The Great Eastern hotel, a privately owned, independent, five-star deluxe hotel located in Hong Kong's commercial district, is faced with a turbulent external environment owing to the current financial crisis. Since its inception six years ago, the hotel has grown in prominence during the bustling economy from 2003 to 2007, and it has been one of the top performers in the upscale and luxury market segments over the four years preceding the economic crises. The hotelľ's main target market segment is the business traveler (75 percent of room bookings) who has no problem with paying USD 350 per night for a room. During the past six months, however, the hotel has been a victim of the severe economic upheaval, which has led to a significant reduction in room bookings from the business travel segment. This has reduced profits significantly to the extent that the hotel is no longer able to cover fixed costs. The owner, Jerry Kong, has called an executive committee meeting to discuss the future direction the company should take in the immediate term and in the long term to sustain its competitive advantage. 1. What issues should Jerry and the executive committee address? Why? (Hint: Make assumptions where necessary, including mission and vision statements, as well as goals, strategies, and objectives.) 2. Given the preceding information, what are Jerry's options? How should they be evaluated? Make assumptions where necessary. 3. What should the hotel do in the short term and in the long term? Make assumptions where necessary to arrive at your decisions. 4. Why is it difficult to answer the preceding questions? Do we have clear answers for issues and challenges in real life? 5. Do managers and executives in hospitality and tourism organizations always have sufficient and reliable information to make decisions?
The Great Eastern hotel, a privately owned, independent, five-star deluxe hotel located in Hong Kong's commercial district, is faced with a turbulent external environment owing to the current financial crisis. Since its inception six years ago, the hotel has grown in prominence during the bustling economy from 2003 to 2007, and it has been one of the top performers in the upscale and luxury market segments over the four years preceding the economic crises. The hotelľ's main target market segment is the business traveler (75 percent of room bookings) who has no problem with paying USD 350 per night for a room. During the past six months, however, the hotel has been a victim of the severe economic upheaval, which has led to a significant reduction in room bookings from the business travel segment. This has reduced profits significantly to the extent that the hotel is no longer able to cover fixed costs. The owner, Jerry Kong, has called an executive committee meeting to discuss the future direction the company should take in the immediate term and in the long term to sustain its competitive advantage. 1. What issues should Jerry and the executive committee address? Why? (Hint: Make assumptions where necessary, including mission and vision statements, as well as goals, strategies, and objectives.) 2. Given the preceding information, what are Jerry's options? How should they be evaluated? Make assumptions where necessary. 3. What should the hotel do in the short term and in the long term? Make assumptions where necessary to arrive at your decisions. 4. Why is it difficult to answer the preceding questions? Do we have clear answers for issues and challenges in real life? 5. Do managers and executives in hospitality and tourism organizations always have sufficient and reliable information to make decisions?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
100%
Transcribed Image Text:Opening Case
The Great Eastern hotel, a privately owned, independent, five-star deluxe hotel located in Hong Kong's commercial district, is
faced with a turbulent external environment owing to the current financial crisis. Since its inception six years ago, the hotel
has grown in prominence during the bustling economy from 2003 to 2007, and it has been one of the top performers in the
upscale and luxury market segments over the four years preceding the economic crises. The hotel's main target market
segment is the business traveler (75 percent of room bookings) who has no problem with paying USD 350 per night for a
room.
During the past six months, however, the hotel has been a victim of the severe economic upheaval, which has led to a
significant reduction in room bookings from the business travel segment. This has reduced profits significantly to the extent
that the hotel is no longer able to cover fixed costs. The owner, Jerry Kong, has called an executive committee meeting to
discuss the future direction the company should take in the immediate term and in the long term to sustain its competitive
advantage.
1. What issues should Jerry and the executive committee address? Why? (Hint: Make assumptions where necessary,
including mission and vision statements, as well as goals, strategies, and objectives.)
2. Given the preceding information, what are Jerry's options? How should they be evaluated? Make assumptions where
necessary.
3. What should the hotel do in the short term and in the long term? Make assumptions where necessary to arrive at your
decisions.
4. Why is it difficult to answer the preceding questions? Do we have clear answers for issues and challenges in real life?
5. Do managers and executives in hospitality and tourism organizations always have sufficient and reliable information to
make decisions?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education