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Bon Star Hotel Case Solution
This case discusses the experience of a New-Jersey-based consultant named Steve McKenzie. His services have been opted for by the client by the name of Krieg Corporation. This organization has acquired a hotel that they are afraid is underperforming. They have decided to hire the consultant and asked him to recommend useful strategies that may improve the business performance of the Bon Star Hotel.
In addition to that, the corporation has awarded him the right to terminate staff as well as suggest whether selling the hotel altogether is a better move for the corporation. McKenzie’s experience in the hotel has been sub-optimal. He has discovered Krieg had withheld information regarding the office complex and outsourced restaurant. He also discovered conflicting business interests within the hotel and a financial structure that made it easy for profits to be siphoned off. All in all, he was taken aback by the power struggle between Krieg and Kaplan. He also received numerous offers from corporations willing to lease or purchase the hotel.
Following questions are answered in this case study solution
Who is the client for this engagement?
Why does the client need Steve McKenzie's services?
What are the client's goals for this project?
How well equipped is Krieg Corporation to operate a hotel and casino?
How would you rate the performance of the Bon Star Hotel manager?
a. How would you improve the operational performance of the Bon Star Hotel?
b. What recommendations would you make to your client?
c. What would our role be moving forward?
d. Would we replace the project manager? Why/Why Not?
Case Analysis for Bon Star Hotel
1. Who is the client for this engagement?
The main client for this engagement is Krieg Corporation. This organization was established in 1974, as a multinational construction company. Krieg Corporation primarily deals with the construction, renovations, and refurbishing of large buildings. These include hotels, hospitals, and even convention centers. The corporation has made decent revenues ranging between 100 to 150 million USD in a year. It was one of the first companies that established itself after the country of Namistan gained independence.
After the dissolution of the Soviet Union, Krieg Corporation took advantage of the numerous opportunities available in Eastern Europe and Central Asia and with its risk-taking ability became one of the first western companies off the ground. Krieg Corporation is the client for this engagement that Steve McKenzie is primarily handing over his report on the Bon Star Hotel. The Bon Star Hotel was built in the 1970s and it had been utilized as a venue for conventions and official functions at the start. It also provided a reasonable accommodation to mid-level government officials. After the country of Namistan gained independence, the hotel went from corporation to corporation and had multiple changes in ownership before Krieg Corporation acquired it in the year 2001.
The Bon-Star Hotel is a 400-room hotel with several large meeting rooms along with a casino. The hotel’s casino attracted many local and foreign tourists. The hotel, itself had also been used for several weddings and other functions. When the Krieg Corporation acquired the hotel, it was reported to have occupancy rates between 10 to 15 percent. Seemingly, the hotel seems to be at par with its competing hotels, however, Krieg Corporation which primarily specializes in construction and renovation wants to check whether its acquisition is paying off. Therefore, they have hired a consultant to look into it and report back to them. Thus, making them the client for this engagement.
2. Why does the client need Steve McKenzie's services?
Steve McKenzie was a consultant that took on projects that most other consultants thought to be difficult. He was a New-Jersey-based management consultant and had worked on various hotel projects, therefore, the project on Bon Star Hotel appealed to him. The client, Krieg Corporation, has asked for Steve McKenzie’s services because they require him to formulate a strategy to improve the business performance of Bon Star Hotel. The client of this engagement, Krieg Corporation needs the consultant services to assess the business performance of the hotel and have him put forth a reasonable strategy to rectify and remedy the situation of Bon Star Hotel. The client has also told Steve McKenzie that if he advises that the Bon Star Hotel is beyond remedy then selling the hotel is a viable option for them as well.
McKenzie has been given very little information before his arrival at the hotel. Nonetheless, the client has assured him that the hotel staff and management will provide him with the necessary documentation. Despite his willingness to work on the short timeline of only one week, McKenzie was skeptical regarding the level of cooperation the hotel staff would give him.
Therefore, he tried to look for information via the internet but there was no online presence of the hotel. McKenzie was still positive as he has had many experiences turning around underperforming hotels in the past. His usual recommendation included a change in marketing strategy along with cost-reduction programs that resulted in dramatic improvements in the overall hotel business performance. In addition to that, the client, Krieg Corporation has given Steve McKenzie the right to terminate staff if he feels that they are not performing up to the mark. It is interesting to note that this is not limited to the hotel staff but even the general manager is not exempt from this possible termination.
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