PROMPT
SCENARIO: Wiltshire Spa Renovation
What is the current situation? The impact of the corona-virus crisis on people’s routines and personal finances is expected to last for a while. Consumers are, therefore, mindful of -discretionary- spending and plan to maintain or reduce spending at least for the foreseeable future. However, a recent report published by McKinley argues that even though 80 percent of consumers report still feeling somewhat unsafe, out-of-home activity is picking up with one-third of consumers resuming “normal” out-of-home activities. This is good news for the hospitality industry, which is a multi billion-dollar industry that is fueled by availability of disposable income and consumers’ basic need for leisure.
Like other leisure destinations. the exclusive Wiltshire Spa Resort, located in Sedona, Arizona, has suffered tremendous strain from reduced guest bookings this year. Therefore, they are eager to capitalize one the recent change in consumer sentiment reported by McKinley Consulting. However. as the Chief of Operations who is an expert on customer experience, you advised the Executive Board at the last meeting that the 40-year old facility needs to undergo a face-lift to attract high-paying guests back to the resort. You also urged them to consider including contemporary and innovative leisure amenities to attract a younger, upwardly mobile demographic. After much deliberation the Board Chairman reached out to you to advise her and the Board on what to do next. To ensure that you came up with a solid recommendation, you engaged Bailey and Rutherford Inc. (B&R). a renowned leisure consulting company, to evaluate the resort and propose options to you.
Following an initial study of the premises, B&R noted that one of the most memorable features of the resort vas the stunning environs. Palm trees, cacti, flowering vines, and dramatic mountain vistas in the distance surround the resort. Using this as the backdrop, they proposed two options that they believed had the potential to make Wiltshire Spa Resort the leisure destination of choice for high-spending guests. The first option, which they called “Back to Nature”, includes a 5,000 square feet archery range, a 4200 square feet healing garden, a 3100 square feet pollinator garden, a 2370 square feet hammock grove, and 5500 square feet farm-to-table garden with honeybee hives. Construction costs in Sedona currently averages $310 per square foot. In addition to construction costs, further cost provisions must be made. Targets, backdrops, lighting, equipment and equipment stands are expected to run about 45% of the cost of constructing the archery range. Plants, shrubs and other materials for the healing and pollinator gardens are estimated at 5% of the total construction cost. Equipment for the hammock grove is expected to cost $3 1 5,000. The farm-to-table garden will require an additional 5107,000 for the purchase of seedlings, beehives and other equipment. It is important to note that specially skilled staff would need to be hired to care for the beehives and the gardens. The second option, called “Ultimate Retreat,” includes the construction of an observation solarium at a cost of S1,615,618, where auests can sip customized cocktails and enjoy panoramic views of the sumptuous landscape. This option also includes the upgrade of the infinity pool. which has an internal area of 10,000 square feet. Upgrading the pool is expected to cost approximately $315 per square foot. The final item would be a 6000 square feet wellness retreat. Equipment and fittings for the retreat will be imported from Sweden and is expected to cost an additional $3,000,000.
Bailey and Rutherford Inc. believe that theirproposed refurbishments and amenities would likely lead to increased revenue through new bookings and enhanced customer retention. The refurbishments will also add a contemporary flair to the establishment, making it appealing to a younger clientele. The improvements will also increase real and perceived value of the facility, and help Wiltshire maintain it’s five-star rating on Forbes Travel Guide.
Of-course, not undertaking the refurbishment to avoid the huge capital expenditure may lead to stagnation in bookings, diminished guest experience, the prestige of the facility being compromised, and loss of competitive advantage.
TASK
Who are you? You are the Chief Operations Officer at Wiltshire Spa Resort
What are you supposed to do?
Evaluate the options proposed by B&R and provide a recommendation, via email, to the Chairman of the Board, Victoria Morales, on which option Wiltshire Spa Resort should pursue.
Because the Board will not be particularly happy about the huge capital expenditure, your recommendation must clearly identify the benefits of undertaking the refurbishment, and the threat to the establishment if it chooses not to.
Apply the appropriate business writing standards for content, style, and organization in your email.
