The Inn on Cortes Island

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The tourism industry in British Columbia has been growing rapidly over the past years thus making it quite possible for hotels within the hospitality industry such as Cortes In to enjoy more commercial success. As of the year 2000, the region had over 22 million visitors who raked in an amazing $ 10 million.

Additionally, the tourism mix of the district of British Columbia did not only come from locals but also from foreigners ensuring that demand is stable. Despite the fact that business opportunities did present themselves for those within the hospitality industry in Cortes Island, it apparently became difficult for those within the tourism industry especially inns such as The Inn on Cortes Island due to the threats on tourism industry that were brought by the 9-11-01 attack by terrorists that reduced tourist traffic.

Issues of human resource availability and skill levels of those employees expected to serve within the industry also made it hard for the industry to flourish due to the perception jobs within that industry did not pay well. Additionally, the outbreak of SARS and the west Nile virus made it hard for the tourism industry to flourish.

The Task environment within the Island was suitable and good for business considering that the industry raked in over $ 10billion annually. Vancouver was well known for its business expos and this had made British Columbia a respected destination in the tourism industry attracting millions of people especially during expos which brought the society together. The only form of political hostility arose from terrorism activities that followed 9-11 bombings.

The availability of websites, DVD/CD technology available to customers meant that the customer experience was maximized. The task environment was thus highly favorable due to the fairly good political, economic and socio-economic culture that was good for tourists arriving from local and international destinations.

The Hotel and hospitality industry within British Columbia was a free and fair industry in accordance with the principles of free market economy, meaning that just as Jonathan Armitage entered the industry since he had the capital, any other participant could to enter the industry.

This fact made the threat of entry quite high within the market. Due to the fact that there were other many similar Inns and resorts in the region, some of which were in the high end and low end of the market this meant that consumers had a wider range from which they could choose from. Thus, making the business environment even more competitive.

Hollyhock retreat resort is one such resort that offered camping facilities which can serve as a substitute for hotel rooms. Despite the unique ambience of the ICI, the presence of camping sites and Rustic dorm rooms have in some way increased the threat from substitute products because individuals who dont opt to sleep in rooms may go to tents hoping to get close to nature.

The product and service

The Inn at Cortes Island is an establishment that targeted mainly middle income earners who paid somewhat average fees to enjoy their services (the average fee per room is $ 225 and $ 110 per cabin). These prices were found to be suitable for middle income earners who frequently toured the Inn and recommended it to others.

The problem is that the price is too high for some target customers turning them away. The Inn had both rooms and cabin spaces facing the beach, Jacuzzi tubs, fireplaces, DVD/CD players for entertainment, and high quality linen in rooms, that were suitable for couples, tourists and even weeding events. Additionally, apart from offering sleep facilities the Inn also provides local gourmets and exclusive food.

The product design should also be differentiated for high end customers. The design of the room was quite cool because it was done by artists who ensured that earth tones were used to create an atmosphere of relaxation which was expected by the customers. In addition, the rooms and furniture ware fitted with high quality linen to ensure that the place looked good. The design of place has no weakness.

The Inn used its website as part of their promotion tool and thus designed it properly. Additionally, the hotel depended upon word of mouth to promote its brand.ICI management also hired A media consultancy farm to create publicity for them occasionally. The current promotion efforts are not enough and should be more vigorous.

Market segment

The intended market of The inn Cortes Island was tourists and locals who especially fell under the middle class bracket of the economy who were searching for a unique spot that had the best ambience.

The segmentation is good and highly attractive having no weakness. Other competitors within the Island were Hollyhock Retreat Resort and April Point, which provided high end services; also there were other many resorts and Inns in the Island which could provide services similar to ICIs thus making competition stiffer. Because the Inn did not offer high end services it is bit of a disappointment for customers with high end needs.

The competitive advantage of ICI was the Inn had unique ambience and design, a good website and world-class cooks together with the availability of capital to expand the business. The Inn serves the affluent middle class who need to run away from the busy urban environment and go to the Island to watch and enjoy nature. Customers visiting this inn usually wish to have some peace and spend time with their loved ones.

The technology

The availability of a beautifully designed website has made it quite easier for the Inn to access its clients and serve them better. Also other technologies such as the availability of DVD/CD players for entertainment have ensured that guests who visit the place are well catered for in terms of entertainment.

Management

Jonathan is the sole shareholder and CEO the Inn. He decided to hire someone who would take the position of a general manager to ensure a smoother day to day running of the organization. ICI has its organizational structure divided into four main functional divisions, which include the front desk, housekeeping, maintenance and grounds, and food services each of this functional area is headed by an individual manager.

At the beginning, the owner had decided to hire a mother and son team with the mother serving as the general manager while the son serving as the chief chef but the decision turned out to be a bad one the forcing the owner to employ a more experienced and professional general manager, Edward Bourgogne. Upon his arrival the general manager put in place new systems and brought in a new chief chef Jackie Newcome, a move that saw improvement in the relationship and quality of work in the Kitchen.

Investment-Pay Back Exit Plan

The construction of the Inn was made possible by the help of loans and the forecasted Revenues are expected to assist the shareholder to repay the loans. The management forecast expects that approximately 70% occupancy rate of the Cabin throughout the year will be needed in repaying the loan.

The bank current total loans have accumulated to $4.8 million, with the latest loan awarded to ICI being $1.8 million the current twelve-monthly principal and interest payments are expected to be around $38,700 per month, which will be spread across loan repayment schedule of 240 months.

The business expects to make revenues of $2.2milion and this is expected to increase by 10% within the following year although no profits are expected in first two years as the company is expected to start breaking even in the third year of its operations. This will ensure that the company repays its loans comfortably.

Tables

Table 1. The Business Environment

	Opportunities	Threats
Political	The resort was established after an approval was made by the local council, federal fisheries department and island trust The state supports tourism industry	The September 11 incidence brought a decline of the number of tourists in British Columbia
Economic	The state puts tourism as a major source of the nations revenue totaling to about $10 billion from a total of 22.5 million overnight visitors	Downturn in the economic position of the state reduces overall demand of services and products
Societal	The resort has established a reputation as being a family oriented resort Most residents residing in and around the result are frequent visitors	The population present is small constraining the availability of staff People look at tourism sector with no good employment opportunities due to low pay
Technological	The resorts website provide quality and in-depth information to its customers and aspiring visitors The media firm offers the resort an opportunity to avail information about the resort to the people for publicity purposes	Not each person is conversant with new technologies

Table 2. Industry Conditions

Competitive Conditions

	High	Neutral	Low
Threat of new entrants	x
Bargaining power of customers		x
Bargaining power of suppliers		x
Threat of substitutes	x
Intensity of competition	x

Key success factors

Table 3. Financial Size-Up

	Strengths	Weaknesses
Profitability and Cash Flow:	Has helped improve its dining room to fit in a world class menu It has also helped them estimate the expansion expenses needed	Strains the relationship between the resort management and the banks
Liquidity:	Helpful for short term financial issues enabling the business meet its current obligation	It can uncover the weaknesses in the financial position of the resort especially during bank scrutiny of the resort
Stability:	Indicates the strong interim profit performance of the resort	The stability record may not be convincing to the banks due to poor timing for expansion plans
Efficiency:	Serves as standardized metrics to measure financial efficiency for investment opportunities	Unexpected cash flow models may be used which will not much up predictions made
Growth:	the continuous interim performance of the Inn contributes to the need of wanting to undertake cabin expansion	Constraints from financial sources hence intense scrutiny by the bank

Table 4. Marketing Size-Up

	Strengths	Weaknesses
Market tactics Price Product Place Promotion	The target market for the resort is the middle come earners meaning the place it quite affordable. It has a good reputation for food and beverage service. Its situated along the richly stretched sandy beach with boldly well constructed rooms giving an earthling feeling that are featured with Jacuzzi tubs fire places dvd/cd players. In terms of product promotion, it has a media consultancy department that deals with publication for publicity purpose including a comprehensive website.	Infatuation of the tourism industry leads to constant changes in the market especially in pricing
Market analysis Segmentation Competition Competitive Advantage Customer Needs	Its market segmentation targets the middle class hence affordable to many The resort is situated in a secluded area that is quite different from the urban environment It also enjoys an upscale world class menu for its clients Expansion plans will be an added advantage to the resorts competitors as it will attract more visitors The media consult department is a major advantage to the resort as its able to publicize to its target market.	The poor cannot afford the resort facilities The product needs to be differentiated in market segmentation to provide high class customer services.
Market strategy execution	The strategy was executed properly through positioning and segmentation giving ICI a good and definite market which it intended to serve.	The management could have been more vigorous on implementing the strategy by launching more serious comprehensive campaigns.

Table 5. Operations Size-Up

	Strengths	Weaknesses
Operations process	Business operation are well managed hence the constant profit result	Lack of organized and permanent staff Members
Risk management issues	The expansion plan is seen as A major project that will increase the number of visitors coming to the resort	Its expansion plan is a risk taking step
Legal issues	Do not exist	Do not exist
Location issues	Its strategic position creates a Good environment that is peaceful and fresh as compared to the city life	Less staff for the resort due to low population size
Use of technology	Gives comprehensive information about the resort. Provides entertainment opportunity to the visitors	Not each person is conversant with new technologies

Table 6. Human Resource Size-Up

Strengths

Weaknesses

Human Resource function

Recruitment and Hiring
Training and Development
Compensation, Performance and Incentives

Staff hiring and training was at first done quickly
To retain staff members staff housing was a benefit for all staffs
Employment of an individuals with decent leadership skills and with good interpersonal skills stabilizes staff relationship

The rural location of the resort encounters low population for hiring staff members
Most people discriminate the tourism sector because of its low payment
Recruitment of employees is low due to small population size

Leadership issues

Organizational Structure
Skills Development
Teams and Teamwork
Management Capabilities

Its headed by a CEO who is the owner of the resort
Besides the CEO, the resort has a general manager overseeing everyday operations including departmental managers
Every staff member has to undergo training to develop their skills
The resorts departments are divided into four each headed by a manger. The manager becomes the team leader of the department

The resort was first run as a family family team which later became a problem
Staff members do not stay on permanent basis

Table 7. Technology Size-Up

	Strengths	Weaknesses
Technology concept and product	Introducing DVDs/CDs was a good move to keep the visitors entertained just like in the urban areas. The concept of their comprehensive website provides quality information about the resort to those who visit it for any queries	Not each person is conversant with new technologies
Intellectual property issues	Its competitive nature has increased the resorts ability to provide high value-added products and services at competitive price It Details companys past experience to prove that the resort can execute on the opportunity	It is not easy to put the company to bank scrutiny
Potential risk factors	Expansion plans are promising to the growth of the business	The expansion plans will have to surpass the internal challenges especially in the human resource department

Table 8. Expansion decision

Rationale and Risk Assessment

Financial risk:	Mitigated by: Financial planning, whereby the management laid out a good loan repayment schedule that would take close to 20 years to repay the loan easing stress on the shareholder.
Market risk:	Mitigated by: Developing a marketing mix that appeals tom customers and is up to date with competitors ensuring that ICI is more likely to succeed in the market
Operations risk:	Mitigated by: Hiring a good operations manager that is able to manage the employees and the heads of all, other department thus reducing conflict and enabling smooth flow of day to day activities.
Construction risk:	Mitigated by: By planning the entire construction process and assigning roles clearly to construction personnel in order ensure construction is according to schedule.
Management risk:	Mitigated by: Hiring qualified managers in all functional areas and hiring a professional operations manager to oversee management of the entire organization.

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