(Because of the confidential nature of this work, these examples are provided anonymously.)
Case study 1: Leisure resort
This privately-owned leisure resort operated many different leisure activities to a high standard, yet was not as profitable as its owners thought it should be. We were able to review the portfolio of activities and identify which were more profitable than others (something that had not hitherto been possible because of the limitations of the company’s reporting system). We subsequently recommended a better management accounting system.
Our benchmarking of prices against competing resorts showed that while prices for ‘headline’ activities were in line with the market, the resort was significantly under-charging for ancillary products such as food and drink.
Case study 2: Independent hotel
This long-established hotel came under new ownership. Under its previous owner-managers (now retired), the hotel had been run efficiently and had good staff in place. The chef was talented and knew how to run a good restaurant, the laundry got done on time, the fitness club manageress had good ideas for getting more people in, the front desk staff were smart and helpful. However, the hotel was now seemingly not as efficiently run as it had been, staff morale was lower and bookings were down.
The new owners had appointed a hotel general manager to oversee the department heads. This manager’s previous job had been as area manager for a motel chain. Consequently he did not know as much about running a restaurant as the chef or as much about running a fitness club as the fitness club manageress. His instincts were to take the hotel downmarket, which did not fit in with the reputation of the restaurant (or for that matter the chef) or the quiet location of the hotel out of town in its own grounds.
We were able to recommend to the client that the appointment of this hotel manager had been a mistake and that one of the existing department heads should have been promoted instead (something which happened after we had finished our work).
We also studied the goals of the new owners and analysed the business risks that would prevent them from achieving their goals, for example the potential loss of their talented chef, who was not happy at being asked to produce ‘Sunday carvery for £5.99’. We studied the local market and argued that while competition at the lower end of the market was fierce, there was a gap in the market for an upmarket out-of-town hotel focused on executive business travellers, events and conferences. This has subsequently proved to be a successful strategy for the hotel.