THE PORTMAN HOTEL COMPANY

Group A1 Ashwani Rathore Krishna Sandhya Shubham Mitra Subhransu Sahoo Tripta Kaur Bath

Problem Statement

PESTCL Analysis Political Most of the San Francisco hotels had unions representing their employees. Since multiple unions were ready to represent the employees, the employers had a tough task. Meeting the demand of each and every union was an uphill task and employers were under constant fear that if they dont handle the employees carefully then, the unrepresented employees might ask for an union. Deregulation in airlines allowed many new firms to enter the market and the financial impact on both established and new airlines was enormous. Although deregulation fostered competition and the growth of new airlines, it also created a regional disparity in ticket prices and adversely affected service to small and remote communities. Airline labour unions were reeling in the face of wage reductions, pension cutbacks and job uncertainty. Airline Pilots Association was the single major union that represented more than 60,000 pilots. But Southwest pilots belonged to an independent union.

EconomicLabor costs in America are thrice that of Asian industry. This reduced the profitability of the hotel while maintaining the same service standards. Some of the facts in the case which suggest this are 1) The base pay of the valets was about the same as a maids in comparable hotels: about $7.50 an hour. 2) The differentiating factor for The Portman Hotel Company was that, the Personal Valets could expect as much as $200. 3) The Portman competed with San Franciscos finest luxury hotels. Rates for single rooms at each hotel ranged from $140 to roughly $250 per night, The Portmans rates were a little higher, ranging from $185 to $320. 4) The monthly total budget for Personal Valets salaries and benefits was about $91,000 and the total monthly budget for the hotel was $1.1 million. Social1) There were primarily two types of customers, Lovers and Rejecters. Lovers were those who felt they deserved a high level of personal service while Rejecters were those who preferred independence and anonymity. Telling one from the other was an important aspect of the Personal Valets. 2) The typical American Luxury hotel was organized very differently from Portman Hotel. The maids cleaned the rooms, someone else stocked the bar, a houseman vacuumed and dusted the hallways in short, it was organized by speciality and lack of coordination between them did not create a problem. On the other hand at the Portman, the Persona Valet did all these in coordination

with the other groups of workers in the hotel. The Portman Hotel in comparison with other hotels was disorganized and relied heavily on the interaction between different groups of workers. Technological No such factor accounted for in the case. Cultural Asian Hospitality model was a very different one from the US. The concept of Personal Valets was being implemented for the first time in the US. So, the Americans were not accustomed to giving tips to PVs and they did not understand this concept of PV properly. Even the employees of Portman hotel considered PVs as maids. Legal Every Portman employee was called an associate and each one of them signed a contract. The contract included a Bill of Rights. The associates have rights and have a written contract guaranteeing those rights. Its fully enforceable in a court of law.

SWOT LISTING Strengths: Good brand name of the Portman hotel in the market attracting large number of customers Efficient and talented employees hired by the SRI Customized and personal service strategy to be provided to each and every guest Concept of no rules for the guests aimed at leaving guests happy and was one of the USP of the hotel. High quality and cost effective service There was a significant amount of unity and inclusiveness among employees as only 9 of the hotels engineers were in a union while the others were unrepresented. This was very different from other hotels in San Francisco which had 8 or 9 unions representing employees.

Weaknesses: The Portman group faced a lot of competition from other luxury hotels in San Francisco. Higher operating costs were faced by Portman due to large amount of customization of services. The personal valet system which was implemented to serve as a USP of the portman group turned out to be a weakness as it lacked clear role definition and the PVs were highly discontented due to lower tips. American customers lacked understanding about the PV system and it could not be utilized by guests to the fullest.

Opportunities:

Portman was the only hotel in San Francisco to have PVs, this was a new concept and provided a big opportunity to the hotel. Increase in the occupancy levels was almost 100%

Threats: PV system was labor intensive and the labor costs were three times as high in America as in Asia. Large amount of competition in the luxury hotel business was a major threat. Industry is faced by seasonal demand making it difficult to employ permanent staff. Internal conflicts among the PVs because of floaters who are having difficulty in coordination with the regular PVs.

Factors: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Cost Effective implementation of Asian Standards in American Hotels Job satisfaction of the PVs Motivation of employees Departmentalization Assignments of PVs to the rooms Low wages of the PVs Low tips by the customers Treatment of the PVs by the other groups of employees Broad work definition of the PVs Growth options in the job

Factors : Categorisation of travellers into convenience, time-oriented business travellers and price sensitive leisure travellers. Two tiered pricing structure Bond loyalty between employees and company

Theoretical Linkage: Kellehers leadership style combined flamboyance, fun, and a fresh, unique perspective. Although Kelleher was unconventional and a maverick in his field, he led his company to consistently new standards for itself and for the industry. Sincerely committed to his employees, he generated intense loyalty to himself and the company. He was a perfect mix of both people-oriented and task-oriented leader. He placed himself in the 9-9 block (Team Management) of the Managerial Grid. He had both concern for people and production (Participative or Democratic Leadership style). He was a visionary who led by example.

The Hertzbergs two factor Theory states that if the hygiene factors are not fulfilled the employees are dissatisfied. The hygiene factors were fulfilled in case of the Southwest employees. Significant care was taken to fulfil the motivation factors which increased the job satisfaction of the employees. Employee initiative was supported and encouraged. Advanced employee training occurred regularly. Employment at Southwest was highly desirable. Efforts were made to share and instill Southwest Spirit.

Critical Factors: 1. Cost Effective implementation of Asian Standards in American Hotels Portman aim was to bring the Asian standards of hospitality to U.S. Along with Portman two new hotels, Mandarin and Nikko, had recently opened with the same objective of bringing Asian style service to the U.S. market. The Portmans rates were slightly higher than that of these hotels. Thus, the competition in the market was quite high. On the other hand the concept of personal valet was labor intensive and labor costs were three times greater in America then in Asia. 2. Job Satisfaction of the PVs The PVs were the key employee for providing exceptional service as they had the maximum interaction with the customers. So, it was the prime necessity that the PVs should be motivated. But PVs had wages which was equivalent to that of the maids (about $7.5 an hour), tips were far below the expectation and they also felt that the other groups treated them as maids. Also working with other groups was difficult and there was a sense of

departmentalization. All these had a negative impact on the PVs attitude towards work and they started disliking their assignments. 3. Broad Work Definition of the PVs The PVs were expected to do everything to fulfil the customers request as long as it is moral and legal. It meant that aside from the butler-like tasks, PVs had to clean the room, perform maintenance, restock the room and clean the hallway and so on. When the original PVs were hired, they had been told that 50% of their job would be cleaning but in practice it turned out to be 80%. This raised concerns about the content of the job. 4. Assignment of PVs to the room. At times PVs had to cover for the others especially when the customers used to buzz. Also they understood that constant reassignment hurt tips, which was the most important of all the rewards for a PV. Theoretical Linkage: 1. The Adams Theory of Equity, which states that the employees compare their ratios of outcomes-to-inputs of relevant others, is applicable here. Among the four referent comparisons stated in the theory the type Other-Inside applies here. The people of this type try to compare themselves with other individuals or groups within the organization. In the Portman Hotels case the PVs were comparing themselves to the maids and the state of inequity was created. 2. The Hertzbergs two factor Theory is applicable here. According to this theory the employees are dissatisfied if the hygiene factors are not fulfilled. In the Portman Hotels case the employees were not happy with the hygiene factors such as salary, status which resulted in dissatisfaction. The Hygiene factors should be fulfilled to avoid dissatisfaction. 3. Vrooms Expectancy Theory holds good in the Portman Hotels case. According to this theory employees will be willing to work hard if they believe that their actions will get them desired outcome. Here, the PVs were demotivated by the low salary, low amounts of tips and low status (being treated equivalent to maids).

Decision Alternatives: Option1: Add one or two cleaning staff per floor so that when a guest is not in the room he/she can clean the room. The PV then wont have to spend most of his time on cleaning and can give the guests all the personal attention they were hired to give. The plan was to engage PVs in catering guests for 50% of the time. However, the current work structure led restrictions to the time the PVs spent with their guests. Option2:

Introduction of team leaders to delegate work and coordinate among team members. The team leader gets paid more than the regular base salary of a valet. The slouches in each team will have to automatically start contributing significantly as they will have to report to the captain. Periodic awards can be given to teams based on their performance and the performance of the leader.

Option 3: Clearer process definitions could eliminate a lot of problems. Like giving a clearer picture of how to clean the rooms and deal with the guests laundry and other activities will help in coordination of activities of the floaters and reduce confusion.

Problem Statement :

SWOT : Strength :

It is a great climate and culture for employees.

It is considered one of the greatest companies to work for based on previous surveys of employees.
Weakness : There may be an issue with a lack of unity in decision making. Southwest does not pay low-level employees well, which could be seen as negative in the lack of support for employees. However, that is offset by greater pay and benefits for long-term employees. Factors: Loyalty bond between employees and company