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Case Method, Help Me Find The Main Problem ?

The Golden Bay Star Hotel was developed by a group of investors in the
late 1970s to be the premier luxury property of its type in the Bay Area.
The location in downtown was chosen for its proximity to the financial
district and art gallery community.
In its early years of operation, the Golden Bay Star enjoyed modest
success. But the ownership felt that better performance was possible.
They decided that name recognition was what they lacked. By 1982 the
ownership decided to affiliate the hotel with a national luxury management
company. The hotel and management company signed an agreement
that was renewable every five years.
For the next few years, the Star (as it is called) experienced record
revenue performance. The boom in the financial markets was reflected in
strong transient and group demand at high rates. The art market was
experiencing strong interest from individual and institutional inventors
from across the world. Auctions and other meetings were traditionally
held at the Star. All parties involved were satisfied with the arrangement.
By the late 1980s, accelerated hotel construction in the vicinity of the
hotel began to manifest itself. Properties of all product types and sizes began
to pop up all around the Star. Newly developed hotel concepts (the extended
stay and all suite) started to vie for the traditional business of the Star.
After several years of declining performance, the hotel owners began
to get nervous. They needed to know why they were in this situation and
how it would be remedied. The ownership sent a representative, Tom
Anderson, to the hotel to monitor the situation. Tom met with the hotel’s
general manager, Shelly Burns. Shelly had been at the hotel for 10 years.
She had been on board for the period of exceptional performance, so
naturally as the leader, she had been lauded. She was not used to being
in the position of having to explain poor performance.
Shelly Burns was a “hands on” general manager. She involved herself
in all aspects of operations and sales. She was so involved in sales
and marketing, she saw no need for a change. They had never needed to
advertise, and the sales office seemed to run itself. After all, she could
make those decisions if need be, so why incur the extra salary costs?
The senior sales person at the Star, Frank Nevins, had been on staff
since the opening of the property. He had long enjoyed a healthy relationship
with the local financial community. His contacts were renowned,
and he spent a great deal of time cultivating those relationships.
Tom asked Shelly to take a good look at the current state of the hotel.
He needed to report back to the owners and wanted a solid plan from the
hotel as to how it would improve performance. The owners were in the
fifth year of their current management contract and needed to act quickly.
He gave her one week to come up with a plan.
If you were Shelly, what would you do? This case presented background
on a fictional hotel, but these situations occur every day. As a group, or as
assigned, develop a plan for the Star. What factors should you take into

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