The Riverview hotel is a 35 room’s luxurious property in Notown, USA. The hotel is known for the exceptionally good personal service at the affordable prices. However due to the recession the room bookings and the events have decreased immensely. Therefore to overcome the effect of the recession and also the competition, hotel’s marketing department has come up with the marketing plan.
This report is made to analyse the marketing plan of the hotel and also the success of the plan. The analysis is made on (a) the risk management that included the risk planning and evaluation and (b) the procurement management that included the procurement strategies and implementations. Also the review of the project is also made keeping in mind the implementation and the post completion of the project.
The report is been made and structured on the marketing plan of the Riverview Hotel in Notown. The following report is the critical analysis of the risk management and the procurement management of the marketing plan that is developed by the hotel. At the end of the report, the conclusion and the recommendations will be drawn and highlight on the basis of the analysis of the marketing plan.
The Riverview Hotel is situated in Notown in USA and is a part of “Exclusive Business Hotel chain”. It holds a five star brand and is considered one of the best hotels in Notown. They are eminent for their personal services and the excellent business services to their clients. One of the unique selling prepositions is their strategic location that is close to the exhibition centres and also the Silicon Valley.
The hotel is dedicated towards providing eminent services to their guests along with quality of standards maintained at all times. The objective is to make sure that the guests get value for money by high standards and maintaining the standards above anything else. The mission of the hotel is to create value for both the guests and the stakeholders, by maintaining the brand values and also by creating the environment of trust and loyalty for the employees where the learning is optimum.
The marketing department plays an extensive role in the hotel, as they are responsible for creating the awareness among the local community, corporate houses and the travel and trade organisations about the hotel and its services. The marketing team is responsible for advertising, print media, internet and public relation activities. In order to be in competition with other hotels, the marketing team has done the risk analysis of the hotel. They have also formulated the marketing and sales plan and strategies. They have also formulated the budget and the potential expenditure in taking the plan a step ahead.
Risk environments are present in all the places where there is competition. In last few years hotel industry has come across the down fall in terms of business due to the recession in the economy of the world. The other environments that affect the business in the hotels are the terrorist threats and the natural environment risks.
Therefore, it is important to plan how to fight with the risk of losing the business. The hotel industry’s marketing team needs to have a contingency plan, where they will make sure that the hotel is getting business at any point of time. This is possible only when the planning is done for the same. The contingency planning should be done in such a way that the risks are covered (Raz, T. and Michael, E. (2000) therefore, the steps to be taken in risk planning are:
It is important for the hotel to identify the risks that can affect them. The identification of risks will give the hotel the directions to get prepared for the competition. It is important to identify the risks at the early stage so that the corrective measures are taken in order to mitigate the risk on business (Chapman C, Ward S (2003). Below is the table that identifies the risks and also the solutions:
Risk Identification Table
Market Risk: The demand and supply of rooms in the locality. If the rooms are more than the demand
Competition: there is a risk of losing the business if the competition is high in terms of services and also the room rates.
The brand reputation: It is vital to maintain the brand’s reputation at all times. They are most likely to hit if the services are not good of the hotel.
Technology risk: If the hotel is not advanced in terms of technology, they tend on losing the business.
In order to do the risk analysis of the marketing plan, I have chosen PEST analysis.
Political factors: the political environment is stable in terms of revenue.
Economical factors: the marketing plan needs to be financially strong, as it will cost to do the awareness programmes. The marketing department have calculated approximately 2500,00 USD would be required to make the plan successful. This would include print media, internet and technology advancement and public relation activities. The marketing activities along with the capital funding will help in raising the growth chart of the hotel.
Social Factors: The usage of marketing tool has become vital in order to spread the awareness as these days people are more likely to book rooms by internet and by analysing the room rates at different sites. (Jones, Peter and Pizam, Abraham (1993). In case the marketing plan is unable to spread awareness in the positive manner, it may affect the customers and the market adversely. Therefore it is important to have good marketing plan in place.
Technological Factor: Since the marketing team have decided to integrate the system of booking the room on the hotel’s website, it is important to keep the details of guest along with their credit card details secure (Hopkins, D.S. (1981). The website’s advancement will help the guests in booking the room online though the financial involved are very high.
Another tool to do the risk analysis of marketing plan is by SWOT analysis. Therefore the factors involved are:
Strengths: the strengths of the marketing plan are:
This deals with the processes of risk evaluation. Generally we consider the Probability of an event to evaluate riskiness of the venture or project at hand. Generally we attach the probability p to the riskiness of the project and Probability (1-p) to its non riskiness. The higher the probability of the risk higher is the riskiness involved in the Project. While evaluating the riskiness one has to keep in mind these Probabilities. Generally lucrative ventures have high amount of risk.
The possible actions for the risk treatment are: Accept: if the risk is high, one needs to accept the risks but also need to mention the reason for acceptance.
Reduce: here resources are implemented in order to reduce the risk and also for the efficient control over the risk. In this there is a need to look into cost, time and human resources implications. (Jorion, Phillippe and Sarkis J. Khoury (1996). The preventive measures are been taken by the marketing team to reduce the risk of competition. They have forecasted the budget and also allotted the time to take the measures to reduce the risk of high competition.
Transfer: here the risk is transferred from one entity to other entity. Avoid: in order to avoid the risk, measures and controls are taken so that the risk can be avoided. For example, Riverview hotel is taking measures of making and putting marketing plan into place so that the risk of competition and recession is avoided.
In order to have the effective risk management, it is important to monitor the actions taken to reduce or avoid the risk. Since the marketing plan is in place, it is vital to monitor its result and also the effect on the room sales and total profit of the organisation. The monitoring can be done by the regular audits done on room night sold and the business reports of the business through corporate houses. This will help in identifying the effectiveness of the marketing plan. It is also important to measure whether the objectives of the marketing team have been met or not. The monitoring will also help in determining the lessons learned during the process of risk management.
The risk system of the hotel clearly indicates that the cost of developing and implementing new technology is quite high. It requires great motivation from the side of team to implement new technology and make use of it successfully. The cost of marketing is quite high. So, if full cost has to be utilized and to be converted into profits each marketing strategy has to be analysed with precision.
1) The cost of $250,000 should be borne only after analysing the gains to be derived from it.
2) This investment should be made only when Marginal Benefit of investing one dollar is more than Marginal cost.
3) The new system of bookings can increase the number of visitors and customers for hotels but the technology platform to be used should be guest friendly/ user friendly.
4) The staff at the hotel should be well acquainted with the new system of technology so that no online booking is missed.
Riverview hotel’s procurement planning is done to cover three imperatives parameters that are to clarify and quantify the cost involved in the procurement that is marketing, define the plans to accomplish the objectives of marketing department and thirdly evaluation of strategies used in the marketing. (Drummond G. and Ensor J. (2001). the procurement planning incurs the total budgets cost for the marketing of the hotel so that the people and the corporate houses are aware of the hotel and its objectives.
Below is the table that shows the cost that will be incurred in advertising of the hotel. The allocation of the budget is such that the maximum cost will be incurred by the contract media space advertising whereas minimum amount will be on monitoring the advertising.
The promotions will be done maximum by advertising that is by print media and also through the internet advertising. The hotel will be featured on the travel organisation’s sites. Once the hotel start selling the rooms and the banqueting space, it will be easy to measure how effective the advertising was. The advertising’s success will be measured through the number of leads getting generated.
Public relation will not be incurring much cost, as they will be more involved in the sponsorships and also participating in more and more local events in order to spread brand awareness. They will be responsible for establishing the list of events in which they can participate and also the list of events that they can sponsor or host in the hotel. (Stanley, Richard T. (1982). Public relation department will be solely responsible for brand awareness.
The cost in the website redesigning is the most as the hotel needs to re-build their brand. Website is the most used source of booking the rooms. Also the information about the hotels is readily available. (Rowley, Jennifer (2004). Below is the table that will show the cost that will be incurred by the website marketing of the hotel.
The objective of the website marketing is to appear on the international and regional travel sites, covey the message of the quality of service they promise to deliver and lastly the guest is able to make the reservations online and the can change the reservations as well. (Bonoma, T.V. (1984). This will be very helpful to the staff of the reservation team, as the load of making the reservations will decrease. Also, since the hotel room rates are less as compared to the other competitors, the website marketing will help the guest to compare the rates and quality of services as well.
The guests who have already stayed in the hotel or the companies whose guests have stayed in the hotel, will be sent the letters or contracts of rates so that the repeat business is coming. The cost involved is minimal as the mails are sent by e-mails. The direct mailing to the existing and potential customers will be cost effective way of marketing.
The Procurement strategies have two aspects, one that the cost is approved by the organisation and secondly the plan of delivery of the marketing plans. If we consider the first aspect, the marketing department has worked out the cost and the budget that will be required to successfully meet the marketing strategies. Below is the cognitive table that shows the cost of every marketing strategy that the marketing division wants to carry out
The marketing department will be hiring the public relation agency to do all kind of PR activities and also the direct marketing of the hotel as they do not have any experience in the same. It will be the challenging task for the marketing team as they have to closely monitor the performance of the agency and also laisonning with the agency on daily basis. The marketing department’s objective is to spread the awareness about the hotel in terms of quality of service therefore the marketing plan will be helpful to doing the same.
The legal issues that will be associated with the strategies would include the contract with the suppliers, like for advertising; the hotel needs to sign a legal contract mentioning the services required by the hotel from the advertising company. In the similar way, PR agency also requires to sign the contract with the hotel for the services rendered to the hotel. The legal formalities are important for the hotel as they are responsible and accountable for the job they will be performing. Online payment process and legal formalities to avoid credit card frauds.
The above section explains which marketing strategy should be employed and how do they affect the budget of hotel for the procurement process. Web Marketing will cost the maximum in terms of budgetary allocation but this type of marketing will have the most favourable impact on the bookings of the hotel. Other types of procurement strategies are less costly but they might not have that high and favourable effect on bookings and revenues.
1) Web marketing has the highest cost but will generate more revenue. So budgetary allocations should be done accordingly.
2) Other procurement methods will not produce great results in a less time. So, hotel managers can deploy more funds in web marketing and use other methods to support the marketing strategies.
3) Other small budgetary allocation strategies can be used on time to time basis to complement the web marketing procurement strategy.
Here the marketing department will ask the suppliers to submit the bids so that the concerned work could be given to them. The solicitation will be required for the PR agency that the department is planning to outsource. Apart from this the solicitation will be required from the web designing companies to quote the prices for their services. Similarly for advertising, the companies will quote the charges for their services. The supplier just not quotes the rates but also offers the list of services which they can do in the accumulative price.
The solicitation will happen from the marketing department as well to the travel organisations such as Expedia.com, Hotel.com and Orbitz.com (Weitz, Barton A and Sandy Jap (1995), where the department will send the quotation to the organisation mentioning that they want to render the services to the company on the commission basis. Apart from this the rate for proposals (RFP) will be sent to existing and potential companies which give the hotel the room business.
The selection of the solicitation will be based on the list of services the company will provide and also on the basis of monitory factor. Since, the budget is already made for each marketing segment, therefore same budget will be considered for the solicitation selection. Here, the general manager and the marketing director, decides to whom the work will be given. Generally it is based on the experience of the supplier, rate quoted by the supplier, list of services offered by the supplier, past history of the supplier and also if he could meet the deadlines given by the hotel. Also depends on the previous works done for the hotel by the company and also the “referrals” submitted with regards to the ongoing association of the company. The solicitation will also depend on the vendor’s code of conduct of the hotel and the agency’s acceptance of the same. The solicitation selection will also check the “awareness” of the supplier in terms of the hotels demands, process and work conditions. One of the selections also includes the “enthusiasm” of the supplier in getting associated with the hotel. The “evaluation” of the proposal will be done on the basis of offerings, services, financials, competitive offers and alignment of expectations. “Commitment” is another criterion, as said earlier, it is imperative for the supplier to meet the deadlines. So the supplier with greatest enthusiasm, efficiency, work commitment, potential, cost effective bid should be given the final bid and contract.
Solicitation Selection process require different companies to submit bids for the project. The budgetary allocation has to be kept in mind while accepting any final bid. Suppliers past records and their quality has to be the major criterions along with the bid to be followed while selection.
1) Only suppliers with high experience in the particular field should be hired as the job is very critical to the success of marketing plan
2) Budgetary Allocation should be strictly followed. Hotel cannot ignore the budgetary allocations at this stage.
3) Best Bid should be chosen. Final bid should be cost effective and quality effective as well.
4) Managers cannot finalize the bid just on the basis of cost effectiveness ignoring the quality delivered by suppliers.
This is the process where the work that is allotted to the suppliers will be monitored in terms of meeting the deadlines and also the quality of work. The marketing department will closely monitor the work that has been allotted to advertising company, website designer and also the public relation agency.( Moorman, Christine, Deshpande, Rohit and Zaltman, Gerald (1993). It is important to check their work from time to time so that quality can be checked and also if changes are required to be made, the same can be done without wasting the time. It is also monitored to check the financial part as well because there is a certain budget that is allotted to each segment.
The legal issues that are associated with the management of contracts are firstly the billing payments that are how the payments will be made to the suppliers; this could be on completion of work or on routine basis. This also includes terms and conditions if the payment is not made on time or probably if the services are not received on time. It is important for the supplier and also for the hotel to maintain the confidentiality at all times, therefore a legal document for the same is also signed by both the parties. The confidentiality document is signed by web designing company and the advertising company. There should be a document on the deliverables from each party, this would contain, what all data or work is expected from the supplier. (McIvor, R. & Humphreys, P& Mc Aleer, W. (1997). Another legal issue is the termination of contract, here both the parties sign an agreement or a contract which mentions that in case the hotel does not like the work or the work ethics of the supplier, they have right to terminate the services and would pay only for the approved work by them. (Mulgan Richard 1997). One of the legal issues is the ownership rights; here the owner that is the supplier is given the right to make some changes in the end product and also to own the product, however, all the main usage rights is with the hotel. The supplier keeps the tights to use the work to show case in his portfolio.
Hotel has to regularly monitor the progress of website developers and suppliers. Regular reports are to be received from outsourced parties to make sure that work is happening smoothly. Legal issues should be dealt in a proper and effective manner.
1) Establish effective monitoring process to track the performance of suppliers and other outsourced work
2) Proper record tracks and tracking software should be used to track the performance.
3) Legal arrangements should be made clear to all the workers outside the hotel to achieve efficiency in work.
8.1 How project was “closed out”
The hotel was successful in making the plan and the budget of the marketing department. They were able to gather all the information and the data of all the hotels and in particularly of Riverview Hotel’s past data record. This data collected helped in forecasting the budget as well as how to carry out the marketing plan. The marketing plan was well made by keeping the objective and the mission of the company in mind. Since the marketing plan is well made, it does not leave a scope of failing. The marketing plan will definitely be a success for the hotel as they have covered all the segments of the market where they need to develop the niche. Also they have clear knowledge and sight of what they want to achieve as the outcome of the marketing.
All the data and figures will be observed on routine basis in relation to projection versus actual. Since the plan is ongoing therefore, alteration and manipulations can be done if necessary. The Annual result will be evaluated at the regional general manager’s meet. The marketing plan will also be reviewed by the marketing director on weekly basis, to check for any short falls and delay in meeting the deadlines. Apart from this the marketing team will also follow the project implementation tracker which helps the team in reviewing and tracking the implementation process of the plan. It gives the clear picture about how the work is progressing.
Once the marketing plan has taken the shape and is implemented, the post completion review of the project is done. The review is done on the basis of time and cost. The work plan needs to be finished in time allotted and also in the allotted budgets. The post completion review will be laid on the following parameters (Moorman, C. and Rust, R. (1999) :
On analysing the marketing plan of the hotel in terms of risk management and procurement management, the conclusion is that the hotel has well developed the plan keeping in mind the objective of the hotel that is the luxurious stay at affordable prices. The hotel’s marketing division has laid out the plan well and the execution of the plan is also well laid. However, the cost that will be incurred during the project is very high, the hotel is aiming at the top of the competition with other hotels and the plan will be successful in spreading the awareness about the hotel. Another observation is that the marketing plan designed is only on long term however the integration of short term plan was missing. The long term marketing plan is through web advertising and advertising. The inclusion of short term plans would have given more options to explore to the hotel. Also, the marketing plans are limited to few tools however there are many tools associated with hotel marketing. Also, it was not clearly stated that what all tasks would be carried out by the team of the marketing division. However, the marketing plan made was well prepared and has left no scope for the failure.
Risk analysis requires proper team work and support from the managers. It has to be analysed from the point of view of budget allocations of the hotel. Probability of risk is measured and different options were also analysed.
For procurement strategy different marketing plans were analysed and best strategy turned out to be web marketing as it provides the most effective and efficient solution to the procurement strategies.
In case of a solicitation process its best to accept the final bids of experienced and quality suppliers. But quality is to be maintained keeping in mind the budgetary allocations.
Procurement monitoring should be done on a regular basis to track the performance of suppliers. Tracking software can be a great help in this case.
As mentioned in the conclusion, marketing plan is inclusive of only long term marketing approaches however, there is always a constant need for the short term marketing approaches as well. Some of the marketing plan that could have been included is the following:
Loyalty program: it is important to incorporate the loyalty programs for the guests who are regular to the hotel; this would include both residential and non residential guests. Hotel could offer them point’s benefits or the perquisites to be the member of the loyalty program.
GM cocktails: The general manager of the hotel should host the cocktails for the corporate houses and the regular guests once in a year. This is a good platform where the awareness about the new hotel programs can be spread.
FAM Trips: The hotel’s sales and marketing division should organise FAM trips that is familiarization trip for the local bookers from travel and trade, automotive industry and the corporate houses. This will help in gaining the more business as the hotel will show them around the hotel and also these FAM people can experience the services.
Booker’s party: At every quarter, the hotel should organise the booker’s party where the hotel will recognise the bookers who have given the maximum business to the hotel. This could be done by giving the bookers with the free stay in the hotel’s chain or a dinner for two in the restaurant or any other lucrative gifts.
Marketing tie ups: Another way to enhance the business is by marketing tie-ups that the marketing division can have. The tie ups can be the credit card companies or the business houses or with retail giants.
The above marketing tools are recommended to be incorporated in the marketing strategies of the hotel as they would certainly help in increasing the awareness as well as the business of the hotel.
1) It is best to allocate major chunk of budgetary allocations to Web marketing as they tend to increase the profits more.
2) Risk evaluation for each and every outcome should be done before reaching any conclusion
3) In the solicitation process the final bid should be made to the supplier that has highest experience and charges the efficient price as per effective budgetary allocation.
4) Proper tracking software should be employed to track the performance of suppliers regularly. This will help the hotel to review the required changes quickly and give a direction to suppliers to improve performance when necessary.
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