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The Carlson Company was founded by Curt Carlson in 1938 and grew to become one of the largest privately owned American companies. Company majors in hospitality industry and owns several franchisees in the hotel industry. Carlson Company purchased Radisson Hotel, a nationally known hotel named after Pierre Esprit Radisson, a French explorer. In the following decade, the hotel expanded and had10 hotels, mainly in Midwestern pat of the U.S. Commitment to growth saw it expand to 360 locations and 47 countries by 1998. Radisson hotels had an expansion rate never seen before in the hospitality industry. The expansion was a product of its expansion of the growth strategy dubbed “growth at any cost” strategy. The strategy saw the hotel expand at the rate of one hotel every seven days. According to Schroeder, Goldstein & Rungtusanatham (465), this growth strategy focused on information technology and hotel owners ensuring that the customer consistently returned to the hotels. This strategy yielded tremendous quality in terms of hotel diversity but gave the hotel a brand image that was unfocused. Another notable effect of the strategy is that the Radisson hotels alignment with other hotels instead of aligning with customers who pay for the service and earn the hotel revenue presented challenge to the hotel customers care and the management. This changed in 1998 when the management decided to change the strategy and focus more on customers. The hotel was to become customer-oriented making its brand a customer-focused brand. The reason the management gave for this move was logical, but it turned out that the hotel should have taken the move earlier that this. The management stated that they had “rediscovered that their primary customer should be the customers not hotel owners.” This move gave birth to initiatives that would make the hotel a customer-centered brand. This included new information technology initiatives, service guarantees, a measurement program to measure guest satisfaction, and an employee satisfaction program to measure the satisfaction of the employee. With these incentives, the hotel management committed to stepping into the 21st century as a true customers-oriented learning organization. Indeed, the hotel managed to change from a “friend of hotel owners” model to “a champion of guest model (Schroeder, Goldstein & Rungtusanatham 466).
Analysis of the Problem
The main problem that faced the hotel was low improvement in quality, which was a result of overemphasis on expansion. As Schroeder, Goldstein & Rungtusanatham (466) note, the hotel provided quality service but was an “unfocused” brand. This brought about a service challenge. A strong brand with high quality, consistency, and uniformity is a clear-cut definition of the brand a business offers to customers. The lack of a proper brand definition is like the lack of identity. In these circumstances, there was no clarity in what the Radisson brand stood for. Customers prefer products that they understand or know. Radisson brand was just another hotel offering hospitality services and expanding wildly to distant locations without something proper to offer other than physical presence and a popular name.
Having a franchise can be delusional and can be confused for real business while the business instead of focusing on selling aims at serving customers and making real profits. The customer is the sources of revenue for the hotel; therefore, having a hotel room with no customer to use is insignificant. The expansion, according to cost strategy, had ignored the need to attract and retain more customers. The company needed to change its strategy in order to compete favorable in the 21st century.
Functional solutions were necessary to deal with the challenges experienced. Since the hotel had expanded to numerous locations, it would be wise to shelve the expansionist interests espoused by the growth at any costs and start attracting customers to fill the hotel rooms. This could be achieved by using a customer-centered approach or strategy, exactly what the hotel management did. First, the hotel developed five strategies to improve the quality of services provided to the customers. The strategies were focused on the customer, individualized marketing, and development of hotels in key locations; they leveraged the advantage of Carlson companies and strengthened the presence of the brand on global arena.
The focus on customer aimed to improve the quality of services, their consistence in giving the guests an exceptional Radisson experience every time they check in a Radisson hotel. It ensures that high service standards are sustained to realize long-term customer royalty as well as improve brand equity. The individualized services and marketing improved information technology was used to anticipate customers’ needs, decipher their preferences, and treat them individually. The strategy to develop hotels in key locations aimed at establishing the brand in key markets and providing Radisson clients with service with the help of the partners of hotel to meet high standards in areas where customers are likely to need the services. This was very different from the blind “expansion at all costs” strategy. Carlson companies advantageous leveraging was meant to pure synergies companies under Carlson franchise, while strengthening global resent was meant to spread a strong Radisson brand message across to world especially in the areas where the franchises has hotels.
These strategies needed a proper framework order to realize the desired outcome. As a result, Stage and O’Hanlon initiated the number of strategic programs which included 100% guest satisfaction guarantee program, fully integrated guest information system, guest satisfaction measurement program and employee satisfaction measurement program, guest recognition and reward program, and a genuine hospitality program.
Summary of the case
Radisson case study presents a process of operations, management improvement, and enhancement of efficiency. The change of strategy was the key to crating ability to serve customers and increasing revenues. Since Carlson’s takeover of the Radisson hotel in 1962, the hotel overly focused on the expansion in number of franchises and geographical coverage. The hotel adopted “expansion at all costs” strategy which increased rather the number of franchises than customer base. This changed with the realization that the best target for the Radisson hotels was not owners but the customers who paid for the services. This orientation towards customers gave Radisson the necessary revenue. The hotel discarded the expansion at all costs and aimed at being a champion of guests. This saw the hotel implement five strategies targeting customers, provision of personalized services, and the use of improved information technology and realizing a strong global presence. Alongside the strategies, the management instituted five programs that facilitated the implementation of the strategies and went ahead to conduct pilot studies in the selected hotels. The operation procedures were changed, and employees were trained to implement the new program. All the initiatives taken during this change were productive. Schroeder, Goldstein & Rungtusanatham (469), report that in 2007, “Carlson hotel worldwide had become one of the leading worldwide hotel franchises with five successful brands.” This included “Park Plaza Hotels & Resorts, Park Inn, regent international hotels, and Radisson hotels and parks” (Schroeder, Goldstein & Rungtusanatham 469). The business focuses on providing leisure and quality services to business travelers. Schroeder, Goldstein & Rungtusanatham (469) also report that by “2007, Radision had 400 hotel locations in 63 countries, and further implemented strategies for continued performance improvement which included pre-arrival online check-in, custom designed, beds and “Curtis-C” reservation system that is also accessible through air reservation systems.”