionnaires will be used and questions which appear in the questionnaires will also be cautiously selected to gain as fair a view as possible. The framework suggested by Easterby-Smith (1991) may be adopted to make sure that the data generated from the interviews is thoroughly reviewed and evaluated. The stages in this process will include: 1. Familiarisation 2. Reflection 3. Conceptualisation 4. Cataloguing concepts 5. Recording 6. Linking 7. Re-evaluation 5. 4 Preparation of the Case Study A case study will be generated at the final stage of the research by putting together the data that is gathered from the previous stages. The case study will bring up recommendations to the management team of Malmaison hotel chain and also, there will be discussions of to what extent the findings can be generalized and to what degree the Malmaison hotel chain management structure, human resource management policies and operational systems can be copied and utilized by other organizations within, or even outside the hospitality industry. . 0 Ethical Issues While conducting the research and interviews, the financial information of Malmaison will be discussed in the interviews, its financial statement will also be used later in the dissertation to analyse and measure its performance, and such information will be kept confidential. The final report will be identified as ‘Commercial in c onfidence’ and will not be available to a wider audience than those directly involved in its assessment. 7. 0 Task List TaskProblemsSolutions Research literature on hospitality management, current hospitality industry trends analysis in the UK. Limited amount of literature in the area of topic. E- journals, business review magazines, textbooks, newspapers, internet. Review literature and identify relevant and reliable articles. Time consuming to select relevant articles. Time management. Contacting general managers in Malmaison hotel chain to gain access to information. Very difficult to get access to key information and financial report and management accounting report. Utilize my identity as former employee in the organization. Selecting different individuals to conduct interviews. Too many employees to choose fromSelect people who may represent the department and be able to give valuable information and opinion. Arranging interviews with selected staff. Difficult to fit in everyone’s schedule and it’s time consuming since the amount of time between each interview when the person is available is unpredictable. Be patient and positive. Conducting interviews. Response may not be relevant. Textbooks on how to carry out interviews. Transcribe interviews scripts. Time consuming while large amount of information gathered in interviews with limited amount of transcribe skills.