Harvard Case - Majestica Hotel in Shanghai?
"Majestica Hotel in Shanghai?" Harvard business case study is written by Paul W. Beamish, Jane Lu. It deals with the challenges in the field of Service Management. The case study is 17 page(s) long and it was first published on : Apr 20, 2005
At Fern Fort University, we recommend that Majestica Hotel implement a comprehensive strategy focused on service innovation and customer experience management to achieve sustainable growth in the competitive Shanghai market. This strategy will involve leveraging technology, enhancing employee empowerment, and fostering a strong service culture to deliver exceptional guest experiences.
2. Background
Majestica Hotel, a luxury hotel chain, is facing challenges in its Shanghai property due to increasing competition and changing customer expectations. The hotel boasts a prime location and luxurious amenities but struggles to attract and retain guests, particularly younger, tech-savvy travelers. The case study highlights the need for a strategic approach to address these challenges and enhance the hotel's competitiveness.
The main protagonists are:
- Mr. Li: The General Manager of Majestica Shanghai, who is tasked with improving the hotel's performance.
- The Management Team: A group of experienced professionals responsible for various departments, including operations, marketing, and human resources.
- The Staff: The hotel's employees who directly interact with guests and play a crucial role in delivering service quality.
3. Analysis of the Case Study
The case study presents several key issues:
- Service Quality Gaps: The SERVQUAL model reveals significant gaps between guest expectations and perceived service quality, particularly in areas like responsiveness, assurance, and tangibles.
- Customer Experience Management: Majestica lacks a cohesive strategy for managing the customer journey, leading to inconsistencies and missed opportunities for delighting guests.
- Technological Integration: The hotel's technology infrastructure is outdated and hinders its ability to provide personalized services and enhance guest convenience.
- Employee Empowerment: The current organizational culture discourages employee initiative and limits their ability to address guest needs effectively.
- Competitive Landscape: The Shanghai market is highly competitive, with numerous luxury hotels offering similar amenities and services.
Frameworks used for analysis:
- SERVQUAL Model: To assess service quality gaps and identify areas for improvement.
- Customer Journey Mapping: To understand the guest experience from booking to departure and identify touchpoints for enhancing service delivery.
- Service Profit Chain: To analyze the link between employee satisfaction, customer loyalty, and profitability.
- Porter's Five Forces: To understand the competitive landscape and identify opportunities for differentiation.
4. Recommendations
1. Service Innovation and Customer Experience Management:
- Develop a Service Blueprint: Create a detailed service blueprint to map the entire customer journey, identifying key touchpoints and opportunities for service innovation.
- Implement Technology-Enabled Services: Invest in modern technology solutions like mobile check-in, digital concierge services, and personalized recommendations to enhance guest convenience and engagement.
- Leverage Customer Relationship Management (CRM): Implement a robust CRM system to collect and analyze customer data, personalize communication, and tailor services to individual preferences.
- Create a Service Culture: Foster a culture of service excellence by training employees on customer service best practices, empowering them to make decisions, and recognizing their contributions.
2. Employee Empowerment and Performance Management:
- Implement Employee Empowerment Programs: Provide employees with the training, resources, and authority to address guest needs proactively and deliver exceptional service.
- Develop a Performance Management System: Implement a performance management system that focuses on service quality, customer satisfaction, and employee development.
- Offer Employee Incentives: Introduce incentive programs that reward employees for exceeding customer expectations and contributing to the hotel's success.
3. Marketing Strategy and Branding:
- Target Younger Travelers: Develop targeted marketing campaigns that appeal to younger, tech-savvy travelers through digital channels and social media platforms.
- Highlight Unique Selling Propositions: Emphasize the hotel's unique features and services, such as its location, amenities, and cultural experiences, to differentiate from competitors.
- Build a Strong Brand Identity: Develop a consistent brand identity across all touchpoints, including the website, social media, and guest communications.
4. Operational Efficiency and Cost Management:
- Optimize Operations: Implement lean service principles to streamline processes, reduce waste, and improve operational efficiency.
- Implement Service Level Agreements (SLAs): Establish clear service level agreements with suppliers to ensure consistent quality and reliable service delivery.
- Monitor and Manage Service Capacity: Implement service capacity management strategies to optimize resource allocation and ensure guest satisfaction even during peak periods.
5. Basis of Recommendations
These recommendations are based on a thorough analysis of the case study, considering the following factors:
- Core Competencies: The recommendations align with Majestica's core competencies in providing luxurious amenities and exceptional service.
- External Customers: The recommendations address the changing needs and expectations of younger, tech-savvy travelers.
- Internal Clients: The recommendations aim to empower employees and create a positive work environment that fosters service excellence.
- Competitors: The recommendations focus on differentiating Majestica from its competitors by offering unique services and enhancing the customer experience.
- Attractiveness: The recommendations are expected to improve customer satisfaction, increase revenue, and enhance the hotel's profitability.
6. Conclusion
By implementing these recommendations, Majestica Hotel can transform its Shanghai property into a leading destination for discerning travelers. By focusing on service innovation, customer experience management, and employee empowerment, the hotel can achieve sustainable growth and solidify its position in the competitive Shanghai market.
7. Discussion
Alternatives not selected:
- Cost-cutting measures: While cost-cutting measures might provide short-term relief, they could negatively impact service quality and customer satisfaction.
- Merging with another hotel chain: This option could lead to loss of brand identity and autonomy.
Risks and Key Assumptions:
- Implementation challenges: Successfully implementing the recommendations requires strong leadership, effective communication, and a commitment to change management.
- Market volatility: The competitive landscape and customer preferences are dynamic and can change rapidly.
Options Grid:
| Option | Advantages | Disadvantages | Risk |
|---|---|---|---|
| Service Innovation & Customer Experience Management | Enhanced customer satisfaction, increased revenue, improved brand reputation | High initial investment, potential implementation challenges | Market volatility, changing customer preferences |
| Employee Empowerment & Performance Management | Improved employee engagement, enhanced service quality, reduced staff turnover | Potential for increased costs, need for effective training and development | Employee resistance to change, lack of management support |
| Marketing Strategy & Branding | Increased brand awareness, targeted customer acquisition, enhanced brand loyalty | High marketing costs, need for effective targeting and messaging | Competitive landscape, changing consumer trends |
| Operational Efficiency & Cost Management | Reduced operating costs, improved efficiency, enhanced profitability | Potential for job losses, need for careful planning and implementation | Market fluctuations, potential for service quality decline |
8. Next Steps
Timeline:
- Month 1-3: Develop a comprehensive strategy and action plan, including budget allocation and resource allocation.
- Month 3-6: Implement key initiatives, such as service blueprint development, technology upgrades, and employee training programs.
- Month 6-12: Monitor progress, evaluate results, and make adjustments to the strategy as needed.
Key Milestones:
- Develop a service blueprint: Completed within 3 months.
- Implement a CRM system: Completed within 6 months.
- Launch a new marketing campaign: Completed within 6 months.
- Implement employee empowerment programs: Completed within 6 months.
By taking these steps, Majestica Hotel can position itself for success in the dynamic and competitive Shanghai market.
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Case Description
Majestica Hotels Inc., a leading European operator of luxury hotels, was trying to reach an agreement with Commercial Properties of Shanghai regarding the management contract for a new hotel in Shanghai. A series of issues require resolution for the deal to proceed, including length of contract term, name, and staffing. Majestica was reluctant to make further concessions for fear that doing so might jeopardize its service culture, arguably the key success factor in this industry. At issue was whether Majestica should adopt a contingency approach and relax its operating philosophy or stick to its principles, even if it meant not entering a lucrative market.
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