I.

Title: Hotel Continental

II. Summary of the Case:
Mr. Oscar Mendoza has a travel agency and he was thinking of operating a hotel, and luckily
Hotel Continental was at lease. Hes thinking of getting the hotel in order to accommodate all of his
guests needless to say he wont just decide, hell have to consider a lot of things like the location, the
management, the people and mosts of all the risks. So by the end of this paper we would have seen the
pros and cons, other alternative solutions, and the final decision.
Mr. Mendoza considered utilizing Hotel Continental that is currently for lease because of its
huge financial losses in the past two years due to the lack of management skills. Hotel Continental is
located in Diliman, Quezon City along Don Mariano Marcos Avenue. One of the great things about
Hotel Continental are their facilities, they have everything they need to accommodate the tourist groups
especially during the peak travel months of December, January, July and August. The hotel has 27rooms three function rooms that can seat twelve to forty persons, a coffee shop, a fast food cafeteria, a
formal dining room and a swimming pool.
This was already the time wherein Cory Aquino reigned as president so the Philippines were
still recovering from the martial law which Marcos ruled. Without the martial law, tourist can now
confidently tour around the Philippines which will give the hoteliers and restaurateurs a radical growth
in their business.
III.Central Problem: Mr . Mendoza owner of Triumph Tours is experiencing
difficulty in finding hotel accommodation for his clients especially during the
peak travel months. Should Mr. Mendoza bid for Hotel Continental to address
the issue regarding the hotel accommodation of his clients, ultimately
increasing profit?
IV. Minor Problems:

They have little to no experience managing hotels.

Facilities are underutilized.

Filling up the remaining 60% annual capacity utilization.

V.

Objectives:

To analyze the current data available and to establish a solid argument in determining
weather or not leasing Hotel Continental is sustainable and profitable for Mr. Mendoza as a
compliment for his traveling agency.

VI.

SWOT Analysis
i. Strength

The fact that Triumph Tours has a marketing team proves to show that they are
well experienced in the business.

Hotel Continental have everything they need to accommodate the Triumph Tour
tourist groups especially during the peak travel months of December, January, July
and August.

Hotel Continental has multiple amenities such as three function rooms that can seat
twelve to forty persons, a coffee shop, a fast food cafeteria, a formal dining room
and a swimming pool.

Tourist increases during the peak of the travel months, which also means profit
also increases.

Mr. Oscar Mendoza is also financially capable, since he has the power to lease a
hotel.

Cory Aquino became President and the peace and order situation in the Philippines
improved thus encouraging more tourist to visit the country.

Economy is recovering from the Marcos regime, tourist can now confidently tour
around the Philippines which will give the hoteliers and restaurateurs a radical
growth in their business.

ii. Weaknesses

Mr. Oscar Mendoza and his marketing team have little to no experience in
managing a hotel, which may lead to poor management and financial losses.

If they wont lease the hotel, Triumph tours may experience difficulty in providing
hotel accommodation for their clients, most especially during the peak of the
traveling season.

Since number tourist are seasonal, the facilities of Hotel Continental may become
under utilized.

Finding employees that possesses the necessary skills and attitude for the hotel.

Feeling up the 60% remaining annual capacity utilization of the hotel.

When the lease term expires Mr. Mendoza loses its right on the property.

Mr. Mendoza incurs all operating responsibilities together with all the financial
obligations; therefore if the business does not perform well, Mr. Mendoza will
suffer all of the losses.

iii. Opportunity

The possible promotions (e.g. Packaged trip) that will be established in order to
attract tourists, if they succeed in the promotion they can fill up the remaining 60%
lacking of the hotel.

Because of the new administration, tourists have more freedom so theyll have to
look for the most promising hotel out there, so Hotel Continental must think of
ways in getting the most of the tourists.

Gradual increase of the number of tourist in the country, since peace and order is
gradually improving.

Economic conditions improved and hotel occupancy rate are expected to increase.

Assuming that hotel continental will be rented, the Triumph Tours would assure
the accommodation of their clients.

iv. Threat

The opportunities for Hotel Continental it is also an opportunity for all so all of the
other hotels will also think of ways to get the people, considering that the hotel
only has 27 rooms which is actually pretty small for a hotel and the people would
of course like it big because bigger is better as they might say.

Facilities may become underutilized.

Increase numbers of competition from other travel agencies and hotel.

With little to no knowledge in managing a hotel, the risk of financial losses is

relatively high.

If financial losses on the hotel is too high, the risk of closing the traveling agency
is also high.

If the economy goes down it may affect the traveling industry, and may discourage
tourist from visiting the country.

If the economy goes down, presence of inflammation is inevitable, thus reducing

the rate of purchasing power.

VII.

Alternative Course of Action

i. Leasing the hotel

Advantage

Retains total control over entire operation.

Hotel Continental have everything they need to accommodate the Triumph

Tour tourist groups especially during the peak travel months of December,
January, July and August.

Hotel Continental has multiple amenities such as three function rooms that
can seat twelve to forty persons, a coffee shop, a fast food cafeteria, a
formal dining room and a swimming pool.

Triumph Tours would assure the accommodation of their clients.

Additional profit for Mr. Oscar Mendoza.

Disadvantage

Mr. Oscar Mendoza and his marketing team have little to no experience in
managing a hotel, which may lead to poor management and financial
losses.

Finding employees that possesses the necessary skills and attitude for the
hotel.

Feeling up the 60% remaining annual capacity utilization of the hotel.

When the lease term expires Mr. Mendoza loses its right on the property.

Mr. Mendoza incurs all operating responsibilities together with all the
financial obligations; therefore if the business does not perform well, Mr.
Mendoza will suffer all of the losses.

ii. Find other hotels to lease

Advantage

The bidding price may be lower than Hotel Continental.

The hotel may have better facilities than of Hotel Continental.

The hotel may have higher accommodation.

You may find hotels a better more suitable location.

Disadvantage

May take a lot of time to find other hotels.

May lose the chance of bidding for Hotel Continental.

iii. Joint venture with other hotels

Advantage

Hotel Continental have can accommodate all Triumph Tour tourist groups
especially during the peak travel months of December, January, July and
August.

This can remove the risk of financial loses of the hotel.

This will gradually build Triumph Tours name.

Mr. Mendoza can focus on improving his traveling agency without

worrying about the hotel.

Since a joint venture is contractual, they can freely choose wether or not to
renew the contract.

Disadvantage

Hotel may have high quota rate that Mr. Mendoza cant provide.

It takes time and effort to build the right relationship

The partners have different objectives for the joint venture.

There is an imbalance in levels of expertise, investment or assets brought

into the venture by the different partners.

Different cultures and management styles result in poor integration and cooperation.

The partners don't provide sufficient leadership and support in the early
stages.

iv. Establish own hotel

Advantage

Expansion of Mr. Mendozas business.

All income goes to Mr. Mendoza.

All tourist clients are accommodated.

Disadvantage

Takes a lot of time, money and effort.

Mr. Oscar Mendoza and his marketing team have little to no experience in
managing a hotel, which may lead to poor management and financial
losses.

Finding employees that possesses the necessary skills and attitude for the
hotel.

Problem in increasing the utilization rate of hotels facilities.

Mr. Mendoza incurs all operating responsibilities together with all the
financial obligations; therefore if the business does not perform well, Mr.
Mendoza will suffer all of the losses.

VIII.

Conclusion and Recommendation

One alternative course of action is to venture with other hotels, in doing so Mr.
Mendoza may find another hotel that has better managerial skills and thus not losing the name
of his agency. On the contrary, the other hotels may have high quota rates knowing that Mr.
Mendozas agency is not really that popular yet so maybe hell have a hard time. Another thing
he might do is to build his own hotel simply put that he will be able to control everything from
bottom to top. The downside of this is hell be needing a lot of money for that and he cant
really reach the certain amount of money required to build a hotel because his agency is still
growing.
So according to the data we gathered we came up of a conclusion that Mr. Mendoza will
not bid for Hotel Continental because as everything falls under the management of the hotel, he
must not risk a lot of money if the hotel has a bad managerial history. Our recommended
course of action is to venture to other hotels, save up a lot of money, make his travel agency
popular and build up his own hotel in order that he will have complete control over the
establishment, the management, the money, etc.