Expansion and plan development
The facility management department concentrates on some of the following themes that provide the strength and weakness of the management. Here are some questions that should be reviewed from time to time by the mangers. The following section studies the possible threats that can confront the group expansion plan. It also offers some valuable solutions to counter the threats. 1. Labor & skills shortage – the lack of skilled labor can be a problem to the Nirvana management group as labor shortage is slowly becoming a world wide problem.
The demographics, lagging wages, and a bad industry reputation are some of the causes of the labor shortage. In this case, it is required that the management develops strategies to promote a rewarding career to the employees, and utilize some of the best training and retention practices for the benefit of its employees. If in case, the company is unable to manage skilled labor, then it can also opt for guest workers – who work on seasonally up to 10 months.
Paying for efficiency, and higher productivity, Cross-training and cross-utilization are some of the new concepts for the hotel industry which can be put into use. 2. Construction costs – the rising costs of furnishings, fixtures and equipment material, fuel, concrete, and transportation costs will be some important factors that can adversely affect the expansion process. The delivery of material at the site and the sub-contractors can be directly affected by the rising prices, and subsequently the project schedule.
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The plan to save the expansion process from such factors is that the management needs to regularly study the markets changes for labor and material costs and ensure that the interest and profits are maintained. Use of pre fabricated structures, cost effective strategies, efficient material supply system can be put to use to avoid over costs. 3. Demographics and Travelling trends – the Nirvana expansion need to address the multi-generational needs, requirements and desires of the clients.
The variety of customers that will be catered by the Nirvana group will range from aging consumers to younger travelers. It is important for the management to bring the age groups together and begin to serve their different habits, patterns and needs. The thriving model for true solutions will require long lead times. If these ideas are applied intelligently by the expansion team, it will definitely offer a key competitive advantage. 4.
Hotel Profits – the expected revenue out of the Nirvana expansion will definitely be tend to get affected by 1) rising operating costs that will decrease the revenue 2) requirement of higher investment that will substantially bring down the profits 3) rising labor costs and government regulations 4) higher interest rates and higher equity return expectations. All these factors together will decrease the profits and the revenue for the Nirvana expansion process by 24 months. Most of these factors are out of the management control, but steps can be taken up to reduce the ill effect of these factors on the expansion of the Nirvana group.
Some of the solutions that can be put forward to the organization are: employing yield management strategies within the group so that the owners can increase their revenue, make use of inventive investment and meticulous oversight of fund expenditures so that the rate of return can be significantly increased, better employee retention techniques, use of contracted labor and retired experts can significantly cut down the costs, employment of energy saving techniques and effective hotel design methods can save more funds for the group.
5. Branding – there has been a sudden rise in the branding structure of the hotel industry within the last 5 years. Many major hotel groups have come up with small franchisee organizations and spin off management companies in order to establish themselves more firmly in the hotel industry all together as a new and unique brand. These brands have brought in more confusion into the minds of the customer. For starters like the Nirvana group, who plans to expand its services by 25% in UK, it can be a difficult stage.
However it has bee analyzed by the industry experts that the effect of branding will go down as the hotel industry matures. At this existing time, the weaker brands tend to get broken off or bought by the stronger hotel brands, therefore to avoid this, the Nirvana management group, which is planning an expansion, should be careful and focused on being more creative, offer new alternatives as compared to the other marginal brands, so as to attract the new generation customer.