Question

QUESTION 2 Mr. Thomas, a hotel manager in the Arabian Paradise Hotel is concerned about the future of the tourism industry. As the coronavirus, COVID-19 has broken out in most of the countries, the business is almost closed. The lockdown (complete closure) was imposed by the local authorities to control the spread of COVID-19, the coronavirus. After the announcement of lockdown, new tourists are not coming. The hotel industry is facing the toughest time. Revenue is stopped, and expenses are still there in the same amount such as the salary of employees, electricity bills, water and telephone bills, maintenance, etc. Another problem, Mr. Thomas is facing problems with the customers who are residing with them since the lockdown was announced. They cannot move out. As the day of paying a salary is approaching, Mr. Thomas is finding it difficult to pay salaries to the employees. Meanwhile, the government has given guidelines to not to remove any of the employees from their employment. Mr. Thomas calls a meeting to discuss the possible solutions to the challenges he is facing in the present crisis. His colleagues present in the meeting had a very positive and optimistic attitude; they all were ready to cooperate with management decisions. Major players in the tourism industry at the international level have announced significant job cuts. However, Mr. Thomas has a different idea. He understands the value of employees and he is trying to find out ways to pay their basic salary by saving money from the budget of training, incentives, and perks. He is reviewing the proposal sent by the HR manager to send some of the employees on education leave, or long leave with hall salary. Additionally, He has a plan to save money by stopping non-value adding activities. Mr. Thomas believes that this is an opportunity to cast an image of a socially responsible organization. Further, he wants to use this idle time to establish a long-term association with other players in the industry. Mr. Thomas believes that the situation will normalize, and the industry will run as usual with a smaller number of players who could survive this crisis. (10 Marks) Answer the following: 2.1 What are the challenges opportunities before the management of the Arabian Paradise Hotel in such a time of crisis? 2.2 What would you suggest to Mr. Thomas about short-term and long-term plans for overcoming the challenges posed by the COVID-19 on the tourism industry? 2.3 If you were the HR manager in the above case, what would you suggest to cut down the human resource cost in the short-term to minimize the effect of lockdown?

Answer 1

1. Challenges and Opportunities before the Management

Challenges:

The immediate challenges would be

- to maintain the hotel facilities which will incur cost without revenues

- incurring employees cost as they have to be retained

- No revenues during lockdown or immediately after the lockdown ends

- After the lockdown ends, convincing tourists to come back

- Exisiting customers utilising the facilties and not able to move out which prevents the hotel from shutting completely to save costs

Opportunities

- create a better brand as a socially responsible organisation

- lesser competition after the covid ends as smaller players will not survive

2. Short term and Long term plans overcoming the challenges

Short term

a. HR Cost optimisation: Rather than reduction of man power, salary cuts can be initiated along with unpaid leaves, education leave etc.

b. Cost reductions: Identifying costs which is considered not necessary and non value added and avoiding the same.

c. Negotiate with Bank to obtain more credit to tide over cash flow crisis

Long term

a. Restructuring of exisitng loan faciltiies

b. Changes to the hotel infra to provide safe social distancing norms thus convincing the tourists to be safe

c. Reskilling and resizing the employees for better utilisation and cost efficiencies

3. Cutting man power

Cutting man power would be the last resort as this can result in negaive atmosphere and also negative publicity. Other measures like salary cuts, unpaid leave , reduction in incentives would be preferred than man power reductions.