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RelativeResourceManager33 - Came I5 Wat Mata Yacht Clad...

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Unformatted text preview: Came I5 Wat Mata Yacht Clad Rena/"t: Wing/2 Cultured Collide In early December 1994, Patrick Dowd, a thirty-year—old management consultant, stared out his office window at the snowy Ithaca, New York landscape. Dowd reflected on his recent phone conversation with Jim Johnson, General Manager of the 95-room West Indies Yacht Club Resort (WIYCR) located in the British Virgin Islands. Johnson sounded desperate on the phone to pull the resort out of its apparent tailspin and noted three primary areas of con- cern. First, expatriate manager turnover was beginning to become problematic. In the past two years the resort had hired and then failed to retain three expatriate Waterfront Directors and three expatriate Food and Beverage Direc- tors. Second, although the resort had not initiated a formal guest feedback program, Johnson estimated that guest complaints had increased from ten per week to more than thirty per week over the past two years. The complaints were usually given by guests to staff at the front desk, writ- ten down, passed on to Johnson, and usually centered on the deteriorating level of service provided by local British Virgin Islands employees. Many repeat guests claimed, “The staff just doesn’t seem as motivated as it used to be.” And third, there appeared to be an increasing level of ten- sion between expatriate and local staff members. In the past, expatriates and locals seemingly found it natural to work side by side{;] now there was a noticeable gap be- tween these groups that appeared to be growing. Johnson had come to know Dowd and his reputau tion for being one of the few expatriate management consultants in the region who seemed to have a real grasp on what it took to manage effectively in the Caribbean. The two had become better acquainted in 1993 when the world-renowned sailing school that Dowd was working for, Tradewind Ventures, was con- tracted to develop new family-focused programs to be offered by the resort. Through this experience, Dowd gained in~depth kndwledge of the resort. Dowd’s reputa- tion and knowledge of the resort prompted Johnson’s call to see if Dowd would be interested in working as a participant observer at the resort to determine the un- derlying reaSODS behind his three major concerns. John- son requested that Dowd work at the resort during three Christmas holiday weeks to observe resort staff during the peak season. Dowd would then present an analysis of his observations and make recommendations regard— ing what actions could be taken to improve the situation. SOURCE: Dr. Jeffrey P. Shay, University of Montana. Reprinted by permission of the Case Research Journal, Copyright by Jeffrey Shay and the North American Case Research Association.All rights reserved. 449 Although Dowd had never provided consulting in this specific area (i.e., an analysis of the cultural influences on the behavior of workers in the Caribbean), he gladly ac- cepted the challenge as it coincided with his personal ex- perience in the region and recent courses on cross—cultural management that he had taken at Cornell University. Dowd moved over to his bookcase and pulled books, brochures, and other information off the shelf and began reading. He was departing for the British Virgin Islands in one week and wanted to get a head start on his back— ground research. BRITISH VIRGIN ISLANDS TOURISM MARKET T‘hirty—six islands, 16 of which are inhabited, comprise the 59 square mile chain of British Virgin Islands (BVIs) (see Exhibit Chi-1)., Unlike neighboring islands, St. Thomas and St. Croix, that underwent extensive touriSm development during the 19705 and 19805, the BVI govern— ment carefully planned and restricted growth. The result was a carefully carved niche in the Caribbean market—u positioning the island chain in the exclusive/ecotourism market segment. From 1950—1970, the BVIs hosted the traveling elite. During the early 19705, the introduction and rapid growth of bareboat chartering (boats ranging from 28 to 50 feet, chartered (rented) to tourists qualified to take the boats out without the assistance of a licensed cap- tain) made the small island chain affordable for tourists with moderate budgets as well. Bareboat charters of‘ fered a unique vacation opportunity—one that connect- ed tourists with the islands’ rich natural beauty and intriguing history by allowing tourists to visit quiet har- bors and villages that were void of larger cruise ships and large hotelsThe BVl’s calm waters and steady trade winds were soon filled with charter boats as the chain of islands quickly became known as the premier chartering location in the world. By the early 19903, there were more than 500 charter boats available in the Virgin Is— lands, with the largest company, The Moorings, managing more than 190 charter boats in the BVIs alone. Although charter industry growth in the BVIs drew the attention of major developers, the combination of strict govern- ment regulations constraining the size of new hotels and resorts, along with limited access provided by the small Beef Island Airport, kept these developers and mass tourism out. As a result, smaller mid-scale to upscale ho— tels and resorts were developed in the BVIs. PART IV Comprehensive Cases Little Jest Guano island» Littte Camangem .. . ‘0'ngka Island ‘ . a fil‘éflgrrmw XHIBITCISI-'WP1.'§E'-thié'fjl3fifi$liV1551?llélsfidf'it‘ldlli’éifiéfi " 3.15? . Necker Island Mosquito Great Camanoe Island The 9095‘? Virgin Gordo G Fulton Jerusalem . rake Norman Island UPSCALE HOTELS IN THE BRITISH VIRGIN ISLANDS Although several mid—scale hotels were developed and operating in the BVIs by the midwl9803, there were only four truly upscale hotels in the island chain in addition to WIYCR (discussed in detail later) (see Exhibit C15-1 for hotel locations). Each of these hotels provided three meals per day (not including alcoholic drinks) and access to ac- tivities (e.g., water sports equipment) as part of the price for the room. Biras Creek was an independent resort lo- cated adjacent to WIYCR’S property and overlooked North Sound of Virgin Gorda (see Exhibit C15-2). This Mosquito Savannah Bay Liflle Dix Bay Resort N lilund v.1— Drake’s " ' II: South Sound Cooper Island cg figer Istand 0 a Suit-Island 'geter I5 and S . . Key; ._-. 6) Peter Island chhtCIub @llttlegpix Bay Resort ' @ Prokes'Anchorage Resort I I ' ® Bifés-ciéek Resort @ westtndies Yacht Club Resort resort featured 34 rooms, one restaurant, three tennis courts, a private beach with a bar, a small marina, and several miles of nature trails. Peak season double occu- pancy rates in 1994 for Biras Creek ranged from $395695 per night and, similar to WIYCR, this resort was only accessible by sea. After facing high turnover of expatriate resort managers and expatriate assistant inan- agers for the past five years, Biras Creek implemented a policy of hiring individuals for these positions for three- year contracts. After the contract was compteted, man- agers were required to seek employment elsewhere. The owners felt that most managers became less effective after three years because they suffered from burnout. Prickly Pet" west Indies Isiand YacthlUb' Anchorage ' ‘ Resort I North Sound fiflt One Nautical Mile CASE 15 Drakes Anchorage was an independent resort located on the 125-acre Mosquito lsland, an island situated at the northern entrance to North Sound (see Exhibit C15-2). This small resort offered 12 rooms, a beachfront restau— rant, a protected anchorage for charter boats, a pic- turesque hiking trail, and four secluded sandy beaches. Peak season double occupancy rates in 1994ranged be- tween $400~600 per night. Expatriate managers oversaw operations at this resort as well. Guests staying at this re- sort were primarily interested in a relaxing, secluded va- cation with limited activities. Little Dix Bay Resort opened in 1964 as part of the Rockefeller Resort chain. In 1993, after a multimillion- dollar renovation project, Rosewood Hotels and Resorts, a Dallas-based company, acquired the management con- tract for the resort. This resort offered 98 rooms ranging in price from $480—1000 per night in 1994 during peak season for a double occupancy room. This resort was lo- cated on the northwestern shore of Virgin Gorda and overlooked the Sir Francis Drake Channel, a channel cutting through the heart of the BVI chain (see Exhibit C15-2). In addition to a fine dining restaurant, the resort offered small boats (i.e., sunfish, lasers, Whalers, etc.), water-skiing, and day excursions to snorkeling and div- ing sites for guests. These amenities made Little-Dix the WIYCR’s strongest local competitor. Under the man- agement of Rosewood Hotels and Resorts, expatriate managers often rotated every two to three years from one Rosewood property to another. Its prices and im- peccable service attracted some of the most affluent tourists visiting the region. Located on Peter Island, the Peter Island Yacht Club was operated by IVA Enterprises, a Michigan-based firm that acquired the resort in the early 1970s (see Exhibit (315—1). The resort had 50 rooms, a fine dining restaurant, a marina, and a beautiful Secluded beach. Peak season double occupancy rates ranged from $395—525 per night in 1994. This resort was also managed by expatriates and had been recently remodeled after being struck by two hurricanes in the early 19905. Similar to Drake’s Anchor- age, this resort primarily attracted guests looking for a se- cluded island vacation with limited activity. BVI LABOR MARKET LAWS AND REGULATIONS All hotels operating in the BVIs faced a number of chal— lenges beyond the strict regulations on development. Perhaps the most significant challenge was dealing with local labor market laws and regulations. Despite the re- stricted growth in tourism, the supply of qualified service employees severely lagged demand. Four general gov— ernment restrictions and policies exacerbated the chal- lenge of hiring and managing staff. First, organizations were granted only a limited number of work permits to attract more experienced service employees from foreign countries. Expatriate work permits were granted based on the total number of employees working at a resort West Indies Yacht Club Resort: When Cultures Collide (i.e., the more employees a resort had,the greater the number of expatriates it could get permits for) and the availability of locals who possessed the skills requisite for the position.The latter meant that resorts had to post positions in local newspapers for at least one month be- fore requesting a permit for an expatriate. Second, organizations were not permitted to lay off staff during slow seasons. This created significant chal- lenges for resorts like WIYCR that ran at nearly 100% occupancy during the peak season (December through May) and as low as 40% during the off season (June through November). Especially hurt by this were luxu— ry resorts that required high staffing levels to provide the services that guests expected during the peak months but were then left overstaffed during the off season periods. Third, policies restricting the conditions under which an employee could be fired severely limited an or- ganization’s ability to retain only the best workers. For example, one hotel manager claimed, “It is hard to fire a local employee even if he steals from us. We are often re- quired to file documents with the government and then at— tend a formal hearing on why we dismissed an employee. Since it is so difficult to fire someone who steals, imagine how difficult it is to fire someone who doesn’t work hard, is always late, or forgets to come to work! Our hands are really tied by these regulations.” Finally, organizations were under extreme pressure to promote BVI locals into management positions whenever possible. As previously noted, before hiring an expatriate manager a resort had to advertise the position for at least a month. In addition, if a local approached the resort with minimal requisite skills for the job but was enthusiastic and willing to learn, the resort found it difficult in the current environment to overlook the local and hire the expatriate. As a result of these restrictions and policies, managers often found themselves over- staffed with underqualified workers. Managers overcame these dilemmas in a number of ways. To combat regulations on foreign employees, or- ganizations often paid foreign staff through their off- shore corporate headquarters and limited the amount of time they actually spent at the resort, hotel, or other ser- vice site. In response to restrictions on laying off staff, or- ganizations offered attractive vacation components to their employment contracts. This allowed the organiza- tion to pay lower wages and to decrease excess labor during off—seasons. Managers, forced to retain staff re- gardless of their productivity levels, rationalized that ex- cess labor costs were offset by lower wages in the region, avoidance of costs associated with training a new em- ployee, and the need for extra staff during peak season. Hotels and resorts also realized that although many entry-level employees could continue to be trained on-the— job, locals seeking managerial positions would require more formalized training. Unfortunately, neither the BVI nor the United States Virgin Islands had developed hospitality management training programs because there wasn’t the PART IV Comprehensive Cases critical mass of local managers required to start such programs. Instead hotels and resorts sent promising young staff to service training programs in the Bahamas and Bermuda in an effort to prepare them for manage- ment positions. THE WEST IN DIES YACHT CLUB RESORT In 1964 the Kimball family sailed into the North Sound of Virgin Gorda (see Exhibits C15-2 and C15-3). The Sound’s natural beauty captivated the family and they knew it was a place to which the family would soon re- turn. Nestled on the mountainside of the innermost point, the Kimballs found a shorefront pub and five cot- tages known as The West Indies Resort. The cottages were rustic with only cold water running in the bath- rooms. It was at the resort’s pub that Joe Kimball met Armin Dubois, the property’s eccentric owner. Dubois had been a pioneer Virgin Islands yachtsman who had found paradise on these shores and never left. Under Dubois’s management, an old diesel genera- tor supplied lighting, and water was collected on the roofs and stored in cisterns that doubled as cottage foun- dations. The pub and restaurant served mariners when Dubois felt like it. Dubois established his own protocol. Mariners blew foghorns just off the main dock and Dubois responded as to whether or not he was open for business. Even after being invited ashore, guests were unsure as to how long the hospitality would last. Dubois was notorious for turning off the generator to let guests know they had outstayed their welcome. By early 1973, after several visits to North Sound, Kimball asked Dubois if he would sell or lease property _I_.'sai_li'i_'1g magazines;heater-its:asses-1y. . f . parlance-thattheresort can offer. . so that he could build a family cottage. Dubois replied several months later that he wasn’t interested in selling or leasing a small piece of property but would entertain an offer to buy out the whole property. In late 1973, Kimball did just that. Kimball‘s painstaking attention to detail fostered de» velopment of the property’s unique character. His vision was to provide a truly eco—conscious and comfortable place for travelers to enjoy an environment perfect for sailing, fishing, snorkeling, diving, and combing beaches. To accomplish this, Kimball maintained many of Dubois’s earlier practices. For example, the resort continued to generate its own electricity, and collect and distill its own water. In addition, the resort used gray water (partially treated water) to iirrigate the hillsides and used solar power wherever possible. In sharp contrast to the multi- story designs used by other Caribbean developers, Kim— ball constructed 55 individual bungalows that Were scattered along the hillside and preserved the natural beauty for which the resort was known. Kimball differen- tiated the resort from others in the region by acquiring the world’s largest resort fleet of sailboats (e.g., 124’s, JYlS’s, Cal 27’s, Freedom 30’s, Lasers, Sunfish, Rhodes 19’s, Mistral sailboards) and powerboats (e.g., Boston Whalers and sport fishing boats). These carefully selected boats were easy for even inexperienced guests to handle. These acquisitions in conjunction with the resort’s sailing instruction program established the resort’s reputation as one of the premier water sports resorts in the world. Sub- sequently, Kimball changed the resort’s name to The West Indies Yacht Club Resort to leverage the distinct aquatic recreational activities that the resort offered. In 1987, with the resort’s reputation growing and busi- ness booming, Kimball acquired a fifteen-year renewable Family weeks-lb change the re'sort’s imagefFittghji-narketecl Special programs during traditional school break periods to families. 'These'vireeks pifovided s'peCialiserviCes, inincluding'iinstructional and recreational program's,for children and young adults. By providing a fun yet safe environment for children,_p_arents were free to spend-time alone enioying activities designed for their tastes (e.g., harbor sunset Cruises}. in additional, there were several family excursions planned throughout the week which of? fered an opportunity td-enioy exploring reefs andoth'er islands together. Capturing the Market Earlier: in addition to the family weeks and Fast Tacks weeks, marketers realized that there was another market that they had-been ignoring which could significantly reduce some of its occupancy cycle troubles. Instead of waiting until a couple had established themselves or started a family. why not get them when they were tying the knot? After all, the resort provided one of the most romantic atmospheres in the Caribbean. Moreover, the majority of weddings in North America, the primary market for the resort occur during the slow periods of summer and fall. in response to this revelation the resort began to actively marketing wedding and honeymoon packages.The resort hoped that these guests would return for future second, third, and fourth honeymoonsL] as well as bring their children when they started their families. CASE 15 management contract for The Sandy Point Resort, locat- ed adjacent to his property. The additional facilities, in- cluding 40 more rooms, a second restaurant, a swimming pool, a fuel dock, and beach, gave the property the criti— cal mass necessary to compete with local and interna- tional competitors. The resort also outsourced the provision of Scuba services from the Virgin Islands Dive Company. By 1990, the property had become a fully 0p— erational, water sports oriented, ecology-conscious re- sort that encompassed more than 75 acres and a mile of beachfront. The resort faced two major challenges: an occupancy cycle with high peaks and low valleys and changing mar- ket demographics. Resort managers estimated that occu- pancy rates from 1985—1990 had ranged from between 80»100% during the peak season from mid-December until the end of May and betWeen 40—60% from June until early December. These fluctuations were thought to occur because key customer markets sought Caribbean vacations during the colder winter months but found it hafd to justify a trip to the tropics during spring, summer, and fall when the weather at home was more acceptable. It wasn’t until the resort was forced to carry Sandy Point’s additional overhead that manage- ment realized the need to address occupancy rate fluctu- ations. One of the most difficult costs to manage was labor. To provide the high-end service that the resort was known for, the number of staff employed by the resort had increased substantial...
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