Memo from Executive Team
To: Chief Executive Officer

From: Chief Marketing Officer, Chief Financial Officer, Chief Human Capital Officer, Chief Operations Officer
Subject: Potential Acquisition The executive team is equally concerned with the high salary and wages of the employees at the Italy hotel properties. It is possible to try to increase the rates of the guest rooms at these locations. If the rates of the guests are to be increased than we need to justify the increase. Several ways that would help is to evaluate other local hotels, the quality of the amenities, assess the condition of the guest rooms, and keeping the hotel competitive. In order to increase revenue, we would need to compare the rates of other areas hotels. Once we research the competitors' rates, then we must compare it to the hotel's current price structure. In addition, we should complete an assessment of the guest rooms of the hotel. This will include an evaluation of the quality of the amenities the rooms provide, such as: bedding, towels, flooring, window treatments, appliances, furnishings, and fixtures. The results of the assessment will help in determining whether or not these accommodations will support an increase in the rates of the rooms. Along with review the guest rooms, we also should examine the hotel site, as well as assess the customer base. It is important to determine whether the market is commercial or tourist. The commercial market serves the business and transient patronage. If guests are using the hotel as a vacation location, then they are classified under the tourist market. Another focus would be keeping the hotel competitive. We would need to look at what the hotel offers: food service, fitness facilities, personal services, and recreational features. A property that is equipped with intriguing amenities will help the hotel to gain more increase in occupancy
Budgeting for training is one top priority. Our company will have to be prepared to do extensive training of our U.S and European workers. This means we need to be financial prepared for current and future training. Also, the employees might expect better compensation then what we provide for the workers in the U.S. and this could affect whether or not people will work for the hotel. Money has to be available to properly compensate these workers. These workers will want to feel like they have some job security.
This concept is great. Purchasing a hotel in Italy, with a mixed culture providing the service is brilliant. Obviously the big question is money and how are we going to spend it. Before we can think about profit margins we have to look at what it will take to get things started. In the start up phase training is the most important. The money has to be spread out in a few areas such as, management and staff training-this will cover chain of command, hotel administration, finances, customer complaints, customer service, maid service, room service, restaurant services, fitness center cleaning, pool cleaning, and daily operations of the hotel chain. Language and culture courses-with the language barrier and culture difference between staff and guests it is imperative that we all know a little about each Nation’s language and culture. Equipment training-The hotel will be modernized with computers. The system will have a website for online booking, payments, complaints, maps, local features for tourists, and any other information a guest may want or need. The system will be used within the hotel for check in and checkout, bill handling, maid servicing, laundry acquisitions, room service, dining facility, training courses in culinary arts, food handling, and restaurant management.
In the training process we have to get all of the employees on the same page. Meaning we need them on the same rotation schedule while being integrated. This will help with language barriers, should those issues arise. In a matter of employment money is always the issue. In this hotel chain all staff will be paid based on position within the hotel. All employees will be evaluated every six months to establish whether a pay raise is warranted or not. Benefits will include health insurance, dental insurance, and paid vacations.
As in all business, the point is to accumulate revenue and then turn it into profit. The idea is to get the customer in the hotel based on his/her budget. Room rates will be based on size, accommodations, amenities, and occupancy. Vacation packages will be available via the website. Room discounts will apply to all businesses traveling within the area to include U.S. and local military.
Management deposits include 20% of each daily rented room will be recorded as revenue earned on the banking balance sheet. If the member stays more than one day then that 20% is taken out for extra days. 20% of the restaurants daily receipts will be recorded as revenue earned on the banking balance sheet. (All room service charges will be calculated in the restaurants 20%) 20% of the gift shop daily receipts will be recorded as revenue earned on the banking balance sheet. All hotel tax and parking tax will be put in accounts payable under taxes. It will be paid out annually. Any income taxes will be placed in the revenue earned account. All other money will be used to facilities to include the fitness center, lawn care, utility bills, employee salaries, re-supply for food, housekeeping supplies, and pool cleaning supplies. Once all expenses are calculated and paid 60% of the remaining money will be transferred to the revenue account. The other 40% will be placed in the expense account where it will stay for incidental expenses that occur on a daily basis.
The idea to purchase a chain hotel in Italy is exciting and challenging at the same time. Our primary concern is the employees and how well the American employees will adapt in Italy if they have to go there to train the Italian employees. My concern would also be on cultivating these new employees, focus on management expectation of the employees, perceived competency or capability or performance.
Yes we would say it is a good idea, but when you think about, having unions involved can cause things to get a bit more complicated. My advise it to try and get close to the union leaders and build a strong working relationship with them. Assuring them that the employees’ needs matter. We do agree that we will need to look at the market to see what kind of guests we will target and adjust our amenities and room type accordingly. Analyze whether the area is more suited to leisure travelers or business travelers. Having a presence in Italy will allow American travelers to be more comfortable and the same when Italians travel to America.
Furthermore we have some concerns regarding the current quality of the buildings and the service of the staff. In order to meet the needs of our guests and provide them with the kind of experience they expect to receive while staying at one of our hotels, extensive work would need to be done to renovate each hotel. Additionally, all employees would need to be trained on providing quality customer service to every guest.
One of the pros of taking on this hotel chain is that we would be expanding into the global market. Being able to offer the same exceptional service in other countries as we do in the US would only increase our standing among our competitors. Additionally, if we can replicate our current standards in Italy and gain a positive reputation there, then Italians who visit the United States may be more inclined to stay in one of our stateside hotels. If we are successful in Italy, it may open doors for us to expand into other countries.
Although we will need to spend some time and money renovating the structures of the hotels, this is an easy task as compared to changing the mentality of the current employees. From what we understand, the Italian employees are unionized. They have boundaries around their work schedules and they are not only limited in the kind of work they will perform within the hotel but also cannot work except in their defined jobs. This, along with the limited labor pool, could present a major stumbling block to the acquisition of the hotel chain. We would highly recommend that before we proceed with purchasing the hotel chain we need to explore establishing a relationship with the union leaders to determine if they would support our employment expectations, such as changes in shifts, job expansion and/or redefinition, and intolerance for sexual harassment. If we can gain the unions support then we would recommend we proceed with the purchase of the hotel chain. This memo is a collaboration of the ideas of the entire executive team. If you agree with our assessments then we will immediately begin the purchase of this hotel chain. We will start with a planning phase so we can control our progress and budget our spending. We will need to establish executive officers in Italy as well, but we think that we can use the Italian hotel chains current leadership to fill those gaps to show the current employees that we aren’t going to fire everybody and Americanize the company. We eagerly look forward to your response.