Best Western

HRM 380 | Case 5 | Group N 1

PART 1 BACKGROUND


1.1 Company Overview Best Western International (BW) is a nonprofit worldwide association of member hotels with headquarters in Phoenix, Arizona. The association is a pure play membership organization established to provide revenue generating opportunities (through marketing sales and other services) and the leveraging of purchasing power to its members. BW is made up of six (6) wholly owned subsidiaries: BW Advertising Agency Inc.; BW-Gold Card Club International, Inc; BW Insurance Agency, Inc.; BW Worldwide Reservations, Inc; BW Financial Services, Inc.; and BW Limited. Internationally, BW operates through 27 Affiliate Organizations (AOs). Each AO is limited to a specified geographic region. A list of the AOs and the respective countries/territories for which they are responsible. Each AO operates under its own ten-year agreement signed with BW. This agreement outlines the affiliate structure, services, and responsibilities of each party.

1.2 A Golden History The Early Years (1946–1959). Best Western has its historical roots in the ―cabin camps‖ which became popular in the Western U.S. in the 1920s. Small groups of independent cabin owners formed associations with the intent of providing traveling motorists with predictable standards of lodging quality. Further, these associations provided a means to pass their traveling guests from one member of the organization to another (this referral system actually dates to 1909 with the old Automobile Club of America). Leveraging the idea of cabin camps, M. K. Gurten founded Best Western in 1946. Gurten owned a beachfront hotel in Long Beach, California. While traveling from Long Beach to Tacoma, Washington, he realized that if the hotel 30 miles down the road was equal or superior to his hotel, he would then feel comfortable referring a guest to that hotel when he had no vacancies. Likewise, the owner of the other hotel would be expected to reciprocate when his hotel was full. With this arrangement, a formal system of referral and the concept of Best Western was born. Initially, 66 motels united to become what at that time was called Best Western Motels. By 1947, over 500 properties were members and the first Best Western convention (called the ―Round Up‖) was held in Las Vegas. At the same time, nearly 5 million Best Western Travel Guides were printed and distributed throughout the U.S. Rapid


Expansion and Internationalization (1960–2001). By 1960, a formal quality assurance department was established within the association. Its purpose was to have members inspect other properties on a regular basis to insure compliance with certain lodging standards. The brand‘s visual identity was updated in 1962, and a year later membership rose to 699 properties in 25 states and Canada. Best Western was now recognized as the industry‘s largest lodging chain. In 1964, Best Western merged with its East Coast counterpart—Best Eastern. The combined entity, which became known as Best Western, moved its headquarters from Long Beach to Phoenix. Membership over the next decade nearly doubled and by 1974 Best Western‘s first centrally owned and operated reservation center was established along with a toll-free number. The mid-1970s also saw Best Western expand internationally to Mexico, Australia, New Zealand, and Europe. A new, updated STAR reservation delivery system was introduced and membership climbed to 1781 properties. By the end of the decade, Best Western boasted 2140 members in 13 countries. In 1982, the title of ―World‘s Largest Lodging Chain‖ was again established, and Best Western even became the largest lodging chain in Canada. The term ―Worldwide Lodging‖ was added to the Best Western visual identity at this time. Worldwide expansion continued apace, and by the mid-1980s, Best Westerns could be found in Israel, Portugal, South America, and even Hungary. In all, Best Western had 3000+ properties in 28 countries.

1.3 Industry Analysis Overview. Significant changes have transformed the landscape of the global lodging industry. Major trends include:

• Market maturity, • An increase in competitive intensity, • A large number of acquisitions by major players, • The advent of the Internet and online travel agencies (e.g., Expedia, Travelocity), • Corporate reorganizations, and • Significant global expansion (with specific and related objectives):

– Economies of scale, – Consistent product and brand positions, – Cross-border employee training to support standard service

delivery, – Global sales and marketing programs.


BW management considers the following lodging brands to be the organization‘s most direct North American competitors; Holiday Inn, Holiday Inn Express, Days Inn, Comfort Inn & Suites, Ramada Inn, Quality Inn & Suites, Super 8, and Hampton Inn. These brands either compete directly with BW in key geographic markets or have developed a significant global presence. From the viewpoint of travelers and travel influencers, each of these competitors could be considered stand-alone brands. Yet, each operates and plays a strategic role as part of a larger portfolio of brands owned and operated by distinct global lodging enterprises (an analysis of key competitors and their brand portfolios is presented below). Within the broad midscale segment, several price tiers exist. Exhibit 9 shows the breakdown of price tiers for BW and competitor properties in the U.S. market. BW‘s ranking across these price tiers (by share of available rooms) is presented in Exhibit 10. Choice Hotels International. Choice Hotels International Inc. is the second largest hotel brand globally behind BW. Headquartered in Silver Spring, Maryland, Choice operates more than 4200 hotels in 35 countries under a portfolio that includes eight brands: Clarion, Quality, Comfort Suites, Comfort Inn, Sleep Inn, Mainstay Suites, Econo Lodge, and Rodeway Inn. At the same time, Choice recognized the need to allow more regional representation which would restore some of the autonomy lost through the global reorganization. Accordingly, three regional teams were developed. The Americas are the responsibility of the regional office in Fort Lauderdale, Florida; London handles the EU and Africa; and Singapore is responsible for the Asia-Pacific. Headquarters provides support to the regional offices in the following areas: (a) international services; (b) the international sale of room nights for other countries; (c) internal services such as finance, accounting, HR, training, and PR; and (d) external service support such as technology and marketing programs. The regional offices were directly responsible for franchise sales through the master franchises, the provision of franchise services, and marketing. In fact, the marketing function of Choice properties has a decidedly ―regional emphasis‖ even though most room night sales are centrally coordinated. On a global level, the company has rolled out its ―100% satisfaction guarantee‖ policy, which is handled out of its headquarters and/or by the master franchises. Support for the ―100% guarantee‖ program was provided by annual quality inspections carried out by both the master franchises and by Choice. Cendant (Travel Division). Cendant is the world‘s largest franchise chain with properties in 80+ countries on six continents. The company‘s lodging brands include: Days Inn, Howard Johnson, Knights Inn, Ramada, Super 8, Travelodge, Villager Lodge, and


Wingate Inn (Avis Rent-a-Car also resides in the Cendant travel portfolio). Worldwide, Cendant opened a record 63,000 new rooms in 1999, with 25% added through new construction. Remaining growth was achieved through conversions from independent and competing brands. Cendant enjoys a franchise renewal rate of over 90%. In 2000, Cendant focused on building critical mass for its brands in Europe. A British developer agreed to build 60+ Howard Johnson properties over five years, while an Italian counterpart committed to 15 in the same period. In Poland, another developer would build 10 or more Super 8 properties. Part of Cendant‘s momentum in Europe (and elsewhere, worldwide) was their recently developed multimillion dollar ―Power Up‖ property management program.

1.4 Global Market Research: The Key Findings BW management initiated a five-year strategic plan in 1998. As part of this plan, management commissioned PricewaterhouseCoopers (and several other firms with extensive lodging industry experience) to carry out a comprehensive program of global marketing research. These studies had internal oversight from BW‘s International Global Research Steering Committee (comprised of BW North America Board Members, Senior Management from the Phoenix Headquarters, and representatives from the AOs). While these studies had multiple and related purposes (study methods are described below and selected results are presented in subsequent Exhibits), the over-arching scope and objective of this program of research was to better understand the perceptions and image of the Best Western brand among global travelers and travel influencers, and to provide a benchmark to key competitors. BW‘s comprehensive program of cross-national research had multiple and related purposes. Specific studies were conducted to assess: 1. the profile of BW customers (and noncustomers); 2. traveler awareness of BW and competing lodging brands; 3. traveler perceptions and image of the BW brand and key competitors; 4. traveler expectations and levels of satisfaction with BW properties and those of competitors; 5. preference for the BW brand and degree of ―lodging loyalty‖ among travelers in the midscale segment;


6. the degree of brand-related clarity (or confusion) that exists for BW; and 7. the use and likely effectiveness of future BW brand-related marketing programs.

1.5 Analysis of Key Findings Awareness of BW and competing lodging alternatives across the four regions (for most of the results reported here, data are reported across the four worldwide regions).6 Not surprisingly, BW scores highest among its own customers. High levels of brand familiarity among noncustomers is also found in North America; noncustomers in other regions showed considerably lower levels of awareness. Among competing brands, Holiday Inn, Ramada, Super 8, and Courtyard by Marriott generally showed high levels of familiarity, for both BW customers and noncustomers, across multiple regions. Analyses were performed to determine how well Best Western was meeting customer (and noncustomer) expectations compared to competing brands in the midscale lodging segment. Overall, however, with the exception of Australia, the brand appears to meet customer expectations. A similar analysis was performed for noncustomers. Here, BW‘s performance was variable across regions, and was generally lower than for customers. Analyses were performed to determine how well BW delivered on attributes considered important to customers and noncustomers in the four regions. Specifically, a ―gap analysis‖ was derived for each region. This analysis displays in visual form how well BW is perceived to deliver on attributes considered important to travelers (for both customers and noncustomers). Specific results are presented


1.6 Moment of Truth: Key Decision-making More questions remained than answers and definitive action steps for Best Western had not yet been identified. Jack and members of the IB/IEC organize their thinking on the key issues facing the organization as it sought to achieve global brand leadership in the worldwide midscale lodging market: 1. Who are BW‘s customers? What does value mean to BW‘s customer? Can BW deliver value consistently worldwide? Does BW need to deliver value consistently worldwide? 2. What is your evaluation of the marketing research? What can you learn from the marketing research? What additional research is needed to make meaningful brand management decisions? 3. Is ―One Global Brand‖ a desirable strategy for BW? Why or why not? If it is desirable, is it viable? Can it be delivered? 4. As BW management looks to leverage equity in the BW brand, can the brand be extended to different property type designations (e.g., limited service, midscale service, upper-scale service)? How would you recommend that BW make this work? 5. Taking into account worldwide differences in the marketplace and customer behavior, what variables of the marketing mix and brand strategy for BW do you recommend be standardized? Regionalized? Localized? 6. In what ways does the BW organizational structure help or hinder the development of branding strategy? Does a regional emphasis make more sense for BW? Why or why not?


PART 2 THEME


Best Western, a nonprofit worldwide association of member hotels headquartered in Phoenix, Arizona faces a series of strategic challenges while facing intense global competition and the changing demographics of the global environment. BW‘s global leadership in the mid-scale lodging industry has been challenged by increased rivalry from the major players, recent technological changes and increased globalization. Its global standards, one of its core competences, have been questioned and recognized as ‗inconsistent‘. The brand itself, one of the competitive advantages leveraged by the company over decades, has been termed ‗outdated‘. The key challenge for the company is to regain its global leadership by implementing the necessary changes and deriving synergies from a truly global business portfolio of numerous SBUs (Strategic Business Units).


PART 3 MAIN ISSUE


What strategy should be undertaken by Best Western, a nonprofit worldwide

association of member hotels headquartered in Phoenix, Arizona while it faces a

series of strategic challenges being exposed to intense global competition and

the changing demographics of the global environment?


PART 4 SWOT ANALYSIS


5.1 Strengths The Global Organizational Structure of Best Western BW is made up of six (6) wholly owned subsidiaries:

BW Advertising Agency Inc. BW-Gold Card Club International, Inc BW Insurance Agency, Inc. BW Worldwide Reservations, Inc. BW Financial Services, Inc. BW Limited.

These subsidiaries are major sources of strength for Best Western as they leverage the organization with an array of a variety of services. Internationally, BW operates through 27 Affiliate Organizations (AOs). Each AO is limited to a specified geographic region. Each AO is a separate nonprofit member organization in its own right, which elects a Board of Directors and employs a staff to provide services to members in the region. AOs generally have a CEO, who is head of the staff, and a President, who is the head of the member Board of Directors. The freedom enjoyed by the AOs contribute to an autocratic A Formal Quality Assurance Department Quality assurance is used to deliver the quality product to the client according to his requirements and budget. The primary focus of Quality Assurance (QA) is on facilitation, training, audits and QA reviews, thereby ensuring best quality services. Best Western has a formal quality assurance department within the association. Its purpose is to have members inspect other properties on a regular basis to


insure compliance with certain lodging standards. This department plays a key role maintaining the global standard of the BW properties. Brand Equity & Legacy of Premium Quality The brand equity of Best Western hotels is very high among consumers around the world. The underlying reasons for high brand equity lie in its history of excellence and its legacy of a century of provision of lodging services. High Level of Brand Familiarity among Consumers Research revealed that the brand Best Western is very familiar among consumers, even among those who are not its customers. Travelers worldwide can find the exact hotel that they want with complete and total confidence in the Best Western brand. Positive Brand Image across the Globe For the last few decades, through the most severe recessions in recent history, Best Western has consistently out-performed the industry. And over the last 60 years, its partners have made Best Western ―The World‘s Largest Hotel Chain‖.


5.2 Weaknesses Inconsistency of Services In a global marketing research conducted by PricewaterhouseCoopers (and several other firms with extensive lodging industry experience), both BW customers and noncustomers described Best Western as somewhat or very inconsistent. These results show that, across regions, a considerable number of travelers associate BW with inconsistency. Interestingly, this result is more pronounced for customers than noncustomers. Across regions, specific negative experiences while staying at BW that led to impressions of inconsistency. Most notable were inconsistency with services, hotel appearance, in-room amenities, and the property‘s physical structure—factors which received high mentions across regions. Brand perception as “Outdated” The global marketing research also showed that a considerable number of those familiar with BW consider the brand to be outdated. The research broke down customers and noncustomers, across regions, who describe BW as somewhat or very outdated. The results for North America and Australia would appear to raise the most concern, with fewer mentions in Northern and Southern Europe.


5.3 Opportunities Growth Opportunity in India & China India AND China are the two most potential markets in today‘s world. These two countries represent more than 2 billion people in their territories. Many new investment opportunities are also opening up with the recent economic boom in these two economies. These two countries provide Best Western with endless opportunities to expand their global operations with much intensity. There are white plastic showpiece towers designed by architects such as I.M. Pei and Sir Norman Foster. There are immense new industrial parks for autos and petrochemicals, along with new subway lines, airport runways, ribbons of expressway, and an elaborate riverfront development, site of the 2010 World Expo. Nine futuristic planned communities for 800,000 residents each, with generous parks, retail districts, man-made lakes, and nearby college campuses, rise in the suburbs. The message is clear. Shanghai already is looking well past its industrial age to its expected emergence as a global mecca of knowledge workers. "In an information economy, it is very important to have urban space with a better natural and social environment," explains Architectural Society of Shanghai President Zheng Shiling, a key city adviser. It is easy to dismiss such dreams as bubble-economy hubris -- until you take into account the audacious goals Shanghai already has achieved. Since 1990, when the city still seemed caught in a socialist time warp, Shanghai has erected enough high-rises to fill Manhattan. The once-rundown Pudong district boasts a space-age skyline, some of the world's biggest industrial zones, dozens of research centers, and a bullet train. This is the story of China, where an extraordinary ability to mobilize workers and capital has tripled per capita income in a generation, and has eased 300 million out of poverty. Leaders now are frenetically laying the groundwork for decades of new growth. Now hop a plane to India. It is hard to tell this is the world's other emerging superpower. Jolting sights of extreme poverty abound even in the business


capitals. A lack of subways and a dearth of expressways result in nightmarish traffic. But visit the office towers and research and development centers sprouting everywhere, and you see the miracle. Here, Indians are playing invaluable roles in the global innovation chain. Motorola, (MOT ) Hewlett-Packard (HPQ ), Cisco Systems (CSCO ), and other tech giants now rely on their Indian teams to devise software platforms and dazzling multimedia features for next-generation devices. Google (GOOG ) principal scientist Krishna Bharat is setting up a Bangalore lab complete with colorful furniture, exercise balls, and a Yamaha organ -- like Google's Mountain View (Calif.) headquarters -- to work on core search-engine technology. Indian engineering houses use 3-D computer simulations to tweak designs of everything from car engines and forklifts to aircraft wings for such clients as General Motors Corp. (GM ) and Boeing Co (BA ). Financial and market-research experts at outfits like B2K, OfficeTiger, and Iris crunch the latest disclosures of blue-chip companies for Wall Street. By 2010 such outsourcing work is expected to quadruple, to $56 billion a year. Even more exhilarating is the pace of innovation, as tech hubs like Bangalore spawn companies producing their own chip designs, software, and pharmaceuticals. "I find Bangalore to be one of the most exciting places in the world," says Dan Scheinman, Cisco Systems Inc.'s senior vice-president for corporate development. "It is Silicon Valley in 1999." Beyond Bangalore, Indian companies are showing a flair for producing high-quality goods and services at ridiculously low prices, from $50 air flights and crystal-clear 2 cents-a-minute cell-phone service to $2,200 cars and cardiac operations by top surgeons at a fraction of U.S. costs. Some analysts see the beginnings of hypercompetitive multinationals. "Once they learn to sell at Indian prices with world quality, they can compete anywhere," predicts University of Michigan management guru C.K. Prahalad. Adds A. T. Kearney high-tech consultant John Ciacchella: "I don't think U.S. companies realize India is building next-generation service companies." Strategic Alliance with Complimentary Service Providers in the tourism industry Best Western can form strategic alliances with complementary service providers in the tourism industry. For instance, they can form an alliance with airline carrier(s) across the world and in regional basis by integrating the services provided. Five star hotels around the world have received immense benefits from this kind of alliance (STARWOOD, ORION etc.). This would play a key role in increasing customer loyalty And thus the company‘s growth and profitability.


Alliance can be established via an agreement to collaborate on air services development and destination marketing as well as pursue joint initiatives in lodging and accommodating activities


5.3 Threats Maturity of the Market The Four Stages of Market Maturity According to Martinez and Haddock, the 4 stages of market maturity are:

Stage 1. Survival

Stage 2. Quality

Stage 3. Convenience

Stage 4. Customization. Best Western‘s market is mostly at the fourth stage of maturity. As a country evolves from developing nation to industrialized nation, the population‘s basic needs pass through four distinct stages. In developing countries, most of the population is preoccupied with basic survival – obtaining adequate food, shelter, and clothing. (Much of sub-Saharan Africa is in the stage right now.) As a middle class emerges, people seek greater quality in their food, housing, and clothing (This is currently happening, for example, in much of China and India.) Once a transitioning market‘s population can afford relatively high quality, they begin to seek convenience; they buy time-saving appliances and processed foods, and they may move closer to work. (This stage is emerging today in Eastern Europe and Latin America.) Finally, as the market graduates into the realm of developed nations, the population wants customization; with needs for survival, quality, and convenience now met, people will spend a premium (as many do in North America, Japan, and western Europe) to satisfy individual tastes and desires. Increasing Industry Rivalry Competitors have economic power based on their ability to compete. Competitors with disproportionately strong resource bases can be aggressive and create a strong rivalry. The nature of rivalry in the mid-level lodging market, as well as the hotel industry as a whole is very high. The key to rivalry in some hotel markets is pricing, for example, whereas in others it may be brand differentiation. In still other markets a key to success is locating near existing


hotel properties. Firms that have multiple properties in different markets are often competing against some of the same firms in several markets, a situation called multi-point competition. Aggressive Mergers & Acquisitions by major players in the industry Domestic and international Mergers & Acquisitions (M&As) have become important tools in the lodging industry as a major means for companies to grow in size and to go international. While mergers may have slowed down a little, aggressive acquisitions have become very frequent for big corporations with multiple investment portfolios and numerous SBUs (Strategic Business Units). M&As are investment activities. As with all good investments, it is expected that they will result in an increase in the value of the firm, which may be achieved in several ways. Higher levels of performance may be attained through improved management if the management of the acquiring firm is superior to that of the target firm. Benefits may also be achieved if a more efficient firm is created through the elimination of redundant facilities and personnel or through offering a more profitable mix of products and services. Also, increased market power may raise performance. Usually, M&As can be divided into three stages: the premerger process, the actual deal, and the post-merger integration process. Premerger and post-merger processes have traditionally been viewed as separate issues: merger performance has been regarded as the result of the success of premerger decision making plus the success of post-merger implementation (Pablo 1994). Often different groups and even managers are involved in the pre-deal and post-deal stages. This may result in a disconnection between the expected benefits of the M&A with the achievement of those benefits during the integration process. Increasing popularity of the Internet and Online Travel Agencies One of the most important recent technology advances, the Internet, may be viewed as an opportunity by some travel service providers while appearing threatening to others. The Internet‘s increased popularity has had a major impact on the travel industry over a relatively short period of time. In the beginning, travel suppliers went on-line to provide information. Now, major on-line travel


sites are much more likely to offer Internet-savvy consumers booking options which can go beyond simple transactions such as point-to-point air and hotel reservations. In fact, travel packages are accounting for an increased share of on-line business The ―do-it-yourself‖ or independent traveler is becoming more prevalent in the Internet age. Consumers can take greater control over their travel plans if they are on-line. Not only is the Internet a useful tool for information gathering, it also allows people to compare prices and options to locate the best deals available. Demand for on-line travel arrangement services has been steadily growing around the world and it is a major threat to Best Western‘s business.


PART 5 HR ISSUES


Best Western International is a worldwide membership association assembling by hotels anchoring in Phoenix, Arizona. The association is a membership organization established to provide revenue generating opportunities through marketing sales and other services and the leveraging of purchasing power to its members. Members are owners of independently owned and operated hotels who join the BW organization. BW is made up of six wholly owned subsidiaries. Internationally, BW operates through 27 Affiliate Organizations (AOs). Each AO is limited to a specified geographic region. Each AO operates under its own ten-year agreement signed with BW. This agreement outlines the affiliate structure, services, and responsibilities of each party. Human resource issue is one of the most important issue to organizations that have been successfully able to maintain a good position in the market and good reputation. HRM is the process of acquiring, training, appraising and compensating employees. Human Resource Management helps build competitive advantage by developing their human capital.

4.1 Travelers experience some specific negative experiences while staying at BW that led to impressions of inconsistency that varies across regions.

The service quality or standard of BW is varied among regions. Best Western has problem on two key attributes—inconsistency and outdated. Customers and noncustomers who describe Best Western as somewhat or very inconsistent told that across regions, a considerable number of travelers associate BW with inconsistency. Interestingly, this result is more pronounced for customers than noncustomers. The brand impact varied across regions and, was both negative and positive. While travelers had overall impressions of inconsistency, certain key drivers contributed to these perceptions. Most notable were inconsistency with services, hotel appearance, in-room amenities, and the property‘s physical structure—factors which received high mentions across regions.


4.2 BW’s performance relative to competitors was generally variable across region. They failed to customers expectations across region. For BW customers, the brand‘s performance relative to competitors was generally variable across regions. From analyses it is found that BW sometimes fared better, and sometimes worse, than specific regional competitors. Overall, however, with the exception of Australia, the brand appears to meet customer expectations. A similar analysis was performed for noncustomers. Here, BW‘s performance was variable across regions, and was generally lower than for customers. The brand performed no better than average on most of the dimensions. In contrast, Hampton Inn scored above average on all 11 attributes, while Ramada fared consistently worse on each.

4.3 Lack of control over regional brunches - Too much distribution of control Because of sovereignty of brunches considerable differences exist in the competitive advantages and competitive weaknesses for the BW brand across the four regions. Power is too much diversified. As a result, consistency and quality of service varied widely by locations. This occurred due to lack of corporate governance within the organization. Employee designation and responsibilities were not well defined leading to discrepancies of service standard.


4.4 Lack of efficient Human Resource Management

It is the responsibility of human resource managers to perform as catalyst in an Organization. Human resource management aims to improve the productive contribution of individuals while simultaneously attempting to attain other societal and individual employee objective In terms of recruitment and selection it is important to consider carrying out a thorough job analysis to determine the level of skills/technical abilities, competencies, flexibility of the employee required etc. In any organization Human Resource Planning can achieve the optimum use of human resources and to achieve the correct number and types of employees needed to meet organizational goals. Additionally, Human Resource Planning provides the basis for establishing and maintaining effective HR programs and for coordinating the various HRM functions. For this reason, BW needs a thorough HRP to have the accurate number of employees with proper skills in its different distribution and service centers all over the world. In order to develop a well-structured HRP the company needs a well functioning HR department in its head office. Moreover, BW needs to have HR units in its every branch. Without a proper HR department it is very difficult to allocate skilled employees and manage them properly.

4.5 BW lacks training and development program in order to increase efficiency. Training and developments programs are required to develop a skilled workforce. In the case information regarding the training and development programs is given. That is why we come up to this conclusion that BW has no such programs for Training & Development for its employees. If they want to enhance the capability of their employees then the company should have the proper training program. It is necessary to learn new skills that could significantly enhance their ability to serve their customers. It also important for having an education center offered updated materials on quality and service issues. The company actively should encourage CSRs to seek outside education and reimbursed such educational pursuits. The only stipulation to continuing education was that CSRs must share their newly acquired knowledge with other employees through a summary of how the experience could be beneficial to one‘s work.


Furthermore, employees had no choice of being trained in other areas of the business, contingent upon being able to find someone willing to trade positions. This provided employees less job flexibility, variety, and personal (as well as professional) reduction opportunities. It also increased the general understanding of the company and the requirements for success in this industry. To train an employee after selection and recruitment is expensive. When a company trains a group of employee they have to arrange improved training and development programs for ongoing improvement. After getting the training it is not obvious that the employee will sustain with the company for a long time.

4.6 Poor level of loyalty of customers towards BW

Certain competitive brands seem able to lure BW customers and noncustomers within specific regions. They are Holiday Inn in North America and Northern Europe, Ibis in Southern Europe, and Courtyard by Marriott in Australia. A more detailed analysis was performed among U.K. business travelers to determine which brand would be the first or second choice among competing lodging brands. The results indicate that BW is in the middle of the pack. The brand trails significantly behind four competitors, two of which are Marriott and Holiday Inn compete directly with BW in all regions. Preference for BW is only marginally above the least preferred U.K. lodging brands. In the same studies, U.K. business travelers were asked if they would be happy to stay at a certain chain again. Here too, BW is found in the middle of the pack, trailing Marriott and Holiday Inn, as well as other local U.K. chains. Willingness to stay again at BW was only marginally above those brands scoring lowest in the study.


PART 6 RECOMMENDATIONS


In this recommendations part for Best Western, the scope of discussion is mostly

confined within the ‗What‘ and ‗Why‘ (reason) parts of mentioned activities that

the organization must undertake in order to operate successfully with a

supportive human resource base for its customer service. That means, first it will

be mentioned ―what‖ is the problem, ‗what‘ are to be done, and ‗why‘ those are

necessary. Later on, in the subsequent implementation section of the report, it

will be discussed elaborately ‗how‘ that can be done, along with ‗what else‘ will

be necessary to make them successful and effective.

Yet, along with recommendations for planning compensation tools, there are some proposition for Best Western which they may follow to increase their operational efficiency and effectiveness.


Problem 1 BW is suffering from two major problems: inconsistency and outdated. Both of these elements are disrupting the activity and efficiency of BW. Most notable were inconsistency with services, hotel appearance, in-room amenities, and the property‘s physical structure—factors which received high mentions across regions. While travelers had overall impressions of inconsistency, certain key drivers contributed to these perceptions. Recommendation

Since the reputation of Best Western depends on the affiliated hotels, it is mandatory to ensure that all the member hotels are maintaining a proper standard defined by Best Western. This will give BW a competitive advantage over competitors. Justification

Most notable were inconsistency with services, hotel appearance, in-room amenities, and the property‘s physical structure—factors which received high mentions across regions. While travelers had overall impressions of inconsistency, certain key drivers contributed to these perceptions.


Problem 2 There is a good management system in the organization but there is no direct control system within the management to supervise the members and ensure consistent quality service around the globe.

Recommendation

Direct supervision and high managerial control over affiliated members will surely increase the standard of Best Western and gain correlation within the management. This will lead to superior service and better management. Justification

Controlling the whole service of member hotel is very important as service, reputation along with service quality suffers due to lack of control. So, Best Western should focus more on controlling issues and they must implement total control management in all over the organization as well as in member hotels to ensure minimum discrepancies in work .So in order to ensure success with member hotels it is necessary for Best Western to have control over their management as well as on their decision making process along with member hotels.


Problem 3 There are already many well established competitors in the market and recent study showed that these competitors are becoming more preferable to the customers which can be dangerous to market position of Best Western. Recommendation

Best western has to provide better quality service to retain the current hostile market situation. BW can attempt to add new well known hotels to BW‘s portfolio to increase its reputation among the customers. Justification

These competitors‘ brands of Best Western either compete directly with BW in key geographic markets or have developed a significant global presence. So to compete with these brands it is very necessary for Best Western to offer their customers with more choice by making alliance with more renowned hotels to include them in Best Western‘s portfolio to convert them as BW member.


Problem 4 From roaming throughout the case study it is now evident that there is no presence of human resource department in Best Western International; though it is crucial for the success of the organization. Recommendation

Best Western must take necessary steps to develop an effective HR department since without it a service organization like BW cannot provide optimal service to its customers. Justification

Establishment of a well-organized proactive human resource department may help Best Western to solve various problems that the company might face while operating and managing member hotels. The HR department ensures better opportunities for Best Western as well as increasing the ability to widen the agenda and to challenge in the here and now. So Best Western considered the fact of HR department seriously.


Problem 5 It is evident that there is no specific training and development program in Best western to build an efficient workforce. Having a training facility is very important for a big organization like Best western. But necessity of a training facility is ignored in this scenario. Recommendation

Providing training to employees on culture, general gesture and customer service can be very effective to the performance of BW since employees deal with customers with wide range of background. Justification

As Best Western provide service in a global scale so to avoid miscommunication with them providing employees with cultural training is necessary. Employee development ensures the best use of organization‘s resources as well as best management of organization. So proving adequate cultural tanning to all level of management of Best Western as well as member hotel staff as they have the responsibly to response quickly with their guests need would help Best Western to increase the quality of service provided to guest and reduce the amount of complain due to cross-cultural communication.


Problem 6 There is no proper compensation strategy in Best Western which can de-motivate employee morale. This can lead to deterioration of service quality and employee performance level. Recommendation

To become the pioneer, to become the market leader and to bring an edge to strategy BW has to introduce a compensation plan that will compensate employees properly so that they feel motivated. Justification

Without proper compensation plan, there are chances that Best Western and its employees might lose track of their goals and objectives. Again, without noticing the effect of compensation plans on the overall progress towards Best Western‘s goal achievement, it is hard to select the appropriate compensation plans that will best serve the organizations purpose. It is important to align compensation goals with both individual goals and Best Western‘s goals. However, long term organizational goals and strategies must be supported with proper human resource planning and after everything, but above all, comes the question of proper compensation planning properly aligned with organizational and individual goals and objectives to support Best Western‘s success.


Problem 7 Customer loyalty level is very low among the tourists since they tend to expand their expenditures among different brands of hotels within the competitive set. BW is always in the middle of the pack in the competitions. BW must find a way out from this problem Recommendation

Best Western should provide best quality services at the lowest rate possible to retain existing customers and attract new customers. Providing high standard services and incentives will convert non-customers into customers. Justification

Certain competitive brands seem able to lure BW customers and noncustomers within specific regions. To attract customers BW must start aggressive advertising along with offering some special packages to them and most importantly not to forget about quality services to customers. BW customers spread their travel expenditures across multiple brands within the competitive set. So, ultimately it is very much harmful as well as intimidation for BW for sustaining in the long run.


PART 7 IMPLEMENTATION


In the recommendation part we have strongly recommended the ideas that will help to solve the problems, which Best Western faced during their expansion. The things we mainly recommended to face the challenges are providing proper training to mangers, removing the discrepancies amongst the members, compensation and training policy and have an efficient operation and management plan. Now in the implementation part it will be focused on who, where, how and when the recommended ideas can be implemented with the help of Best western‘s strength and opportunities.


Problem 1 BW is suffering from two major problems: inconsistency and outdated. Both of these elements are disrupting the activity and efficiency of BW. Most notable were inconsistency with services, hotel appearance, in-room amenities, and the property‘s physical structure—factors which received high mentions across regions. While travelers had overall impressions of inconsistency, certain key drivers contributed to these perceptions.

Recommended Solution We suggested that since the reputation of Best Western depends on the affiliated hotels, it is mandatory to ensure that all the member hotels are maintaining a proper standard defined by Best Western. This will give BW a competitive advantage over competitors. Establishing quality control department can be effective in this scenario.

How the solution will be implemented? Although it is costly for Best Western to have new quality control department and inspecting member hotels but at the same time it was an effective decision as the customers became inconsistent. So opening a new quality control department is an excellent idea which BW can follow in order to ensure greater reach to more target audience. So, it was necessary to choose and appoint employees in this department.

Who will implement this solution? It is responsibilities of the board of directors and the affiliated members to impose quality standard and establish a quality control department.


Where this will be implemented? Providing quality services to tourists around the world is the primary objective of BW. So to ensure best service in member hotel BW may establish quality control department in each regional as well as in head office.

When this will be implemented? Implementation of a new department and at the same time making team to ensure quality service was very difficult but as it is crucial for organization Best Western would better to come along with a long term plan and establish this step by step and make necessary adjustment as quickly as possible.


Problem 2 There is a good management system in the organization but there is no direct control system within the management to supervise the members and ensure consistent quality service around the globe.

Recommended Solution It is highly recommended that direct supervision and high managerial control over affiliated members will surely increase the standard of Best Western and gain correlation within the management. This will lead to superior service and better management.

How the solution will be implemented? Control is one of the crucial aspects which must be practiced on member hotels. It is an important function because it helps to check the errors and to take the corrective action so that deviation from standards are minimized and stated goals of best Western are achieved in desired manner.

Who will conduct the implement process? Centrifuging the control to top management is a long term process. It is the top management who has to take initiatives to implement this solution.

Where this will be implemented? This implementation process has to start from the headquarter. After that the process needed to be spread around the regional offices.


When the process will be implemented? Making a single locus of control is not an easy job. Many steps are needed to achieve this target.


Problem 3 There are already many well established competitors in the market and recent study showed that these competitors are becoming more preferable to the customers which can be dangerous to market position of Best Western.

Recommended Solution Best western has to provide better quality service to retain the current hostile market situation. BW can attempt to add new well known hotels to BW‘s portfolio to increase its reputation among the customers.

How the solution will be implemented? Brand name is more than just name or symbol. Brand name of Best Western represents customers‘ perception and feeling about the quality of service they expect from member hotels – everything that mean to customer. In the final analysis brand exist in the mind of consumers. Thus, the real value of a strong brand name of BW is its capture consumers performance and loyalty.

Who will conduct the implement process? The marketing department of BW has to take necessary initiatives to resolve this situation. Because they are the experts to make a name for the organization, they are the one who are needed for this job.


Where this will be implemented? The marketing department has to make a move before the pies are lost. Massive marketing worldwide will do the job.

When the process will be implemented? This process cannot be delayed. It should be started as soon as possible. Though the tourist season may be a good time to start.


Problem 4 From roaming throughout the case study it is now evident that there is no presence of human resource department in Best Western International; though it is crucial for the success of the organization.

Recommended Solution Best Western must take necessary steps to develop an effective HR department since without it a service organization like BW cannot provide optimal service to its customers.

How the solution will be implemented? Best Western needs to establish a proactive HR department to take strategic decisions on proper time. Employee development would help them to implement a HR department in an effective and efficient manner. Without a specific HR department, though having a proper planning, everything becomes useless, because human resources are the main contributor to make those plans successful. HR is the most important asset for Sesame Workshop and ultimate success of Best Western depends on implementing management in coordination with HR strategic measurement system.

Who will conduct the implement process? The top management or ultimate authority should be concern regarding this issue. According few senior managers, skills and habits they acquired in playing games give them an extra edge in business and in management. So a proactive HR department is very important for Best Western to solve future problem.


Where this will be implemented? In the organizational hierarchy of Best Western HR must be implemented in top most positing because sharing experience and knowledge is the major criteria of learning environment of an organization which ensures success.

When the process will be implemented? It will be better while planning about management a specific important place has to be created for HR so that the proactive department may start to take action from the very beginning of operational activities.


Problem 5 It is evident that there is no specific training and development program in Best western to build an efficient workforce. Having a training facility is very important for a big organization like Best western. But necessity of a training facility is ignored in this scenario.

Recommended Solution

Providing training to employees on culture, general gesture and customer service can be very effective to the performance of BW since employees deal with customers with wide range of background.

How the solution will be implemented? Hiring appropriate trainees and providing Best Western‘s employees with adequate training in side organization is very crucial. It is vital to response quickly with their guests to increase the quality of service provided to guest and reduce the amount of complain due to cross-cultural communication. Training is necessary for any sort of organization to ensure success but when it is about an international organization or a tourist resort or hotel management like Best Western cross-cultural training is mandatory as employees have to deal with as well as they have to satisfies guest from various region of the world.

Who will conduct the implementation process? The management of Best Western must establish an in-house cultural training center which will make employees aware about cross-cultural communication technique as well as interaction with international customers by using fluent international language.

Where this will be implemented?


For all employees working in a resort where international guest used to come, more or less too some extent all employees form lower to top most managerial position this sort of training is must. Because, cross cultural training participants develop great ‗people skills‘ that can be applied in all walks of life.

When the process will be implemented? Since interacting with multicultural people is a constant process in BW; they should start implementing as soon as possible.


Problem 6 There is no proper compensation strategy in Best Western which can de-motivate employee morale. This can lead to deterioration of service quality and employee performance level.

Recommended Solution It is recommended that to become the pioneer, to become the market leader and to bring an edge to strategy BW has to introduce a compensation plan that will compensate employees properly so that they feel motivated.

How the solution will be implemented? Conducting an internal survey would be a good option to start. BW has to make an overall estimate its budget before making any change to compensation plan. After that BW has to evaluate every job and determine specific compensation for every position.

Who will conduct the implementation process? Since we have discussed the importance of HR department, it is them who have to take initiatives to implement this process.

Where this will be implemented? Field management would be the best place to start this process. Since there job responsibilities are simple and a bit easier to define it would be better to start from bottom to up.


When the process will be implemented? Since the HR department are responsible for this process; this task has to be started as soon the HR department is re-organized.


Problem 7 Customer loyalty level is very low among the tourists since they tend to expand their expenditures among different brands of hotels within the competitive set. BW is always in the middle of the pack in the competitions. BW must find a way out from this problem.

Recommended Solution

Best Western should provide best quality services at the lowest rate possible to retain existing customers and attract new customers. Providing high standard services and incentives will convert non-customers into customers.

How the solution will be implemented? Detailed analysis along with lot of strategies implementation with member hotels is necessary in this regard to lure customers BW must start aggressive advertising along with offering some special packages to them and most importantly not to forget about quality services to customers. BW customers spread their travel expenditures across multiple brands within the competitive set. So, ultimately it is very much harmful as well as intimidation for BW for sustaining in the long run.

Who will conduct the implementation process? It is the job of the board of directors of BW along with member hotels to determine what kind of packages can be offered to customers. It is not about BW alone as member hotels are independent parties. So consent of top management a hard work of operational level management is necessary in this concern.


Where this will be implemented?

Announcing lucrative packages and by establishing quality control department in each regional as well as in head office will give an edge. The field management will play an important roll in it.

When the process will be implemented? As number of customers decreasing, Best Western would better to come along with a long term plan and establish this step by step and make necessary adjustment as quickly as possible.

Best Western

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Transcript of Best Western