Shangri-La Hotels and Resorts is a deluxe hotel chain that operates in Eastern Asia, the United States, Australia, and Europe. There are several competencies of this orthe ganization which need to be discussed. The main strength of this institution is its ability to take into account the cultural backgrounds of their customers and meet their expectations. This is one of those skills that cathe n be acquired and elaborated only through long practice. The key values of Shangri-La Hotels are respect, humility, courtesy, helpfulness, and sincerity.
The main challenges that they faced was transferring these values to other cultures. The thing is that such notions as respect, courtesy, or sincerity are not universal; more likely, they are culturally determined. For example, in Thailand, it is normal to serve coffee on one knee, whereas in the Philippines or Western countries such practice is unacceptable.
This is why the management of Shangri-La hotels pays special attention to the training of their employees, who must be well-aware about such cultural distinctions. On the whole, they have managed to address this issue and now personalized guthe est service is the major competence of Shangri-La Hotels.the This is probably the main reason why they remain at the forefront of the hospitality industry.
Judging from the annual income statements, one can argue that financial performance of Shangri-La Hotels gradually improves. During the period between 2002 and 2006, its room, food, and beverage revenues were continuously rising. Over this time, the net income of this company increased at almost 160 per cent. On the one hand, the shareholders can be quite satisfied with such state of affairs. However, one should bear in mind that their operational expenses also increased during these years.
In part, it can be explained by the fact that the company is continuously expanding its presence in different regions of the world. However, this increase may also indicate that this organization is not run effectively.
The most disturbing detail is that the cost of revenue has risen at approximately at 40 per cent during these years. In this case, one should determine whether these costs are the result of organizational growth or mismanagement. Still, Shangri-La Hotels displays relatively good financial and operational performance and the shareholders can feel pleased with these results.
There are several challenges that company encounters in Eastern China. One is them is the reluctance of Chinese employees to take initiative: they usually follow instructions to the letter; however, they do not want to make any independent decisions and always ask for the permission of their manager. This lack of initiative sometimes leads to delays and customer dissatisfaction.
In effort to respond to this issue, the management tried to give the staff a higher degree of autonomy and encourage their decision-making by providing five-month training programs to them. To some extent, this approach yielded good results as the personnel began to feel more empowered and relaxed. Nonetheless, the key issue which still needs to be handled is poor retention of the employees.
The thing is that in recent years China has become a popular attraction for many international hotel chains; so, now there is a strong demand for skilled employees. Many of Shangri-La competitors poached the company’s personnel by offering them higher wages. In the long term, this can increase turnover rate in this company and downgrade the quality of their services.
The management took several measures to make employees more loyal to the firm: first, they adopted a new compensation policy that is based on financial performance of the departments and customer satisfaction. The remuneration strategy enabled the management to better assess the performance of the workers and reward them.
Apart from that, this organization, made the career path more transparent, in other words, the employees know that they have a chance of promotion in the workplace hierarchy after a certain period of time, for example, after three or five years. Overall, it is rather unlikely that these strategies are going to bring about improvements.
The problem is that Shangri-La competitors can offer the same opportunities to the staff. It seems that the management should accept the fact that the quality of life in China has risen, and this includes wages. Thus, they need to raise wages of the personnel as this will allow them to reduce turnover rate and avoid extra expenses on recruitment and training of the staff.
On the whole, the problems encountered by the company in the East are similar to those in Western countries. The labor market in China is becoming more and more expensive. The increased competition among hotel chains provides the employees with an opportunity to choose. This is why the staff, trained by Shangri-La Hotels, may prefer to leave the company and join its competitor. The management is disinclined to raise the wages of the personnel because it will hurt their profitability.
One should take into account that these expenses on the personnel will be compensated in the long-term because the company with a low turn-over rate usually spends less money on recruitment and training of the staff. This is the major recommendation that one can make to the management of Shangri-La Hotels.