Subject: Hospitality Management.

The Indian Institute Of Business Management & Studies

Marks: 100

Case I Airline Commission Caps Travel agents have begun legal action and public campaigns to combat several airlines decisions to lower commissions for writing tickets, and have warned of higher ticket costs if other airlines follow. Most U.S. airlines have lowered the commission rate on tickets for domestic flights to a $20 cap for a round-trip fare. International commissions also fell and vary from airline to airline. As consumers begin to balk at rising ticket prices and Wall Street presses for continued earnings growth, airlines must cut costs by turning to their second largest expense, that $12 billion spent annually for costs such as travel agent commissions. It has become clear that airlines can do nothing about fuel prices and can do very little, if anything, about labor costs. The only area that airline management has any power over is the area of distinction expenses. American Express Corporate Services Agencies, which books mostly business travelers, warned that if other airlines follow suit, some travel agencies will go out of business. That would send more businesses to airlines reservation agents, who do not offer the lowest available fares from all carriers, or could result in travel agents passing costs along to consumers. The American Society of Travel Agents, which represent 24,000 agents, and The Association of Retail Travel Agents, a trade group that represents 4,000 travel agents, have announced they will seek U.S. congressional approval to allow small, business-sized travel agents to bargain collectively with the major airlines and to steer customers to friendly airlines when negotiating fails. The associations believe that the cut in commissions in less than three years is a slap in the face. After the introduction of the initial cap of $25 for one-way domestic tickets and $50 for round-trip tickets, many agents complained caps would eliminate jobs and reduce earnings. A class action lawsuit followed on behalf of 33,000 travel agents, alleging price fixing. Some travel agents also steered customers away from other airlines such as Delta in retaliation. In September 1996, American, Delta, Northwest, and United agreed to pay $72 million in cash to settle the lawsuit. Discussion Questions 1. If you owned a travel agency, what would your reaction to the reduced commission cap be? 2. What options would you consider?

Subject: Hospitality Management.

The Indian Institute Of Business Management & Studies

Marks: 100

Case II Developing the San Diego Waterfront San Diego, California, has a diversified economic base with tourism as an important component of the economy. The city hosts about 18 million tourists who spent some $6 billion, and tourism is steadily expanding each year. Most tourists are domestic, although a fair number of foreigners also visit the city. The attractions for tourists in San Diego are the mild Mediterranean-type climate; attractive natural setting; beaches developed with resort and park facilities; and major attractions including Sea World, the world-famous San Diego Zoo and Wild Animal Park, interesting and well-preserved historic areas, and picturesque shopping districts. A variety of resort and urban hotels have been developed, the most notable being the historic Hotel del Coronado. The policy of government, which is supported by most residents, is for the continued but controlled development of tourism as a major source of income and employment. A major focal point for tourism development is the downtown area located next to the waterfront of San Diego Bay. As a result of concerted planning efforts and substantial investment during the past several years, the San Diego downtown is undergoing new development and redevelopment. Changes include a recently completed convention center; the preservation and renovation of numerous shops and restaurants in the historical Gaslamp Quarter; the development of a maritime museum on the waterfront of historic ships; the Seaport Village shopping and restaurant complex and related park, also located on the waterfront; and others. New urban residential complexes are also developing. In response to the revitalization of downtown, several new high-rise hotels have been developed and some historic hotels have been renovated to provide good quality tourist facilities. Many conferences and conventions are now being attracted to the downtown and this area, with its interesting features, has become an important center for tourism for both business conferences and holiday tourists. San Diego recognizes the importance of its waterfront and the views it affords as a major attraction for both residents and tourists. If properly conserved and carefully developed, waterfronts give an urban area a unique character. However, in the case of San Diego, and some other cities, the economic pressure to develop prime waterfront sites can lead to cutting off public access to the waterfront, thereby preempting waterfront areas from public use and blocking views of the water from inland downtown buildings. In San Diego, the new convention canter already stretches along a considerable length of the waterfront and plans are to expand it further along this area. New high-rise hotels near the convention center are blocking waterfront access and views of the bay, and more hotels have been proposed for this area. Expansion is planned for the popular Seaport Village, however this complex is low rise and does not greatly impinge on views. It is designed to provide pedestrian access along the waterfront. Other projects are being considered for development on the waterfront. Thus, there is the dilemma of the waterfront area, the most significant natural feature of the downtown environment,

Subject: Hospitality Management.

The Indian Institute Of Business Management & Studies

Marks: 100

not being effectively integrated into development patterns because of economic development pressures. At the same time, many persons recognize the need to preserve public access, use of the waterfront, and views of the bay. The problem relates particularly to the need for careful land-use planning with utmost consideration given to social and economic implications. Discussion Questions 1. Why is it considered so desirable to develop public and private amenity features on the waterfront and preserve public access to the waterfront and water views in urban area? From the residents standpoint? From the standpoint of developing successful tourism? 2. What approach can San Diego take in properly developing its downtown waterfront area both to achieve economic development objectives and to preserve access to and along the waterfront and views of the adjacent bay? 3. If the choice of development of a particular waterfront site lies between developing the site for a high-rise hotel, for which there is proven market demand, or a waterfront public park for use by both residents and tourists, which do you think is the best use of the site? What approaches could be applied to achieve both objectives?

Subject: Hospitality Management.

The Indian Institute Of Business Management & Studies

Marks: 100

Case III To Flag or Not to Flagand If So, Which Flag? Joy and Bob Brown retired from the military in 1995. They bought a motel near a picturesque New England town. The Cozy Motel is clearly visible and easily accessible from the turnpike. It has seventy-five rooms that are in good shape, having just been refurbished, and the curbside appeal of fresh paint and attractive landscaping adds to the motels presentation. The motels year-round occupancy is 58 percent, which is about 10 percentage points below the national average. The average daily rate is $38. The Cozy Motels guests are a mix of business travelers, who are mostly from companies at the nearby business park; a few retires traveling for pleasure; an occasional bus tour; and some sports teams. The Browns have asked several major franchise corporations to submit their best offers. The best one indicates that the cost of a franchise application fee is $20,000, and that there is a 2 percent revenue marketing fee and a reservation fee of $4 per room booked by the Central Reservation System (CRS). Discussion Questions 1. What would you do in the Browns situation? Should they sign a franchise agreement or not? Make assumptions, if needed. 2. What terms and conditions of a franchise agreement would be acceptable to you, or to the Browns? 3. What additional information would you, or the Browns, need to know?

Subject: Hospitality Management.

The Indian Institute Of Business Management & Studies

Marks: 100

Case IV Checking Out a Guest A guest walked up to the front desk agent in an upscale hotel, ready to check out. As she would normally do when checking out a guest, the agent asked the guest what his room number was. The guest was in a hurry and showed his anxiety by responding, I stay in a hundred hotel rooms and you expect me to remember my room number? The agent then asked for the guests name, to which he responded, My name is Mr. Johnstein. After thanking him, the agent began to look for the guests last name, but the name was not listed in the computer. Because the man had a heavy accent and the agent assumed that she had misunderstood him, she politely asked the guest to spell his last name. He answered, What? Are you an idiot? The person who checked me in last night had no problem checking me in. Again, the agent looked on the computer to find the guest. The guest, becoming even more frustrated, said, I have a plane to catch and it is ridiculous that it has to take this long to check me out. I also need to fax these papers off, but I need to have them photocopied first. The agent responded, There is a business center at the end of the counter that will fax and photocopy what you for it. Havent you ever heard of customer service? Isnt this a five-star hotel? With your bad attitude, you should be working in a three-star hotel. I cant believe they let you work here at the front desk. Havent you found my name yet? The agent, who was beginning to get upset, asked the guest again to spell out his full name. The guest only replied, Here are my papers I want faxed if you are capable of faxing them. The agent reached to take the papers, and the guest shouted, Dont grab them from my hand! You have a bad attitude, and if I had more time, I would talk to someone about getting you removed from your position to a hotel where they dont require such a level of customer service. The agent was very upset, but kept herself calm in order to prevent the guest from getting angrier. The agent continued to provide service to the guest, sending the faxes and making the photocopies he had requested. Upon her return, the agent again asked the guest to repeat his last name, since he had failed to spell it out. The guest replied by spelling out his name, J-o-h-n-s-t-o-n-e. The agent was finally able to find his name on the computer and checked him out, while he continued to verbally attack her. The agent finished by telling the guest to have a nice flight.

Subject: Hospitality Management.

The Indian Institute Of Business Management & Studies

Marks: 100

Discussion Questions 1. Is it appropriate to have the manager finish the check-out? Or, should the front desk agent just take the heat? 2. Would you have handled the situation in the same manner? 3. What would you have done differently?

Subject: Hospitality Management.

The Indian Institute Of Business Management & Studies

Marks: 100

Case V Overbooked: The Housekeeping Perspective It is on secret that in all hotels, the director of housekeeping must be able to react quickly and efficiently to any unexpected circumstances that arise. Stephen Rodondi, executive housekeeper at the Regency in La Jolla, California, usually starts his workday at 8.00 A.M. with a department meeting. These morning meetings help him, and the employees, to visualize their goals for the day. On this particularly busy day, Rodondi arrives at work and is told that three housekeepers have called in sick. This is a serious challenge for the hotel because it is overbooked and has all of its 400 rooms to service. Discussion Questions 1. What should Stephen do to maintain standards and ensure that all the guest rooms are serviced?

Subject: Hospitality Management.

The Indian Institute Of Business Management & Studies

Marks: 100

Case VI Overbooked: The Front Office Perspective Overbooking is an accepted hotel and airline practice. Many question the practice from various standpoints including ethical and moral. Industry executives argue that there is nothing more perishable than a vacant room. If it is not used, there is no chance to regain lost revenue. Hotels need to protect themselves because potential guests frequently make reservations at more than one hotel or are delayed and, therefore, do not show up. The percentage of no-shows varies by hotel and location, but is often around 5 percent. In a 400-room hotel, that is twenty rooms, or an average loss of approximately $2,600 per night. Considering these figures, it is not surprising that hotels try to protect themselves by overbooking. Hotels look carefully at bookings: Who they are for, what rates they are paying, when they were made, whether they are for regular guests or from a major account (a corporation who uses the hotel frequently), etc. Jill Reynolds, the front office manager at the Regency La Jolla, had known for some time that the 400-room hotel would be overbooked for this one night in October. She prepared to talk with the front desk associates as they came on duty at 7:30 in the morning, knowing it would be a challenge to sell out without walking guests. Seldom does a hotel sell out before having to walk a few guests. The hotels policy and procedure on walking guests enables the front desk associates to call nearby hotels of a similar category to find out if they have rooms available to sell. If it is necessary to walk a guest, the associate explains to the guest that, regrettably, no rooms are available due to fewer departures thane expected. The associate must explain that suitable accommodations have been reserved at a nearby hotel and that the hotel will be pay for the room and transportation to and from the hotel. Normally guests are understanding, especially when they realize that they are receiving a free room and free transportation. On this particular day, the house count indicated that the hotel was over booked by thirty rooms. Three or four nearby, comparable hotels had rooms available to sell in the morning. Besides walking guests, Jill considered other options, in particular splitting the fifteen suites with connecting parlors. If the guests in the suites do not need the parlor, it is then possible to gain a few more room to sell separately, however roll-away beds must be placed in the rooms. Fortunately, eight parlors were available to sell. Discussion Question 1. If you were in the same situation, what would you do?