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Pacchettino Hotels Case Study

Task 1 – People
Marcos is disenchanted in his current position, especially about the prospect of running Tinos Hotels because he focused on a different segment of the market. To put it more precisely, he was eager to run the premium segment of the market to enhance his position in the company and he has already got the hotel, which he could develop in a luxurious hotel to realize all his creative and marketing ideas.

Cristiana’s conversations at the management meeting had provided her with this new role, and his handpicked new recruit had been taken from him and tasked with the establishment and rapid growth of Tinos. In such a way, Cristina neglected the fact that it was Marcos, who introduced Cristina to the board. As a result, she just stepped over Marcos in his career development and focused on her career alone, even if she ruined plans of Marcos, whom she was actually obliged and without whom she could not get the promotion. Cristiana has poor communication with her subordinates for she demands obedience and admits no questions and arguments. For instance, Boris does not know what to do. Hence, Cristiana is likely to face problems with her subordinates. New Tinos head was sharing Marcos’ offices and all of the other facilities in Italy and able to access his Pacchettino profits to use as the Tinos budget for the first few hotels.

Organisations
The creation of new hotels, including cheap, budget, low-cost hotels and mid-range hotels raises the problem of the expansion of the company and entering new segments of the market.

Marketing
The company is going to enter new segments of the market and carry on developing its network internationally. Christiana is unable to create adequate marketing plan and make accurate forecasts concerning the marketing development of Tinos hotels.

Finance
Christiana cannot make adequate forecasts and profits of Tinos Hotels are likely to be low or there will be no profits at all.

Task 2 – Marcos’ action plan
Marcos should accept the offer and head the Tinos hotels. In such a way, he will prove the board that he can reach success and he is responsible enough to take the higher position in the company. In fact, through accepting the offer, he should prove that the board made a mistake, while appointing Cristiana and neglecting his plans.He should enhance the cooperation between Pacchettino hotels and Tinos hotels. This means that Pacchettino hotels should offer customers Tinos hotels as alternative for those, who cannot afford Pacchettino hotels. At the same time, Marcos can shift some services provided by Pacchettino hotels to Tinos hotels.

He should implement his idea of creating zones in Tinos hotels. The creation of diverse zones will open larger opportunities for Tinos hotels to reach marketing success. In fact, zones will save costs on the construction of unnecessary suits. Instead, Tinos hotels need to equip special zones to offer customers with the possibility to conduct special events and for other purposes that can bring benefits. He should create the realistic marketing plan and assess accurately the financial development of Tinos hotels. The board should either accept the plan of Tinos’ development created by Marcos or let Cristiana manage the project and complete it.

Marcos should get the position of CEO of Pacchettino hotels and Tino hotels in Italy to have the possibility to model the strategic plan of the company of developing low-cost hotels along with luxurious hotels in terms of Italy, whereas his experience in Italy may be later implemented in global terms by the company, on the condition that Marcos reaches success. At this point, Marcos can negotiate his own promotion in the company, in case of his success with both Pacchettino hotels and Tinos hotels.

Marcos should develop the promotion for Tinos hotels aiming at customers preferring low-cost hotels. In this regard, the use of internet should be particularly helpful. The promotion is effective tool to attract customers to Tinos hotels. Marcos can reach the mass audience using internet in terms of the promotional campaign of Tinos hotels.Marcos can transfer some managers and employees from Pacchettino hotels to Tinos hotel promoting them to higher positions. In such a way, he will recruit well-qualified professionals to Tinos hotels and motivate transferred managers and employees to work better (Berno, 122). In addition, Tinos hotels can perform successfully due to the experience of employees and managers transferred from Pacchettino hotels. Tinos hotels should recruit local professionals for other jobs and provide them with an opportunity to get training in Pacchettino hotels (Gomory, 186). In such a way, Tinos hotels will be able to provide customers with services of the high quality at low costs. Marcos should offer customers a variety of services in Tinos hotels. In such a way, customers will receive multiple services at low costs. The company can offer customers the possibility to use advantages of the contemporary hotel at affordable price.

Task 3 – Report
Problem
In actuality, Pacchettino hotels face a considerable problem. The company attempts to enter the new segment of the market. At this point, it is worth mentioning the fact that the new chain of hotels should reach a considerable success in a relatively short time because the company expects obtaining profits from Tinos hotels within the first year of operations. In such a situation, Cristiana appointed to manage the projects has failed to complete the project. Instead, she has just started the project but, as she found out that she cannot develop the adequate marketing plan and manage Tinos hotels successfully, she virtually escapes shifting the responsibility for Tinos hotels to Marcos. In such a situation, Cristiana does not recognize her failure and Marcos faces the dilemma of taking responsibility for Tinos hotels and refuse from his own plans, or refuse from Tinos hotels and explain to the board that he has never been going to manage Tinos hotels and preserve the responsibility over the project for Cristiana, who is likely to fail. In addition, the personal dilemma of Marcos is aggravated by his loyalty to the company, where he has been working for ten consecutive years because his refusal from managing Tinos hotels and failure of Cristiana to manage Tinos hotels successfully would undermine the plan of the company to enter the low-cost hotels segment of the market in Italy. In such a situation, Marcos has to choose either to take responsibility for Tinos hotels or refuse from the responsibility, whereas the company should either appoint Marcos and probably succeed with Tinos hotels or keep Cristiana responsible for Tinos hotels and likely to fail with entering the low-cost hotels segment of the market. In such a situation, Marcos should take responsibility and head Tinos hotels to success but he would likely to face another problem how to reach success in the development of the new chain of hotels.

Most important issues
On analyzing the current situation in Pacchettino hotels, it is important to place emphasis on the fact that, at the moment, the company faces a number of problems and Marcos as the manager and the leader of Tinos hotels has to solve them using his experience of work in Pacchettino hotels (Volti, 241). In actuality, Marcos needs to conduct the detailed analysis of the current situation in the market and position of Tinos hotels as well as the position of Pacchettino Italy (Mohrman, 225). In this regard, the analysis should involve profit and loss correlation because it will uncover possible financial problems the company is likely to face and marketing gaps Marcos as the head of Tinos hotels should close.

On analyzing the major issues Pacchetino hotels face in Italy with its Tinos hotels, it is important to dwell upon the poor human resource management and project management. What is meant here is the fact that Cristiana has apparently failed to establish positive relationships with its subordinates and, what is more, she has considerable communication gaps. For instance, Boris has no idea what he should do and how he should meet goals set by the company. This means that subordinates of Cristiana do not understand clearly ultimate goals of the development of Tinos hotels and how these goals can be reached. In such a situation, Marcos as the new leader of Tinos hotels should close communication gap and create the team of managers, which he should head to lead Tinos hotels toward success (Dumbrell, 94). What is meant here is the fact that Marcos should not just head Tinos hotels but he should develop effective communication style with his new subordinates. Closing communication gaps would be probably one of the greatest challenges for Marcos to cope with.

Furthermore, Tinos hotels have considerable problems with meeting the profitability rate set by the board. In fact, Tinos hotels can hardly reach 50% profit or profit close to profits of Pacchettino hotels. In such a context, the company needs to change its marketing strategy and advance its Tinos hotels to positive financial performance (Mаrtin and Hаrаld, 128). In such a situation, the company can reach a considerable success, if it develops a long rung plan of its development with a steady progress (Masterson and Picton, 147). The maximization of profits of Tinos hotels may have negative effects on the long-run development of the company because the maximization of profits can occur at cost of the quality of services delivered to customers and saving costs on the equipment of Tinos hotels (Newel, 305). Obviously, in a long-run perspective, such saving of costs will have negative impact on the development of Tinos hotels. At this point, it is possible to refer to Table 1 and Table 2:

Table 1. Profit and Loss for Pacchettino Italy (14 luxury hotels)
(€’000s) 12 months ending 31st December 2010 12 months ending 31st December 2009
Revenue 73,260 71,206
Operating expenses 10,436 9,768
Administrative & other expenses 38,021 38,957
Depreciation & amortisation 3,800 3,807
Operating Profit 21,003 18,674

Table 2. First year projected profit and loss for Tinos Italia first hotel
Room rental 120 rooms (based on assumed occupancy) €766,080
Extras To include extra sales Not known
TOTAL REVENUES €766,080
Employees To include:
Front desk 24/7
laundry services
management €200,000
Consumables Toilet roll, cleaning products etc.
(200 Euros / day) €73,000
TOTAL OPERATING EXPENSES €273,000

Rates & Taxes 8000 per month €96,000
Insurance 1000 per month €12,000
Running of Website & Booking System 1500 per month €18,000
Advertising & Publicity Including 2 campaigns in women’s glossy magazine; airline brochure €300,000
Printing & Stationery 1500 per month €18,000
Legal & Professional Fees 20000 per year €20,000
Miscellaneous To include:
Other monthly costs €80,000
TOTAL ADMINISTRATION & OTHER EXPENSES €554,000

Depreciation & Amortisation 10 year straight line depreciation on beds, bedding, fixtures & fitting etc on assets bought for €100k €10,000
OPERATING PROFIT (€60,920)

In such a way, profit expectations of Tinos hotels are unrealistic because the company is just entering the market. The company is just entering the market but, taking into consideration the current situation in the market and the high competition as well as the substantial investments the company should make to develop Tinos hotels (Kerin and Peterson, 201). Therefore, the company can reach the substantial growth of profits only on the condition of considerable savings and minimization of costs. However, such a situation is controversial because, on the one hand, the company expects maximization of profits from Tinos hotels, while, on the other, Tinos hotels have to save costs, while entering the market (Noble, 175). Saving costs put under a question the possibility of the successful entering the market by Tinos hotels.

In addition, Tinos hotels need to develop an effective promotional campaign, which can attract customers to Tinos hotels (Best, 194). The company should promote low-cost hotels, which can offer customers the high quality services at low cost. Therefore, Marcos and the managers of Tinos hotels should develop effective promotional campaign to enter the low-cost hotels segment of the market. At the same time, the company should recruit professionals to work in Tinos hotels. At the moment, Tinos hotels have to start recruiting professionals to work in the new chain of hotels. The high qualification of professionals working in Tinos hotels is extremely important to manage hotels successfully and to provide customers with services of the high quality (Garvin and Artemis, 291).

Conclusions
Thus, it is obvious that Tinos hotels need to develop effective marketing strategy, to balance its revenues and expenses, to recruit professionals to work in the chain of hotels, to develop effective promotional campaign, and to balance its profits and steady development of the company in a long-run perspective. In such a situation, Marcos as the new leader has to cope with the aforementioned challenges and to complete the project of the development of the new chain of hotels to enter the low-cost hotels segment of the market. In fact, Marcos has the potential to manage Tinos hotels effectively and to bring the new chain of restaurants to success because he has substantial experience and good creative ideas to develop Tinos hotels. Therefore, he should take responsibility and lead Tinos hotels to success, although at cost of refusal from his dream of the luxurious hotel, which he planned to come true.

SMART recommendations
In such a situation, it is possible to suggest several recommendations Marcos could follow to reach positive outcomes in his work at the position of the leader of Tinos hotels. First, Marcos can introduce new managers to manage Tinos hotels effectively. He can transfer managers from Pacchettino Italy. In actuality, he is heading Pacchettino Italy. Therefore, he knows perfectly his subordinates and he can transfer prospective managers to Tinos hotels. He can promise promotion to managers working in Pacchettino Italy to motivate them to transfer to Tinos hotels. Marcos can define managers, who are ambitious enough to participate in the new project and to obtain promotion. Their experience will be useful to develop effective management system in Tinos hotels. At the same time, Marcos should develop effective communication with his new subordinates as he heads Cristiana’s team, where the communication between the leader and subordinates was poorly developed. Marcos should close communication gaps with his new subordinates. For this purpose, Marcus should meet his new subordinates, explain goals of Tinos hotels and functions of each manager subordinated to Marcos. His subordinates may ask any questions to comprehend their role and functions in Tinos hotels and specific tasks they have to perform. Marcos can use the servant leadership style to work as a steward and guide for his subordinates.

Furthermore, Marcos should organize training for Tinos hotels’ employees in Pacchettino Italy. On recruiting new professionals for the new chain of hotels, Tinos hotels should send them to train in Pacchettino Italy. As Marcos heads Pacchettino Italy, there will be no problems with the organization of the training process. At the same time, Marcos should develop knowledge sharing management in Tinos hotels as well as Pacchettino Italy. In such a way, employees, who have trained in Pacchettino Italy, will be able to train other employees in Tinos hotels and share their experience with each other.

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