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‘HiLite’ hotels (HiLite) is a listed hotel chain, located in the country of Deeland. Deeland has a developed economy, which has experienced strong growth in the last 15 years. Deeland also has a highly-developed tourism industry.
HiLite’s competitive advantage is built on its highly competitive pricing strategy, and this has been a significant factor in its current position as the leading hotel brand in Deeland. HiLite normally attracts those travellers seeking ‘no frills’ accommodation, at a reasonable price and as such, is referred to as a ‘budget’ hotel chain. Every HiLite hotel room provides an en-suite bathroom, TV and free Wi-Fi internet access and each hotel offers a complimentary breakfast service.
However, HiLite hotels do not provide additional services such as bars, restaurants or leisure facilities. Every HiLite hotel has a similar layout and design, and are mostly located at airports, city centre locations and close to major transport routes, such as Deeland’s main road networks and train stations.
HiLite was founded about 40 years ago beginning with two hotels in the capital city of Deeland. Since then it has grown significantly, operating 510 hotels (approximately 46,000 rooms) by the end of the 20X7/20X8 financial year (Note: HiLite’s financial year end is 30 June). It is now the largest hotel chain (in terms of number of hotels) in Deeland. Since it was founded, all of HiLite’s growth has been achieved organically within Deeland, with investment being gradually made in new
‘HiLite’ branded hotels each year throughout Deeland. Although it is currently the leading hotel brand in Deeland (in terms of market share), HiLite faces fierce competition from several home-based and international hotel chains.
In the last 10 years, HiLite has made significant investment in web-based technology, which has resulted in over 75% of room bookings in the 20X7/20X8 financial year being completed through the HiLite website. HiLite operates with lownumbers of staff in each hotel but the staff in these hotels is highly trained to provide excellent customer service.
HiLite values its staff highly, and is strongly committed to staff development and retention. HiLite pays above the Deeland national minimum wage in order to encourage staff commitment and loyalty.
You are a senior business analyst working within the business analysis department of HiLite. You report to the chief business analyst, who reports directly to the finance director on a wide range of business and strategic issues.
The following exhibits should be used to undertake the tasks asked of you by the chief business analyst and the finance director:
Exhibit 1: Chief Executive’s Statement: Report on Performance for year ending 30 June 20X8
Exhibit 2: Deeland Hotel Industry Report 20X8
Exhibit 3: Factsheet relating to HiLite’s proposed acquisition target
Exhibit 4: Deeland Daily News article
Exhibit 5: Extract of a senior management team briefing
Exhibit 6: Board meeting minutes November 20X8
The case requirements are included in the tasks shown below:
1 The board of HiLite is currently looking to develop the HiLite business model in Veelandia, a developing country with good growth potential. However, as operating in a different country would be a new strategic direction for HiLite, the finance director has stated that before any such strategy is considered, it is important to understand the key factors in its home country of Deeland, which have driven HiLite’s success.
Required:
(b) Using the factsheet referred to above and any other relevant information, prepare a report for the finance director, which evaluates the proposal to acquire the Comfi Stay hotel chain. (16 marks)
Professional skills marks are available for demonstrating evaluation skills in presenting a balanced and objective appraisal of the relevant information relating to the proposed acquisition of the Comfi Stay hotel chain.
(4 marks)
(39 marks)