The Arizona Sky Resort case study

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Arizona Sky Resort Case Study
Introduction
Arizona Sky Resort is a hotel based in Flagstaff, Arizona which is a small town in Northern Arizona with a population of approximately 70,320. This Resort was established by Uncle Rodger who was Chad’s great uncle. Chad who is an Organic Chemistry professor has little to no knowledge regarding the hotel industry, but surprisingly, he inherits Arizona’s Sky Resort upon his great-uncle’s death. The resort currently competes with three different properties, and it receives an average of occupancy of 2.3 guests with an average stay of approximately 2.1 days. In the year 2010, Uncle Rodger had realized that he was no longer in a position to manage the property and thus he hired High Country Management to operate the resort. The last renovation project was in the year 2003 at the cost of $3 million and covered soft renovation of 165 guest rooms. In July 2016, shortly before Uncle Rodgers death, High Country Management Company handed a 2017 Capital Expenditure to him which covered a five years horizon. This plan was, however, not amended by the estate’s executor. Afterward, the attorney acting as Uncle Rodger’s executer hired MTN Associates who are specialists in hospitality property valuation and they handed back their reports after valuation.
Chad has very great expectations regarding the resort, and he intends to hold onto it. He also has heard and researched a lot about Millennial Customer which would be a great way to appeal to a new customer segment.

With his organic chemistry knowledge, Chad has constantly spearheaded energy conversation efforts in many parts of the world. He hopes to use this knowledge to make Arizona Sky Resort sustainable.
Overview of the situation.
The resorts do not get it fair share of the market regarding penetrating its competitive set of properties. The main goal of the property has been to aggressively market the property and also to adjust the room rates to increase the occupancy thus raising the gross revenue. This way, the property will meet or even exceed its fair share in occupancy. According to hospitality property valuation report, the property is in dire need of renovation to attract more customers. We learn from the report that the roof, gutters, porte-cochere, exterior walls, porches, balconies, guest room interiors, pool deck and kitchen floor all show signs of aging. This is expected since some of these facilities had not been upgraded since the resort was established. The customers will opt for a property that has their best interests at heart, and that is why facilities such as the swimming pool and exterior lighting should be renovated for better performance.
Recommendations
The five years capital expenditure plan recommends that in the year 2017, new carpeting and pad should be raid at a total cost of $15,000; the entire property should also be painted at the cost of $3,000; and finally Vinyl wallcovering and vinyl cover base to be put in place of $2,500 and $1,000 respectively. However, these should not be the main priorities if at all the property wishes to pick up at a higher rate than its competitors. The key priorities should involve the installation of landscaping lighting at the cost of $4,650; Fixing and renovating elevator cabs at the cost of $100,000; painting the entire property at a cost $3,000; new floor tiles at the cost of $4,500 and finally purchasing new safety gadgets for the swimming pool for an average of $8750.
These recommendations are necessitated by the fact that the customers are firstly concerned about their safety ahead of anything else. By installation of brighter exterior lamps, the customers will feel safe and free to walk around during the night since the facility will be well lit. Also parking during the night will be easy, and there will be no unnecessary vehicle collisions due to dim lighting. On the other hand, fixing the elevator cabs will ensure that there are no cases of customers being stranded in malfunctioning elevator cabs which can cause fear and shock on the side of the customer to the point of never visiting the property again. The swimming pool safety gadgets should also be prioritized since that way; the customers will feel safe when using the swimming pool, and in the case of any incidences, the situation will be handled quickly without risking anyone’s life due to the presence of professional gadgets. There are those customers who prefer to walk around the property bare-footed and with aging and worn-out floor tiles they may end up injuring themselves. This may be very big blow especially in cases of severe injuries since even if such customers are attended to with utmost professionalism they may choose never to visit the facility again. This is the sole reason behind the recommendation of new floor tiles across the entire property. These tiles will also make the property look cozy, appealing and presentable especially when tile colors and shapes are professionally chosen. Finally, another upgrade that would help the property regain a comfy look would be painting the entire property with well chose colors which are attractive and fitting depending on the exact point of the property. This simply means that the kitchen should not share the same color as the bedroom and the dining room should be of a different color from the bathroom. This way, the facility will look elegant and attractive. If these recommendations are effected, it is no doubt that Arizona Sky Resort will regain its initial footing ahead of subsequent upgrades in the next four years. These subsequent upgrades should also be prioritized based on urgency and importance.
The new carpeting and pad at a total cost of $15,000; Vinyl wallcovering and vinyl cover base at the cost of $2,500 and $1,000 respectively should be deferred since the property needs to put the customer security first before think of making the property cozy and attractive. Even if the property is made very beautiful and attractive, without security there will be few visitors and the target fair share occupancy will not be met.
Capital expenditure budget for 2017
Capital Expenditure Budget for the Year 2017
Item Cost Items Scrapped Cost
Landscaping Lighting $4,650 New carpeting and pad $15,000
Renovate elevator cabs & fixtures $100,000 Vinyl Wallcover$2,500
Paint $3,000 Vinyl Coverbase$1,000
New Floor Tiles $4,500 $18,500
Swimming Pool Safety Gadgets $8,750 Totals $116,400 Additional/Miscellaneous recommendations
To work more effectively with High Country Management, the property should put a better management team including an effective and competent executor who will be ready to evaluate and decide on any recommendations either from the High Country Management or Chad himself. Chad should also reconsider his terms with High Country Management Company since 24% of the gross operation profit is a high figure. The Management Company should also be kept in check to ensure that it delivers the best to the company and that there are no double standards when treating the property in comparison with other properties. Chad should also ensure that the management Company is not the same company managing its competitors since that can lead to double standards. In planning for the future, Chad should consider revising the Five years expenditure plan, ensuring that the highest prioritized items are top on the list. This revision should first include the suggested recommendations for the year 2017.
Summary and closing
This review confirms that Arizona Sky Resort is not currently getting its fair share regarding occupancy which has been less the 100%. To ensure that the resort succeeds and remains ahead of its three competitors Chad should ensure that the priorities of the property are viable and sustainable. By implementing the five years capital expenditure plan, suggested by High Country Management Company. Chad should also put into consideration the MTN Associates hospitality evaluation report ensuring that the areas of concern are addressed as soon as possible depending on their level of importance. Finally, Chad should consider the above recommendations when implementing the five-year capital expenditure plan ensuring that the initial recommendations for the year 2017 are implemented and the priorities for subsequent years are revised based on priority. For the implementations to be quick and effective, Chad needs to seek the services of a competent, qualified and business oriented evaluator considering the fact that Chad does not have past knowledge in the hotel industry. In so doing, the high expectations that Chad has for Arizona Sky Resort will be achievable, and the property will thrive amidst its competitors (Arizona Sky Resort, n.p)

Works cited
Arizona Sky Resort: Case Study. N.p.: n.p., Fall 2016. Print.