| Unit 1: Hospitality Environment | Feasibility Study (Mercure Resort Sanur) | Gino Severien (236594) | Joshua Ega Yus Pratama (286486) | Year 2 Module 2PBL Group 1HOSPITALITY OPERATIONS ENVIRONMENT |

Assessor: Mark de Jong
This is submitted in partial fulfilment of the requirements of the
INTERNATIONAL HOTEL MANAGEMENT
Academic Year 2013-2014

Declaration Form
Hereby we declare that:

1. This work is composed by us. 2. This work has not been used in any way before. 3. The work of which this is a record is done wholly by us. 4. All verbatim extracts have been distinguished by quotation marks and the resources of our information have been specifically acknowledged.

Friday, 17 January 2014

_____________________
Gino Severien

_____________________
Joshua Ega Yus Pratama

Table of Contents Declaration Form ii Executive Summary iv Preface v Introduction vi The Environment 1 Political 1 Economic 1 Social 1 Technological 1 Legal 2 Environmental 2 Competitor Analysis 2 Internal Analysis 4 TOWS 5 Choice 6 Implementation 7 Business Case 8 Scorecard or Dashboard 9 Bibliography 10 Appendices A Appendix 1: Overview of Mercure Resort Sanur’s Competitors A Appendix 2: Daily Revenue Report of Mercure Resort Sanur on 26 November 2013 B Appendix 3: NPV Calculation C Appendix 4: Co-operation Contract D Appendix 5: Assessment Sheet E

Executive Summary
A report titled Feasibility Study (Mercure Resort Sanur) purposely serves as a business improvement proposal for PT Synergy Hospitality Solutions Bali’s client, Mercure Resort Sanur. A 26-year-old hotel franchise, Mercure Resort Sanur is the only Accor’s portfolio along coastal Sanur village with five hectares of lush tropical gardens. Coming in a strategic improvement project, PT Synergy Hospitality Solutions Bali is dedicated to devise a realistic, profitable project for Mercure Resort Sanur to implement. In this case, the foci of the feasibility study are regarding people, planet and profit, to be sure.
With the help of different methods of macro environment analyses, this paper provides an insight into different business perspectives to be reviewed carefully. To start with, the local environment where Mercure Resort Sanur is situated is assessed referring to PESTLE analysis. In summary, tourism growth and development in the midst of national political and economic instability increases the demands for meetings, incentives, conventions and exhibitions (MICE). Additionally, the evolution of social media and technologies has a great impact on Mercure Resort Sanur. Coupled with increased competition in the industry especially from Sanur Beach Hotel, Sanur Paradise and Puri Santrian, Mercure Resort Sanur has to constantly initiate improvements in order for the business to remain competitive in the market. Referring to competitor analysis, Mercure Resort Sanur has a great potential to progress its key industry success factors among the three competitors aforementioned. Consequently, microenvironment analysis of Mercure Resort Sanur is carried out to generate some possible ways for tactical environment.
Proceeding with the analyses, PT Synergy Hospitality Solutions Bali utilises SWOT and TOWS analyses in order to determine internal and external forces that affect the property’s business practices. As part of internal analysis, Mercure Resort Sanur boasts its “Grand Vins Mercure” and “Cups and Tastes” programmes, the spa, Accor’s Planet 21 sustainable development programme, low staff turnover and its beachfront location, which will be explained in the latter chapter. On the other hand, the property lacks updated hotel facilities and amenities in addition to weak performance of its F&B and MICE departments as well as paper footprint. In conclusion, a TOWS matrix is devised to identify plausible recommendations to be implemented, which in the case of Mercure Resort Sanur is identified as the installation and integration of virtual hotel application.
To sum up, an improvement point suggested for Mercure Resort Sanur is to implement iRiS F&B Suite system in the departure lounge and the guestrooms. Four tablets that function as digital dining books are to be installed in the departure lounge. On the other hand, guests are also promoted to download this free application on their smartphones or tablets for in-room orders upon check-in. These initiatives have three main objectives, which are increasing F&B revenues, improving guest satisfaction and eliminating costs by being sustainable. As a result, implementing iRiS F&B suite software will directly influence Mercure Resort Sanur’s human resource requirements especially the IT staffs. By applying principles of financial management and net present value (NPV) method to assess whether an investment project is favourable, this innovation can be considered as profitable, sustainable and favourable to be realised due to exceptionally positive NPV value. At last, a performance scorecard is illustrated to measure some key indicators upon introduction of this technology particularly in terms of increased F&B sales, improved guest dining experience or satisfaction, increased efficiency in the learning processes and enhanced staffs’ opportunities to learn. In summary, iRiS F&B Suite software is suitable to improve Mercure Resort Sanur’s business operations.
Preface
To whom it may concern

To begin with, on behalf of PT Synergy Hospitality Solutions Bali, we would like to thank Mercure Resort Sanur for entrusting us with such an opportunity and responsibility for plausible, realistic approaches to the property’s business improvement. We, indeed, take great delight in working collaboratively with your passionate and co-operative team members led by Mr Luke Benbow serving as General Manager at the property. Simultaneously, we also would like to express our gratitude specifically to the Executive Secretary for her hospitality in giving us a hotel tour during our site visits. Moreover, we are amazed by your property’s generosity, not to mention the provision light refreshments, of your quality of services. Overall, working with your property is an enriching experience for our firm, which we hope that we could maintain the relationship fostered as our long-term, strategic communication partners.
Apart from your distinguished team, we do not forget to inform you various people behind the scene that constantly support and contribute to the accomplishment of this feasibility study. First, special thanks dedicated to Ms Stephanie Brown and Ms Jolinde den Haas for their advice with regard to this project. Furthermore, Ms Renske Goedhart and Mr Varun Bhatia shall be acknowledged as well for their presence along with us during the two site visits at your property. With their continuous moral support, we believe that this project results in a solid improvement plan that can be possibly implemented in no time, which is expected to have a positive impact on your daily operations.
Herewith, we are writing to inform you that this feasibility study in the form of a written business improvement proposal is ready to be presented both formally and verbally. Therefore, we are also open to any feedback and constructive criticisms with regard to this study.

Yours faithfully

Gino Severien and Joshua Ega Yus Pratama
Team Consultants to Mercure Resort Sanur

Introduction
To begin with, Haas, Hoekstra and Coerts (2013) believes that today’s hotel managers would like to identify and implement profitable business strategies in order for the property to grow and develop consistently within the increased competition market. This is, surely, not a simple task to do. Hence, it is a challenge for hotel managers to sit back and consider different elements involved in their strategic and tactical decisions. Fortunately, a devoted team of PT Synergy Hospitality Solutions Bali is ready to assist the clienteles in considering all those factors and producing a business improvement plan. Mercure Resort Sanur is delightful to be one of them.
A 4-star property under Accor’s brand portfolio; Mercure Resort Sanur boasts high standards of comfort in its 189 guestrooms split into 41 Balinese-style cottages (Mercure Resort Sanur, 2014). Situated in one of TripAdvisor’s Asian destinations on rise, Sanur, this franchise is encircled by 12.36 acres of lush greenery and cultivated garden (Prawitasari, 2013). Some of excellent resort’s facilities include a beachfront, main restaurant accompanied with two bars, four spacious meeting rooms, two swimming pools, a spa, a tennis court, a boutique and a departure lounge. Its strategic location is another great plus point of Mercure Resort Sanur, which is accessible within approximately 20 to 30 minutes from Ngurah Rai International Airport Bali (Mercure Resort Sanur, 2014). Arguably, Mercure Resort Sanur is a perfect choice for one’s trip in Bali.
After conducting two field trips to the property supported by various secondary researches available, one can get an insight into different obstacles that managers are currently facing. At present, Mercure Resort Sanur is under major renovation and refurbishment since 2004 (Mercure Resort Sanur, n.d.). This major renovation involves revamping all obsoleted guestrooms, refurbishing the furniture as well as retiling the floors. This course of action, for sure, requires a great deal of investment and time. Thus, realistically speaking, this business development proposal is very likely to be feasible and considerably low cost at the same time. In this case, the feasibility study focuses on three main aspects, which are revenue and profit generation, sustainability and technological innovations. Overall, they will eventually lead to higher guest satisfaction and quality of services.
For your information, the outline of this feasibility study will be as the following. * The Environment consists of macro-environmental factors analysed by performing PESTLE (Political, Economic, Social, Technological, Legal and Environmental) analysis. * Competitor Analysis demonstrates three main industrial competitors that possibly pose as threats to Mercure Resort Sanur. * Internal Analysis is done with the help of SWOT analysis, which points out both strengths and weaknesses of Mercure Resort Sanur relative to its competitors aforementioned. * TOWS present some possible approaches or business improvements with reference to SWOT analysis formulated. * Choice is a chapter where one acknowledges and proposes one of the plausible business improvement plans from the previous section. Furthermore, convincing arguments presented also support the notion. * Implementation refers to the determination of all related elements that are directly impacted by the point of improvement. It covers methods or procedures to be managed in order for the proposal to operate successfully. * Business Case makes use of Net Present Value (NPV) method to estimate financial benefits obtained from the investment. Principles of financial management are also examined to decide the investment’s feasibility. * Score Card or Dashboard displays several key performance indicators that are affected by the implementation of the selected business improvement plan. * Summary captures the attention of readers by providing the essence of the results as well as the conclusions.

Min
The Environment
Political
Located in Sanur Village at the sub-district of South Denpasar, Mercure Resort Sanur’s operations must comply with both regional and national laws. According to Anne (2011), Banjar plays a vital role in the community where the property operates, which it needs to collaborate during religious occassions or ceremonies. On the other hand, since the property is in Denpasar, the minimum wage set under provincial labour law in 2014 is IDR 1,560,000 (Atmodjo, Big minimum wage rises in Badung, Denpasar, 2013). In terms of taxation, it is subject to 10% hotel tax (Walikota Denpasar, 2011) in addition to other taxes that must be settled, such as restaurant tax, advertisement tax, street lighting tax, and land/construction tax. Pemerintah Kota Denpasar (2012) reports that Mercure Resort Sanur is one of the best assessable tax corporations that are acknowledged by Denpasar’s government in 2011. Additionally, 2014, otherwise, year of politics should be taken into account as legislative and presidential elections will take place in Indonesia. Therefore, Mercure Resort Sanur should assess political factors carefully to keep its operations stable from any political forces.

Economic
When one looks at economic factors that affect businesses, one may think of economic growth, exchange rates and inflation rates. Erviani (2013) reports a 6.6 to 6.8% of Bali’s economic growth’s forecast throughout 2014, which still relies on tourism and hospitality industry heavily. The same article publicises that, in the previous year, travel and tourism industry accounts for 67.23% of the island’s gross domestic product, outcompeting other sectors, agriculture for instance. Furthermore, today’s Indonesian Rupiah’s exchange rates are not favourable compared to major world currencies. For one US Dollar, it is IDR 11,836, which increases the daily costs of the property’s operations. This condition is compounded by higher inflation rate on the island up to roughly 8.35% (Atmodjo, 2013). Logically, this leads to higher prices of trade goods and services especially supported by bad weather, rising fuel prices and low investment climate. Osman (2013) also adds that there will be positive trends in the demand of MICE industry like conferences. In general, the economic climate where Mercure Resort Sanur operates is currently fluctuating.

Social
Based on social aspects, the demographic trend is an interesting point to be considered. Again, Erviani (2012) reports that the population has climbed to more than 4.22 million people by the end of 2012. Bali’s incumbent governor, Mr Pastika, adds that the increments in birth and migration rates have caused this occurrence. Consequently, there will be more intense competition in the labour market. In relation to the property, Mercure Resort Sanur should adapt to this social trend in recruiting its future employees since many of them have worked for more than 7 years. Furthermore, Mercure Resort Sanur have to respect local Balinese cultures and ceremonies. As a result, its operations is always in line with the local communities.

Technological
Theoretically speaking, today’s hospitality industry utilises technological innovations to either automate certain undertakings or channel hospitality goods and services in various distribution channels (Felius, 2013). In turn, this will result in higher efficiency and put the business at the competitive edge. As mentioned by Mr Benbow, the property’s General Manager, technological development in Bali is relatively slow compared to other countries because high costs of installation of the devices and training of employees. However, he argues that Pullman Bali Legian Nirwana, another Accor’s upscale brand, has advanced on its interactive hotel TV in every guestroom. Now, Mercure Resort Sanur is very active in the social media especially Facebook with the purpose of engaging prospective and existing guests. As a matter of fact, Grazella (2013) reveals that Indonesia has over 64 million active Facebook users. Twitter users in Indonesia, nevertheless, rank fifth in the world’s statistics in 2013 (Lukman, 2013). However, low speed of Internet access is still a major barrier to such technological innovations, in Bali particularly as stated by Mr Benbow. Overall, there is still a room for technological improvement to be realised at Mercure Resort Sanur.

Legal
In accord with Erviani (2013), the statistics show that the number of foreigners who officially work in Bali has reached 1,455 people, mainly in hospitality and tourism sector. In order to control these foreign workers’ work permits, local authorities claim that there is a bylaw, which imposes IDR 1,000,000 foreign employees’ recruitment fee per person for every month to Bali’s provincial administration. Otherwise, work permits cannot be guaranteed any more. Bradford (2013) also finds out that the regional employment law remains stringent to ensure 99% of total Bali’s workforce in the hospitality sector particularly are local people. In case of Mercure Resort Sanur, only the General Manager who is an Australian, not to mention that the property’s management also focuses on empowering local managers to be the succeeding General Manager. In short, Mercure Resort Sanur follows this employment law accordingly.

Environmental
Finally, yet importantly, environmental elements with regard to nature play an important role in the property’s local environment. Wardana (n.d.) suggests that the development of Bali’s hospitality industry should correspond to local values system called Tri Hita Karana and Tri Mandala, which encompass the harmony and balance between God, human and nature. Nonetheless, for more than 25 years, provincial government has successfully implemented a bylaw, which restricts the construction of over-than-15-metres buildings to avoid the development of skyscrapers. Taking Mercure Resort Sanur as an example, its development should be appreciated as it provides adequate open-air spaces for gardens. Its exterior and interior, in fact, also embrace Balinese cultures and traditional values as stated previously. Lastly, due to one of Accor’s brand portfolio, Mercure Resort Sanur puts Accor’s Planet 21 sustainable development programme into practice (Accor, n.d.). These efforts, however, must be consistently managed and realised to be sustainable in the long-run.

Competitor Analysis
Mercure Resort Sanur, being the only Accor’s brand in Sanur, is likely to benefit from Accor’s loyal clienteles who would like to stay in the area. Even so, a number of comparable 4-star, midscale hotels pose as threats to Mercure Resort Sanur, namely Sanur Beach Hotel, Sanur Paradise and Puri Santrian. Mr Benbow, himself, confirms these so-called competitors during the first site visit. Nevertheless, he claims that Mercure Resort Sanur mainly targets European market segment, including the Dutch, Germans and Russians, as well as Australian market segment. They are usually 40 to 50+ years old leisure-seekers, which can be termed collectively as a grey market. Along with about 189 employees working at the property, this is the scale and nature of Mercure Resort Sanur. For further information, please refer to Appendix 1.
Therefore, a competitor analysis in the form of competitor array should be designed by applying 6 key industry success factors based on TripAdvisor. They are sleep quality, location, rooms, service, value and cleanliness. Melia (2009) believes that these critical success factors should be measured equally because they are parts of the main framework developed; location, employees, management, quality of products or services, infrastructure and customer care/satisfaction. The following table represents a competitor array of Mercure Resort Sanur. Key Industry Success Factors | Mercure Resort Sanur | Sanur Beach Hotel | Sanur Paradise | Puri Santrian | Sleep quality | 4 | 4.5 | 4.5 | 4.5 | Location | 4 | 4.5 | 3.5 | 4.5 | Rooms | 3.5 | 4 | 4.5 | 4 | Service | 3.5 | 4.5 | 4.5 | 4.5 | Value | 3.5 | 4 | 4.5 | 4 | Cleanliness | 4 | 4 | 4.5 | 4.5 | Sub-total | 22.5 out of 30 | 25.5 out of 30 | 26 out of 30 | 26 out of 30 | Total | 0.75 | 0.85 | 0.87 | 0.87 |
Table 1 – Competitor array of Mercure Resort Sanur based on TripAdvisor’s traveller ratings
In general, Mercure Resort Sanur’s TripAdvisor traveller ratings can be said relatively low in comparison with its competitors. This can be justified due to its ageing guestrooms, which are under major renovation and refurbishment now. Because of the quality of rooms, sleep quality may be directly affected too. Additionally, a minimum of 24-hour Accor’s staff online training should improve its quality of services. According to Mr Benbow, this is part of Accor’s commitment that must be done to ensure guest satisfaction. Value for money, in the meantime, is subject to the room rate adjustment because of general economic downturn and inflation in Indonesia. Thus, three issues that Mercure Resort Sanur could enhance further are rooms, service and value.
Besides the above competitor array, it is also of value to get an insight into industry averages presented in Appendix 2. It can be concluded that Mercure Resort Sanur ranks third, second and fourth respectively in terms of Market Penetration Index (MPI), Average Rate Index (ARI) and Revenue Generation Index (RGI) relative to its competitors aforementioned. For your information, the figures observed are year-to-date, which is up to 26th November 2013. These data imply that Mercure Resort Sanur is weak in the revenue share of the market while performs fair in occupancy rate as well as average room rate of the market. In other words, Mercure Resort Sanur’s profitability is considerably low compared to its 3 competitors. Seeing from the data, possible recommendations include restructuring daily room prices, selling more rooms or even boosting secondary and ancillary revenues from the property’s spa and F&B outlets for examples. In brief, there are a lot of opportunities for Mercure Resort Sanur to adjust its revenue management strategies further in such an intensified business environment.

Internal Analysis
As regards internal analysis, parts of SWOT analysis that are “Strengths” and “Weaknesses” can be used. In Mercure Resort Sanur’s case, two of its unique selling points that stand out against its competitors are its “Grand Vins Mercure” as well as its “Cups and Tastes” programmes (Mercure Resort Sanur, 2010). In accordance with Mercure’s brand commitment worldwide (n.d.), “Grand Vins Mercure” at Mercure Resort Sanur is a programme, which the property’s F&B outlets sell its guests a selection of premium wines at affordable prices to let them appreciate the arts of wine tasting. In addition, “Cups and Tastes” at Mercure Resort Sanur is another revitalised concept of savouring varieties of coffee and tea accompanied by mouth-watering desserts. In brief, the property is proud of its exciting F&B offers to boost the revenues generated beside the room nights.
As reported by Mr Benbow during first site visit, another Mercure Resort Sanur’s strength is its 600 metres private beach complemented by Pandawa restaurant facing to the ocean. Known because of an enchanting sunrise and white sand, the property’s beachfront is an exquisite view while guests have their breakfast buffet. By contrast, it, indeed, lacks sunset due to its location, which is inevitable. Furthermore, Mr Benbow satisfies with his staff retention at the moment because of Accor’s online trainings and Accor’s perks, such as extra leave when one has worked at the property for set periods of time. As a result, high employee satisfaction will lead to low staff turnover. Spa, on the other hand, is another in-house department that bring on favourable revenues and profits for the property. With average spending of USD 24 per guest, Mr Benbow asserts that its spa facilities are to be refurbished to attract more guests enjoying the spa packages offered. To sum up, in the General Manager’s point of view, Mercure Resort Sanur’s strengths incorporate its area by the beach, high employee retention or satisfaction and spa facilities.
In addition to the above paragraphs, there is a characteristic of the property that is worth mentioning. Since its establishment, Mercure Resort Sanur has actively collaborated with the local banjar as an effort to respect host cultures. By sheltering a sacred cow, namely Angelique to join the staffs in beach clean-up every morning, it gives a unique attraction for the guests. Every morning, furthermore, the property’s head of security guard always report to the local banjar as well as local police officer about the status of the area. This co-operation also allows local people to conduct ceremonies in front of the property. In short, this shows Mercure Resort Sanur’s corporate social responsibility in relation to the local community they operate.
Objectively speaking, there are some things that are of Mercure Resort Sanur’s concerns. Firstly, Mr Benbow admits that most of the room facilities and amenities are old-fashioned due to its last major renovation in 2004. TripAdvisor’s reviews have corroborated this fact. Having been built in 1988, this 26-year-old resort is currently under modernisation as a response to guests’ feedback. Moreover, he explains that there is still paper footprint within the property’s internal operations, such as in purchasing processes. This may be rationalised by the fact that staffs have accustomed to such paperwork, which their habits are difficult to be changed. Hence, the introduction of new technologies to automate some paperwork might be a good alternative to speed up the tasks and match Accor’s Planet 21 programme. Thirdly, its supplementary outlets and services, such as meeting facilities and departure lounge do not generate sales revenues as expected. Departure lounge, for instance, merely contributes roughly 1% to 2% out of the overall F&B revenues. Subsequently, the property’s twitter account seems ineffective proven by its years inactivity since October 2012. Therefore, Mercure Resort Sanur should formulate strategies to make the four points aforementioned better.
TOWS
Before the formulation of business recommendations, it is necessary to identify both internal and external forces of Mercure Resort Sanur that are strengths, weaknesses, opportunities and threats. Referring to earlier chapters, The Environment, Competitor Analysis and Internal Analysis, a TOWS matrix is constructed. The purpose of such matrix is to plan some possible strategies for the property to execute. | External Opportunities (O) 1. Sanur is TripAdvisor’s top 10 destination on rise in 2013 2. Economic and MICE industry growth and development 3. The power of social media 4. Technological advancement | External Threats (T) 1. Political instability 2. High inflation rate 3. Population growth 4. Bylaws regarding work permit, taxes and any other restrictions 5. Intense competition in the market | Internal Strengths (S) 1. “Grand Vins Mercure” and “Cups and Tastes” 2. Low staff turnover/high employee retention 3. Accor’s Planet 21 sustainable development programme and corporate social responsibility 4. 600 metres private beach 5. Spa at Mercure Resort Sanur | * Aggressive marketing of “Grand Vins Mercure” and “Cups and Tastes” via social media * More innovative spa packages with the latest technology available * Hosting beachfront activities that involve guests and local communities, such as morning beach clean-up or village tour | * Price adjustment to “Grand Vins Mercure” and “Cups and Tastes” due to high inflation rate by offering packages and upselling * Extra fringe benefits for staff's retention in order to minimise recruitment costs and time. * Use organic, locally produced spa ingredients to be more sustainable and lower costs | Internal Weaknesses (W) 1. Out-dated facilities and amenities 2. Weak performance of supplementary services (F&B outlets and convention facilities) 3. High level of paper footprint 4. Twitter’s account | * Major renovation of facilities and amenities to cope with increased demands * Installation and integration of virtual hotel application to boost revenues of supplementary products and services * Revival in the property’s Twitter account to engage more market segments * Brunch or lunch or dinner buffet at the restaurant/happy hours * Better marketing strategies to promote and distribute its meeting facilities | * Shift unprofitable department, such as the departure lounge, to something unique like an art museum that none of its competitors possesses * Deactivate its twitter’s account and shift it to other social networking tools, such as Hyves, Instagram, Pinterest and many more * Minimise the use of paper or even make use of waste recycled office paper |
Table 2 – A TOWS matrix of Mercure Resort Sanur
Choice
Based on the TOWS analysis made earlier, PT Synergy Hospitality Solutions Bali believes that installation and integration of virtual hotel application is an appropriate refinement point for Mercure Resort Sanur to realise. In other words, this strategy derives from WO strategy, which utilises external opportunities to keep internal weaknesses to a minimum. There are three arguments why Mercure Resort Sanur should implement this development point. First, as clearly stated Mr Benbow, Mercure Resort Sanur has to work on its F&B department because it is another important aspect in the hospitality industry besides accommodation. Next, this strategy is also related to the marketing of the property’s strengths, “Grand Vins Mercure” and “Cups and Tastes”, which both of them are under F&B offerings. Lastly, this plan will not generate higher revenues and profits for the property only, but also increase efficiency as well as reduce paper footprint at Mercure Resort Sanur. Concisely, the notion of virtual hotel software especially in connection with F&B department is realistic enough for Mercure Resort Sanur to achieve.
After extensive research, Mercure Resort Sanur is proposed to employ an award-winning iRiS hospitality application that can be installed and consolidated in iOS or Android-based platforms (iRiS, n.d.). Among all applications developed by iRiS software systems, one of them, namely iRiS F&B Suite is suggested for implementation. Based on iRiS F&B’s product fact sheet (2013), it is a multilingual, digitalised menu book that covers food, beverages and wine items installed on tablets. This interactive, digital menu book can be connected to Mercure Resort Sanur’s existing point of sale via Internet. Otherwise, it works offline perfectly as merely dining book. With reference to iRiS Case Study Restaurant Sra Bua by Kiin Kiin - F&B (2013), statistics indicates increments in wine sales by 28% from 2012 to 2013. This figure proves a great success in generating higher revenues in the hotel’s F&B department. According to the product’s fact sheet, again, another return on investment that could benefit Mercure Resort Sanur’s F&B outlets is its monthly implementation expenses can be balanced with revenues generated within seven days (iRiS F&B, 2013). For guests who bring their Apple iPad or Android tablets, it is very convenient to download the application available online. Therefore, it is possible for such software system to be applied at the property’s restaurant and departure lounge too.
Upon installation and integration of iRiS F&B Suite, both Mercure Resort Sanur and its guests can enjoy several advantages. Essentially, this improvement approach corresponds to Accor’s Planet 21 innovation pillar through the introduction of environmentally friendly, technological innovations. Apart from improving staffs’ technological knowledge and skills, the use of digital dining book will minimise printing and paper costs since alterations can be done immediately and virtually. Along with the objective to promote “Grand Vins Mercure” as well as “Cups and Tastes” programmes, iRiS F&B Suite’s “Sommelier Recommends” function can be utilised as an effective marketing tool supported by enticing visuals and full information regarding the menu items. Moreover, guests’ preferences and special requests can be tracked as a database in order for Mercure Resort Sanur to perform menu engineering. Further, in-room orders are likely to rise as well because the convenience of ordering menu items at fingertips from one’s device. More importantly, the overall ordering processes will become more effective and efficient followed by improved guest dining experience as well as higher revenues. To sum up, iRiS F&B Suite is a profitable, alternative solution to weak performance of Mercure Resort Sanur’s F&B outlets.

Implementation
Regarding the implementation of the tablets and the software, there are some operational features affected. Since this is a technological innovation, obviously, the implementation process directly influences the Information Technology (IT) staffs, otherwise the engineers. Supplementary online-based or in-house trainings are required initially for the maintenance of the overall system. This entails both the tablets themselves as the software is installed on them. Nevertheless, such software also requires updates in order to stay up-to-date and prevent bugs or errors. Otherwise, the IT staffs must be well acquainted with the programming of the software. It is of utmost significance that the order taking processes run smoothly for the guests. In consequence, this brings up several issues in reality. Firstly, the IT staff must be well aware of while programming the software. Secondly, menu items including food, beverages and wines must be well presented and easily customised. Thirdly, options regarding choice of food and beverages must be easily accessible for guests to order accompanied by accurate guestroom identification. Once the IT staffs are fully knowledgeable about the tablets and the software incorporated, the other hotel staffs especially in F&B department must be trained to gain basic knowledge on how to handle the software properly. Responsible staffs for receiving room service orders have to undertake a special training regarding the system of order taking and processing through the iRiS management software. On top of that, front office staffs will also receive additional trainings, as they will have to carry out a new standard operating procedure for guest’s check-in. One major change in the methods of guest’s check-in is the word-of-mouth introduction of iRiS F&B Suite software, which guests are highly encouraged to download from Apple iTunes Store or Android Google Play. Afterwards, they could install the application on their smartphones or tablets that are useful throughout their stay at Mercure Resort Sanur. The front office staffs should be able to explain comprehensively all necessary elements or features related to iRiS software. In addition, they must make sure that the guest understands how to run this software. Thus, it is crucial for Mercure Resort Sanur to think carefully about human resources requisites before the application of the software.
With the implementation of the tablets and the software, some risks come along with it. In order for iRiS F&B Suite software to be linked with the property’s point of sale, an Internet connection is obligatory. In Bali, it is observed that the Internet connection can be unstable at times, which might result in improper function of the software. Albeit iRiS F&B Suite can function offline, it, however, solely performs the function of a digital dining book. In conclusion, it is very important for Mercure Resort Sanur to maintain its Internet connection stable and speedy.
Moreover, the use of iRiS F&B Suite significantly reduces the property’s paper footprint as fewer menu books are printed while advertising is mainly done virtually on the software. As an effect, it increases the degree of customisation of the advertisements placed by Mercure Resort Sanur as well as eliminates printing of paper-based advertisements. This is a sustainable, convenient alternative for advertising. As a final point, there are a few steps to be carried out prior to this proposal’s implementation. Primarily, the purchase of four tablets as proposed are required for the commencement of this investment project. Afterwards, staffs have to be trained in order to fulfill the requirements that are described previously. Subsequently, the iRiS software must be programmed properly so it is visible and understandable for the guests. Once all the tablets are in place, the applications are then installed accordingly. When the application is available, the IT staffs should monitor and maintain the functioning of the application With the installation of the tablets and software, there is no logistics involved since it is a small-scale project with no further change to the property’s operations needed.
Business Case
In this chapter, several principles of financial management will be explained and applied to the project. First, according to the time value of money principle, it is questionable whether or not now would be a good time to invest in the project, as the money invested will not earn any interest. Another issue that should not be neglected is the current on-going renovations in the Mercure Resort Sanur, which requires a huge investment. With this investment going on, it is important to consider its current financial position and see whether it is a preferable time to make an additional investment. However, when looking at other aspects, such as exchange currency, this would be an extremely good time since according to XE (2014), the Indonesian Rupiah has not been this favourable for the US dollar in the last 4 years. The next financial principle that is important to take into considerations is the payback period. Since iRiS F&B Suite software is free, the initial investment equals the price of the four tablets (which is IDR 19.996.000 according to Lazada (2013). PT Synergy Hospitality Solutions Bali estimates that the availability of software and the tablets in each room, there will be two additional room service orders or departure lounge per week. Moreover, it is estimated that the average bill of room service amounts to IDR 200,000 per order (average between bottles of wine, food orders and beverages). With these statistics in mind, it would take approximately 100 room service orders to earn the revenue that would cover the initial investment. The period in which this occurs depends highly on the season, during rainy season guests are more likely to order room service, but in the summer season the occupancy is likely to be higher, however in the summer guests are keener to eat outdoors rather than order room service. Logically, this raises the question whether or not this is a lucrative project. Surely, as none of the competitors in Sanur has anything like this, Mercure Resort Sanur might be the first hotel that integrates sustainable technological innovations into its operations. If Mercure Resort Sanur, in reality, implements this proposal, the property will be the first iRiS-integrated corporation in Indonesia. As a result, this will also enhance its corporate image. Additionally, the risk-return trade-off is something to be taken into account. The general rule regarding risk-return trade-off is that high potential risks projects are expected to generate high returns and vice versa. The only risk in this project is a potential loss when increased sales are not enough to cover the initial investment of the tablets. iRiS software is free to install for both the property and its guests as stated on Google Play (2014), thus this will be entirely risk free. In conclusion, in the foreseeable future this project comes with low risks and low return alike, but since this one time investment will bring about positive increments in cash flows as time goes by the return will be higher over a longer period of time. In addition, it is ethically right to implement such innovation as it is partially an effort to reduce paperwork, which shows commitment and responsibility for the surroundings. Furthermore, the employees will also benefit from this as they get the opportunity to work with new technologies and acquire more knowledge through various trainings. Overall, all of these are in line with Accor’s Planet 21 sustainable development programme (2013). As a final point, the NPV of this investment will be elaborated. It is calculated, that with the tablets and the software functioning, each guest will order two additional in-room orders per week. With the calculated average bill being IDR 200,000 and an estimated 68% average occupancy per year, this totals IDR 2,704,000,000 additional cash inflow on a yearly basis. With a discount factor of 12%, the net present value of IDR 2,394,289,714 is forecasted. For the estimated calculations, please refer to Appendix 3.

Scorecard or Dashboard
A performance scorecard or dashboard as portrayed below represents objectives, measurements, targets and initiatives from the application of the suggested investment project. | | Targets | | | Strategic Objectives | Measurements | Year 1 | Initiatives | Financial | Increase F&B covers and sales | F&B sales | +10% | Place tablets with iRiS software installed in the departure lounge | | Increase “Cups and Tastes” sales | “Cups and Tastes” sales | +25% | Allow guests to install iRiS sofware on their smartphones/tablets to browse and order products and services | | Increase in room sales | In-room dining sales | +25% | Allow guests to install iRiS sofware on their smartphones/tablets to browse and order products and services | | Increase wine sales especially “Grand Vins Mercure” wine selections | Wine sales | +25% | Make use of iRiS software options such as the "Sommelier Recommends" section and the highlighting tool | Guests | Enhance guest satisfaction by providing easy access information with regard to the products and services provided by the property | Inquiries regarding the property, products and services | -50% verbal queries or complaints regarding the property, products and services, indicating that everything is clear for the guests relative to the previous year | Place tablets with iRiS software installed in the departure lounge | | Increase accessibility of room services, F&B products & services | Numbers of orders processed trough iRiS software | 5 orders per guest per week | Allow guests to install iRiS sofware on their smartphones/tablets to browse and order products and services | Internal Processes | Increase cross-selling and upselling of products and services | Sales of additional products and services | 10% | Make use of "highlight" options on iRiS software to promote additional items and services | | Use the tablets to advertise products and services catered | Sales of advertised products and services | 25% increased sales of advertised products and services | Make use of "highlight" options in iRiS software to promote additional items & services | Learning | Improve staff knowledge and ability to handle technology | Results from training tests | Achieve "Pass" results for all employees | Extensive Accor’s online trainings supplemented by on-the-job simulation trainings | | Gain knowledge about guests’ preferences and requests | Results of the tracking system | Determine which products are preferred or requested by the guests | Make use of the tracking system to determine most viewed/ordered products |
Table 3 – The investment project’s performance scorecard or dashboard for Mercure Resort Sanur

Bibliography
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Appendices
Appendix 1: Overview of Mercure Resort Sanur’s Competitors
The following table is to give an understanding of Mercure Resort Sanur’s three main competitors identified, which are Sanur Beach Hotel, Sanur Paradise and Puri Santrian. In order to tabulate this table, the information gathered is from TripAdvisor.com and individual hotel websites. Therefore, this table will support Competitor Analysis chapter. | Mercure Resort Sanur | Sanur Beach Hotel | Sanur Paradise | Puri Santrian | Star rating | 4* | 4* | 4* | 4* | No. of guestrooms | 189 | 425 | 413 | 182 | F&B outlets | 1 restaurant1 casual dining restaurant2 bars1 lounge | 2 restaurants2 kitchen and bars2 bars1 lounge | 1 restaurant1 café 1 pool bar1 lobby bar | 2 restaurants1 bar | Meeting and convention facilities | 4 meeting rooms | 3 meeting rooms1 outdoor theatre1 convention centre | 1 ballroom14 meeting rooms | 1 meeting room | Health and wellness facilities | SpaTennis courtJogging track | SpaFitness centreTennis courtWater sport facilities | SpaFitness centreTennis court | SpaYoga class | Price (Rack rate) | Superior (USD 135)Deluxe(USD 170) | Superior (USD 124)Deluxe garden view (USD 206)Deluxe sea view (USD 230)Junior suite (USD 363) | Superior(USD 158)Superior balcony(USD 175)Pool view(USD 175)2-bedroom suite(USD 230)Executive suite(USD 266)3-bedroom suite(USD 270) | Garden wing(USD 182)Beach wing(USD 194)Bungalow(USD 218)Santrian club(USD 278) |
Table 4 – An overview of Mercure Resort Sanur’s competitors

Appendix 2: Daily Revenue Report of Mercure Resort Sanur on 26 November 2013
Below is an excerpt of Mercure Resort Sanur’s daily revenue report dated on 26 November 2013 obtained from Mr Luke Benbow, the General Manager. Please take into considerations that this information is highly confidential; thus, the materials shall not be copied and/or distributed publicly without the permission of Mercure Resort Sanur’s management. Hotels Sanur | YTD | | Rooms Sold | % | ARR | Fair Market Share | RevPAR | MPI | ARI | RGI | Mercure Resort Sanur | 48,977 | 0.02% | 617,271 | 0.12 | 103 | 0.11 | 1.16 | 0.12 | Sanur Beach Hotel | 119,386 | 0.02% | 600,205 | 0.23 | 132 | 0.26 | 1.13 | 0.29 | Sanur Paradise | 76,313 | 0.03% | 591,742 | 0.12 | 157 | 0.17 | 1.11 | 0.19 | Puri Santrian | 46,243 | 0.01% | 771,747 | 0.15 | 103 | 0.10 | 1.45 | 0.15 |
Table 5 – Daily revenue report year-to-date of Mercure Resort Sanur on 26 November 2013

Appendix 3: NPV Calculation
The following portrays a calculation to determine the net present value of proposed investment project. The purpose of this document is to support Business Case chapter in which relevant principles of financial management are assessed to analyse whether the investment is sustainably profitable in the long-term.

NPV Calculation by PT Synergy Hospitality Solutions Bali | Project: iRiS F&B Suite’s installation and incorporation at Mercure Resort Sanur | | | | | Required rate of return/ discount factor | 12% | | | Year | 0 | 1 | | Investment | (19,996,000) | | | Cash inflow | | 2,704,000,000 | | Cash out | | | | Total | 19,996,000- | 2,704,000,000 | | Discount factor | 1 | 0.892857143 | | PV | 19,996,000- | 2,414,285,714 | | NPV | 2,394,289,714 | | | | | | | Explanation | | | | 1) Required rate of return: 12% | | | | 2) Investment: 4 tablets (IDR 19,996,000) | | | | 3) Cash in: Assume 2 additional room service orders per occupied room per week, average bill of IDR 200,000, calculated with 68% average occupancy per year, which makes up for IDR 2,704,000,000 annually | 4) Cash out: None, the investment comes without additional costs | | | | | |
Table 6 – NPV calculation for Mercure Resort Sanur’s proposed investment project

The NPV is calculated with the following statistics in mind; Two additional room service orders per occupied room per week, average bill of IIDR 200,000, calculated with 68% average occupancy per year, which makes up for IDR 2,704,000,000 annually. As the iRiS software is free, no additional costs are counted. Furthermore, no additional costs are counted as the implementation of the tablets is entirely cost free. The only costs related to this investment are the tablets themselves. Logically speaking, the NPV should not be this high, but since there are no additional costs and the free software will pay for the tablets by generating revenue. Since the revenue over 1 year is significantly larger than the initial investment, the NPV is exceptionally high.

Appendix 4: Co-operation Contract
Wherever “he”, is written in this contract, “he/she” should be read. For readability reasons, one form has been chosen.

CONTRACT
FOR WHAT REASON HAS THIS CONTRACT BEEN DRAFTED?

Within the module HOSPITALITY OPERATIONS ENVIRONMENT, students are asked to carry out the respected Environment module assignment within subgroups. Consequently, if some member(s) happens not to cooperate, this might jeopardise the chances of the rest of the group to still complete their module (assignment) successfully.

WHAT IS EXPECTED FROM EVERY GROUP MEMBER? * Attend all sub group meetings – if disturbed to attend a meeting, please call off; * Make sure that minutes are made of every meeting – herein the most important issues discussed, problems encountered as well as absentees should be mentioned; * Hand in all parts (drafts and final version) that were assigned on planned time – if disturbed to hand in a part on time, please report this to the group; * Attend all PBL sessions/lessons/lectures/workshops – these classes are namely interrelated to the module assignment (see PBL KIT for guidelines to report absenteeism in PBL); * Show a proactive behaviour (do not wait for others to tell you what to do); * Be accessible to all members of the subgroup.

WHAT ARE THE CONSEQUENCES IF THESE TERMS ARE VIOLATED? * Report this at all time to the tutor. Make also sure that this is written in the minutes of the group meetings. After three warnings, and in close consultation with the module coordinator(s), the student in question will be expelled from the concerning subgroup and forced to complete the module assignment on his own.

Signed on Thursday, 14 November 2013

STENDEN UNIVERSITY Bali
International Hospitality Management

Names and signatures:

__________________________ _________________________
Gino Severien Joshua Ega Yus Pratama

Appendix 5: Assessment Sheet
This assessment sheet is retrieved from Haas, Hoekstra and Coerts (2013). The assessor is going to make use of this document in order to grade this written assignment.

Group number: 1
Module period: 2 (Hospitality Operations Environment)
Academic year: 2013-2014

Student name | Student number | Gino Severien | 236594 | Joshua Ega Yus Pratama | 286486 | | |

Elements | Scoring Rubrics | | Weight | Score 1-10 | Remarks | Step 1: Environment | 1/12 | | | Step 2: Competitive analysis | 1/12 | | | Step 3: Internal analysis | 1/12 | | | Step 4: TOWS | 2/12 | | | Step 5: Choice | 1/12 | | | Step 6: Implementation | 2/12 | | | Step 7: Business case | 2/12 | | | Step 8: Score card | 1/12 | | | Step 9: Summary | 1/12 | | |

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[ 1 ]. The rack rate or published rate might vary over time, depending on the hotel’s dynamic pricing strategy