Internal Situational Audit Essay Example

suite options are offered including Junior Suites, Executive Suites, Deluxe Suites, and a Presidential Suite. All suites are soundproofed and equipped with amenities such as an ironing board, coffee making facilities, mini-bar, room safe, broadband internet access, and satellite television channels.

2.1.2.2 Business Centre

The Business Centre in PPKLIA is located on the 2nd floor at lobby level and operates from 7 am to 8 pmIt is referred to as "your office within a hotel" and comes equipped with various business equipment and facilities. The friendly and competent staff provide efficient and reliable guest services. Guests can also securely and easily access high-speed internet from anywhere on the hotel premises.

2.1.2.3 Food & Beverage Establishments

PPKLIA offers three deluxe food and beverage establishments that serve a diverse range of Asian and Western cuisine. The 24-Hour Restaurant, located on the 2nd floor, provides over 150 types of Asian, international, and fusion dishes in an open-kitchen concept. Travellers Bar & Grill, also situated on the 2nd floor, specializes in grilled food such as wood-burning pizzas, tasty tapas, juicy steaks, and burgers. The Palmz Lounge, found in the lobby across from the front desk, serves a wide variety of pastries,sandwiches,and hot snacks throughout the day along with a selection of coffees, teas,and smoothies.

2.1.2.4 Banquet / Catering

PPKLIA's banquet and catering department focuses on meetings,special events,and weddings.The hotel provides event spaces for onsite catering that offer flexible services for different types of occasions.These venues include a grand ballroom for large banquets and a smaller meeting room for intimate gatheringsPPKLIA offers various additional features, including a 184-fixed-seat auditorium, eight separate breakout suites, two Business Centre meeting suites,

and two exclusive Pacific floor meeting suites. Additionally, the hotel provides off-premise catering services for special events held at the nearby Sepang International Circuit. These events include Formula 1 and MotoGP races. The hotel is also known for hosting weddings and offers different wedding and feast packages to accommodate various guest needs and religious preferences.

The Spa is located on the first floor of the hotel's recreation center. PPKLIA provides limited spa services in packages that offer two different bundle types with varying durations. Guests can choose between a full body traditional massage with oil or a full body aromatherapy massage for our 50-minute massage service. Each bundle costs RM 188 and RM 288 respectively.
For our 80-minute massage service, guests have the option of a full body traditional massage or a full body aromatherapy massage which cost RM255 and RM298 respectively.
To cater to different guest needs, we also provide pre-blended essential oils such as Serenity for relaxation, Vitality for rejuvenation, and Recovery for healing.

Moving on to the Boston Consulting Group (BCG) Matrix (section 2.1.3), this analytical model assesses an SBU's relative market share and industry growth rate to determine its strategic position within the market.Higher-growth markets are more attractive than low-growth markets. Relative market share indicates the dominance of an SBU in its market compared to the market leader. The suites section of PPKLIA hotel is the most profitable, as there is less cost of sales compared to food and drink establishments. Unlike food and drink items which are consumed, the suites are re-rented every night, resulting in no cost of sales associated with them. However, this section incurs high expenses due to the purchase of

guestroom supplies and equipment maintenance. On the other hand, room rates for suites are much higher than average prices in restaurants, starting at RM 800 per night. In 2008, PPKLIA's occupancy rate was 66.6% with an average daily rate of RM 355.34, resulting in RM 236.66 revenue per available room. This explains why the net income of the suites section is significantly higher than other sections. Therefore, it can be considered a Cash Cow due to its large share in a slightly growing marketThe organization receives a substantial amount of cash from this segment, but since their market is not growing significantly due to fixed products, the cash is primarily used for financial needs in other areas of the hotel. The Business Centre at PPKLIA plays a crucial role, especially because it targets business travelers who make up a significant portion of its market. These travelers come to the Business Centre to access various facilities such as computers, printing services, faxing services, secretarial services, electronic services, meeting rooms, translation services, and more. However, the growth potential for the Business Centre market is limited due to its limited range of offerings and lack of plans for introducing new ones. Despite this limitation, the Business Centre holds a high market share due to its large customer base of business travelers. It's worth noting that the secretarial services offered by the Business Centre are expensive compared to those available outside of the hotel. For instance, typing and printing on A4-sized paper cost RM 15.00 while faxing on A4-sized paper costs RM 0.50 per page. Nonetheless, business travelers are willing to pay these prices because they value the convenience

and quality assurance provided by these services. As a result of this demand from business travelers, the Business Centre generates significant profits and cash flow that can be utilized in supporting other units within the organizationOverall, the Business Centre is classified as a Cash Cow within the hotel's portfolio. It serves as an important section for PPKLIA, particularly targeting business travelers who often utilize various facilities like computers, printing services, secretarial services, and translation services. Despite limited offerings and low market growth, the Business Centre holds a significant market share due to the substantial number of business travelers. While the secretarial services provided may be expensive compared to external options, business travelers are willing to pay for convenience and quality assurance. Consequently, the Business Centre generates substantial profits and cash flow that can be used in other areas of the business.

On the contrary, the food and beverage establishments at PPKLIA hotel are categorized as Stars because they generate a large amount of cash for the organization. The Degree 24-Hour Restaurant, Travellers Bar and Grill, and Palmz Lobby Lounge each have monthly grosses of RM 600,000, RM 80,000, and RM 10,700 respectively. However,
they also have the lowest net income percentages due to high costs in F&B establishments. Both labor and food/drink costs contribute to expenses ranging between 35% and 36% in these restaurants.Expenses for items such as cleaning supplies, linens, uniforms, utilities, and equipment maintenance make up between 10% to 15% of overall expenses. The total expenses amount to 81%, indicating a significant portion in a high-growth market that requires substantial cash flow to support its rapid growth. The catering section within the organization is more

profitable compared to the food and drink establishments due to its ability to plan menus with specific prices and customer counts, resulting in more efficient operations and higher profitability.

PPKLIA primarily focuses on providing catering services for motorsport events near Sepang International Circuit, including Formula 1 and Motorcycle Grand Prix. This particular section generates a considerable amount of cash flow for the organization, allowing management to consider making additional investments in order to achieve attractive returns. The reason why this specific business unit (SBU) can be classified as a Star is because it operates within a high-growth market that demands significant financial resources to sustain its rapid growth.

On the other hand, the Spa service offered by the hotel is relatively new in terms of market presence. As a result, it generates less revenue compared to other SBUs and offers limited package options for customers. Currently, the Spa business experiences low market growth and only generates enough revenue to break even without generating substantial profits for the hotel. This categorizes the Spa service as a Dog within the SBU classification system.The Spa service could potentially be a liability for the hotel in the worst-case scenario due to the availability of more options with various packages offered by other establishments. Please see Appendix B for the Boston Consulting Group (BCG) Matrix. The hotel building comprises nine floors, with function rooms, ballrooms, an entertainment center, and group check-in facilities located on the first floor. The lighting system on this floor is a concern as it is dimly lit during the day, which can inconvenience and pose safety risks to guests. Therefore, upgrading the lighting system should be considered by

PPKLIA to enhance overall brightness in this area. The group check-in counter can be found on the left when approaching the main entrance of the dance hall; however, it would be more convenient if it were situated on the ground floor for easier access to rooms. Additionally, compared to its competitors, the hotel lobby is relatively small for a 5-star establishment. The concierge and front desk are positioned to the left of the main door entrance; however, there are space constraints at both counters – particularly insufficient parking space for streetcars at the concierge counter – and narrow gaps between them and cushioned benches that may cause inconvenience when multiple guests approach simultaneously. Furthermore, there is a blocked staircase leading from the ground floor lobby to the first floor that might not be easily noticeable.
PPKLIA should consider implementing signage to guide guests and ensure their safety. Appendix C provides the hotel's layout for floor one and two. In terms of finance, PPKLIA hotel assesses an organization's sales and profits at various levels within the business. Effective management and control of expense accounts by all hotel directors in every department is crucial for maximizing profits. In 2008, the average occupancy rate for the rooms section was 66.6%, with an average room rate of RM 355.34, resulting in an average revenue of RM 236.66 per available room. The sale of 160,965 guest rooms contributed RM 38,093,514 to the total room revenue, making it the primary income generator for the hotel.

The food and beverage establishments including Degree 24-Hour Restaurant, Travellers Bar and Grill, and Palmz Lobby Lounge generated monthly average revenues of RM 600,000, RM 80,000,and RM10 ,700

respectively with a food and beverage cost ranging from 35% to36%. The average spending per customer at Degrees Restaurant was RM280 while at Travellers BarandGrillitwasRM260,andatPalmzLobbyLoungewasRM60.AccordingtotheAnnualReport2008fromMalaysiaAirports Holdings Berhad (MAHB),thehotel'sactual revenuereachedRM61 ,709 ,000 comparedtoRM54 ,078 ,000in2007.ThisincreaseofRM7 .6millionor14 .1%w asdueto higherroomoccupancyratesin2008andthehotel'snewinvolvementina irportcateringbusiness.
After deducting expenses, PPKLIA recorded a Profit Before Tax (PBT) of RM2.9 million in FY2008, compared to a loss of RM940 thousand in FY2007. The net income for the same period was RM2,934,000, showing an increase of 212.14% from the previous net income of RM940,000.

PPKLIA's major expenses include sales cost, salary cost, benefit cost, and direct operating expenses. In 2008, a total of RM7,270,000 was spent with RM13,790,000 allocated for asset depreciation. There is a discrepancy of RM3,698,000 between the actual expenses and the total achieved expenses in 2007.

The increase in expenses can be attributed to PPKLIA's tenth anniversary celebration. In terms of financial performance indicators: The rate earned on shareholders' equity for 2008 is 2.33%, which is higher than the rate on total assets at 2.21%. Consequently,the purchase (pitching) percentage stands at 0.12% in 2008 compared to 0.2% in 2007 (Please refer to appendix E for purchase computation).

Considering all these figures,it can be concluded that PPKLIA's financial state appears healthy as there is generally better performance seen across hotel occupancy rate,revenue,and operating profit.The hotel occupancy rate marginally increased to 66.6% in comparison to the prior achievement of65.5%.Total hotel revenue increased by 14.1%, while gross operating profit saw a 4.2% improvement. In 2008, PPKLIA achieved an average room rate of RM355.34, which was a 3.7% increase from the previous rate of RM342.53 (Please see appendix D for PPKLIA financial information). The human resources department at PPKLIA follows

a hierarchical structure with six levels of employees, starting from the general manager and descending to supervisors and staff members. The organization chart is based on functional lines, grouping departments according to their specific work activities. This design ensures efficiency within each department and specialization in tasks to enhance overall productivity. Figure 2.3.1 (a) in Appendix F illustrates the organizational pyramid of PPKLIA, showcasing the relationship between line functions involved in producing goods and services and staff functions as advisors. It also displays the delegation of authority and responsibility from top management to lower levels.
PPKLIA should consider adopting a rearward organizational chart (refer to Appendix F: Figure 2.3.1(B)) to enhance its performance in serving guests, placing guest satisfaction as the highest priority.
Every hotel's mission is to guarantee guest satisfaction and loyalty, making front-line employees who directly interact with guests crucial individuals in the hotel setting while supervisors and managers provide support and assistance in their rolesThe GM, positioned at the bottom of the pyramid, showcases the idea that leaders serve the people they lead (Rutherford and O'Fallon, 2007). PPKLIA prioritizes formal communication between the general manager and employees. Meetings are conducted regularly for different levels of staff. Department heads have a monthly meeting with the general manager, while there is also a monthly general assembly where employees gather with the general manager. Every quarter, directors and staff representatives get an opportunity to meet with the general director. Additionally, occasional meetings are arranged for cafeteria commission members and athletics club employees to interact with the general director. Apart from these face-to-face gatherings, employees can utilize a system called 'Box to GM' to communicate with the general

director by writing messages, comments or complaints regarding their working conditions. This system enables the general director to stay updated on employee situations and address any issues or problems they may encounter. By doing so, it ensures that personal problems do not hinder employee productivity and promotes loyalty towards the hotel. Moreover, these meetings also focus on discussing potential risks that might result in service disruptions in order to collectively find agreeable solutions.PPKLIA commonly addresses concerns regarding business performance in relation to both guests and employees. Scott and Mitchell (1976) emphasize the significance of communication in decision making, motivation towards organizational goals, clarification of roles and responsibilities, and expression of emotions. To enhance communication between the GM and employees, PPKLIA conducts meetings.

2.3.3 Training and Development

While many organizations view employee training and development as optional due to perceived costs, PPKLIA's management team recognizes its importance for surpassing competitors through effective results. Each hotel employee has a job profile, evaluated through tests every six months. If an employee's performance is below 60 percent, they must participate in a performance improvement plan known as the performance enhancement plan to reach satisfactory levels for serving guests effectively.In the hospitality industry, employment instability and high turnover rates are common among operational level and lower staff (Lucas, 1995). However, effective human resource management in hospitality organizations can successfully manage turnover and increase productivity (Abbasi and Hollman, 2000). PPKLIA is an example of this as they consistently implement training and development programs for their employees, resulting in only a one percent turnover rate. Additionally, PPKLIA has a high employee satisfaction level with 75 percent rating it as satisfactory based on bi-annual surveys

conducted by the hotel. This high satisfaction is attributed to factors such as satisfactory wages offered by the hotel. Moreover, PPKLIA has implemented a non-monetary incentive system to motivate employees to improve their performance. Awards are given by the management team to those who excel in their job tasks. According to Mr. Alex Chin, the Sales Manager of PPKLIA hotel in 2009, employee satisfaction reached 75 percent indicative of a high level of job satisfaction among staff members. The majority of employees express contentment with their pay and working environment demonstrating a positive attitude towards management.The management at PPKLIA believes in treating their staff with dignity, kindness, and respect as it has a positive impact on the business. They provide support and assistance to help employees quickly and fairly solve any problems they may have at work. However, Mr. Alex Chin mentioned that implementing authority is not easy as it requires a long-term commitment from individuals. Consequently, employees without authority may struggle to take ownership of and provide rapid solutions to customer issues, particularly when it comes to complaints that need to be addressed with different employees.

2.4 Selling

The PPKLIA hotel has 441 luxury guest suites and specializes in serving corporate clients, airline crew, and transit air travelers. 80% of the guests are from Australia, British, and the United Kingdom while the remaining 20% are local business clients from the government. Many of the guests choose to stay at the hotel because of its convenient location, especially transit travelers who have a few hours between flights. These travelers, who have early morning departures or late night arrivals, find that PPKLIA meets their specific needs.However, according

to Mr.Alex Chin these guests usually have a very short stay of about 1.1 nights.They typically check-out the next morning or late at night in order to catch their next flight.Because of their short stay ,they may not have opportunity explore use hotel's services facilitiesResting in their room to recover from long flights and quickly catching their next flight challenges PPKLIA's ability to retain guests and build guest loyalty. A good distribution channel helps bridge the gaps between goods and services and customers, with PPKLIA providing information and online room booking through their website. They also utilize a marketing channel by purchasing keywords for faster search results on popular search engines like Yahoo! and Google. Pan Pacific Privileges for Bookers is a loyalty program specifically designed for secretaries making corporate bookings, where each booking earns Privileges Points that can be exchanged for rewards. The program has three levels - Classic, Silver, and Gold - offering members additional benefits along with attractive rewards.PPKLIA, one of the participating hotels in this loyalty program, utilizes advertising as its main promotional tool. This is achieved through collaboration with Malaysia Airline System (MAS), and advertisements are featured in the in-flight magazine 'Going Places'. The hotel's offerings have gained significant coverage in local newspapers such as The Star and New Strait Times. Moreover, PPKLIA's public relations team has cultivated a positive relationship with local journalists by inviting them to stay at the hotel and participate in activities like food tasting. Consequently, the hotel has received numerous reviews. The public relations coverage for PPKLIA holds a value of 1.5 million, with an equal amount spent on distributing promotional materials throughout the year.