Case Analysis: Argentina Suites
What are some of the major problems facing Argentina Suites?
Argentina Suites faced many problems from the beginning idea to convert a 75,000-square foot building into a hotel. The owner, Abraham Sinclair decided to enter the hotel business with no market research, no hospitality experience, and rough financial projections. The decision to enter a market without knowing what ones getting into, led to major problems facing Argentina Suites. Some major problems include inefficiency, lack of technology, threat of new entrants, unethical behavior and transferring of information.
Max, a person very familiar with Argentina Suites took responsibility to manage the hotel and to make it a better place to stay. In doing so he went around the hotel to start asking questions. Max quickly discovered many flaws in the hotel, one being how inefficient the hotel is overall. Observing the work processes and procedures, he noted that reservations were taken by telephone and written in duplicate using carbon paper. This problem caused different companies and different individuals within companies to receive different rates. He found that the guest history system consisted of individual registration cards that were stapled to the reservation sheet. These cards were often lost. There was no interface between handling room inventory and handling guest information. There was no computer program that kept track of information about hotel statistics such as a profile of the hotel’s primary customer base. For keeping track of the amount of cash, credit card slips, and checks that entered or left the front office, Osvaldo, head of accounting agreed how it will be much easier and efficient to install computer systems.
Technology plays a big role in solving major problems for Argentina Suites. Being able to keep track of information by using computer programs will help the hotel become more efficient. Most of the new competitors that opened up hotels around Argentina Suites had sophisticated reservations and property management systems. This development used expertise in management, marketing, and information technology. Also, with the five-star hotels opening up in addition to several four-star properties being under construction around Argentina Suites, it is critical for the hotel to remain competitive. To keep competitive, Argentina Suites must introduce new technology to the hotel.
Unethical behavior is another major problem that needs to be resolved for the company to be completely successful. When Max went around asking questions he found that the hotel was secretly tapping into external power lines so that most of the energy received was without accompanying cost. Another scandal involved Argentina Suites’ accountant Osvaldo Olivera, who had been altering bills to decrease taxes. Even another incident occurred when max realized that the restaurant had billed the hotel for 100 percent of clients eating breakfast, when only 75 percent actually consumed breakfast. He found out the assistant controller had been embezzling the other 25 percent for months before getting canned. All of this unethical behavior can end a businesses life. The DGI caught the scandal with the altering bills and began an intense investigation/audit of the hotel. The hotel paid a fee of $300,000 in exchange for consulting services. This kind of attention is obviously bad for the hotel and one that Max needs to fix. He also needs to get rid of employees paid under the table because the government was also cracking down on this. If unethical behavior can be terminated on a large scale, like the incidents mentioned, it might channel down and affect the employees in a way to change behavior unless they want the same outcome, the boot!
Transferring of information between managers seemed to be a major problem for the hotel. Several years the hotel essentially operated without a general manager. Three people...