Mc Gill Bsh Final

Bon Star Hotel

“The main thing is to keep the main thing the main thing”

Stephen R. CoveyAuthor, public speaker, consultant

McKenzie ConsultingA. Bech Bruntse, L. Lawaetz, L. Pedersen, S.

Troll

12.04.2023McKenzie Consulting 2

BSH has to professionalize its hotel management and expand its office section

Issue Complication Question Answer

• Unexploited potential of the Bon Star Hotel due to mismanagement

• Non-transparent business practices.

• Unprofessional management

• Run down facilities

• Unutilized space

• How can Krieg Corp. utilize its core competencies to reposition BSH more profitably in the market?

• Refurbish the building complex

• Hire new hotel management

• Outsource additional services

• Reposition BSH as Bon Star Business Center


BSH should offer higher hotel quality at competitive prices

4*

3*

2*

1*

5*

BSH

Hotel Quality

Hote

l P

rice

High

HighLow


Industry Standard Bon Star Hotel

Experienced Management Basic Accomodation Night entertainment Additional Services Sauna/gym facilities Online booking Office facilities

BSH is currently below industry standard


Sell BSH immediately

Turn BSH into Offices

Reposition BSH

Revenue

Initial Costs

Demand

Difficulty of Operations

Profit from Sale

The most profitable solution for Krieg Corp. is to reposition BSH on the market


BSH now BSBC future0

20

40

60

80

100

120

OfficeHotel

Perc

en

tag

eBSH should integrate both, hotel and office solutions


BSH (H

otel

)

Hotel

Indu

stry

Ave

rage

4-5

Star

Hot

els

BSH (O

ffice

)

Office

Indu

stry

ave

rage

0

20

40

60

80

100

120

Min Occupancy

BSHs occupancy rate is below industry average for the hotel and in line with the industry average for the offices


HotelOffice

Importance of collaboration between hotel and office

BSBC


BSBC should offer higher hotel quality at competitive prices

4*

3*

2*

1*

5*

BSBC

Hotel Quality

Hote

l P

rice

High

HighLow


Dismiss Kaplan and layoff excessive staff

Phase 1

Increase current office prices

Focus on core competency:Refurbishment

Hire business lawyer

Renovate hotel

Outsource training and education of staff

Negotiate outsourcing deals

Phase 2

Integrate office section

Hire local GM with hotel expertise

Develop incentive scheme

Launch new webpage

Phase 3

Evaluate and reward performance

Reposition BSH to Bon Star Business Center

Phase 4

Create strategic alliance with office lessees

Evaluate opportunity to sell BSBC

Phase 5

BSH should implement these five phases to reposition as BSBC


The implementation of the five phases will be completed in 2015

2010 2011 2012

Phase 1

Phase 2

Phase 3

Phase 4

Phase 5

2015


Industry Standard

Bon Star Hotel

Bon Star Business Center

Experienced Management Basic Accomodation Night entertainment Additional Services Sauna/gym facilities Online booking Office facilities

BSBC will offer above industry standard quality at competitive prices


Krieg will incur total refurbishing cost of $7.5 million for BSBC

Refurnishing activitites Cost in $Rooms 5.258.440 Kitchen/laundry 1.045.000 Gym 150.000 Spa&Sauna 40.532 Lobby, Hallway etc. 1.000.000

Total 7.493.972


Now

Refur

bish

ing

Wor

st C

ase

Like

ly C

ase

Best

Cas

e-$200,000

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

BSBC Monthly Revenues 2009-2014

BSBC will have greater monthly revenues over a five year time horizon


BSH has to professionalize its hotel management and expand its office section

Issue Complication Question Answer

• Unexploited potential of the Bon Star Hotel due to mismanagement

• Non-transparent business practices

• Unprofessional management

• Run down facilities

• Unutilized space

• How can Krieg Corp. utilize its core competencies to reposition BSH more profitably in the market?

• Refurbish the building complex

• Hire new hotel management

• Outsource additional services

• Reposition BSH as Bon Star Business Center


Questions?


BSH has to change its management and ownership structure to exploit its potential

Poor Hotel Conditions

Ownership Structure

TheftRun down facilities

Management

Lease of land


1-2 Star Hotel

3 Star Hotel Boutique Hotel

4-5 Star Hotel

0

100

200

300

400

500

600

700

Max. PriceMin. Price

Below 125

BSH is currently positioned at the lower end

Bon Star Hotel


1970s 1990s 2000s Now Future

BSHs vs. Competitor performance

BSH Other Hotels

BSH needs to improve performance in order to stay competitive

BSBC


Now

Refur

bish

ing

Wor

st C

ase

Like

ly C

ase

Best

Cas

e-$200,000

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

BSBC Revenues during the first year

Including refurbishing expenses, BSBC might incur a negative revenue in the first year


Critical issues for BSBC

Issue Ease of implementation

Importance

IT Accounting System

Refurbishing hotel

Gym & Spa area Increase Office Space

Additional services

Casino

Facility Management

Online booking


Gym equipment and maintenanceBasic gym equipment lease,

maintenance, operations

Krieg Corp. core competencies lie within refurbishing, the rest will be outsourced

Integrated Facility ServicesCleaning, Facility Management, Security, Catering

Casino operationsRefurbishing of casino space,

running of casino business


By repositioning, BSH will turn into a profitable business with a long term selling option

Bon Star Hotel Bon Star Business Center

• Run down 3* Hotel • 4* quality with comparatively low pricing

• Poor Management • Professional Management

• Well equipped office facilities

• Expanded and integrated office facilities

• Local Customers • International Business Travelers


0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1

BSH's office/room distribution

Office space Hotel rooms

Office/room distribution at BSH


BSH current revenue and expenses

Data Worst Medium BestOccupancy rate 15 17,5 20office rate 14 17,5 21Hotel rooms 208Office rooms 112Price for Room 175

Office 47.040 58.800 70.560 Hotel 163.800 191.100 218.400

95% revenue 210.840 249.900 288.960 5% (Restaurant and shops) 11.097 13.153 15.208 100% revenue 221.937 263.053 304.168

Energy 88.775 105.221 121.667 Salaries 82.117 97.329 112.542 Utilities 37.729 44.719 51.709 Miceallenous 13.316 15.783 18.250


Revenue from BSCB 5 year average

Revenue from Office and Hotel (4-5 star Benchmark)

Rooms: 120 Price 250Office rooms 280

Revenue from office (monthly) (Price = 30 $)Worst (95%) Medium (97,5%) Best (100%)

239.400 245.700 252.000

Occupancy 30 %Revenue (monthly) 270.000

Occupancy 60 %Revenue (monthly) 540.000 -

Occupancy 75 %Revenue (monthly) 675.000 -

Mc Gill Bsh Final

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