May, 2014 Case Study
Mombasa, Kenya
Roger Williams
• Citizen of the UK
• Made large fortune in the primary
sector
• Wanted to diversify his investments
Early years
• Sole trader
• Financial problems: especially cash flow
and liquidity management.
The Imperial became the most famous seaside
hotel in Mombasa
• Positive corporate image and reputation.
• High quality service & elegant décor.
Change!
World War II – British Empire
• turbulent times in Kenya
• independence movement
1. Roger’s heir – Jeff – sells
in 1959.
2. Until 1989 – five different
owners.
PROS
CONS
Attractive 200-room property with a private
beach & easy access to Mombasa airport
Recurring political unrest in neighboring
countries; fear the situation in Kenya would
deteriorate.
Global properties
 International investment group
 Private limited company
 Shareholders: US, Japan & South Korea
Hands off management
style; preferred to have a
manager on-site.
Manager would generate
profits that would be paid
in dividends to GP.
Yearly meetings:
 Calculate break-even
quantity
 Set target profits
 Determine margin of
safety
Jomo Kimathi
The Imperial groundskeeper
for the Williams family.
1959
 Jeff sold the hotel
 Helped Jomo obtain work
permit in UK
Jomo worked in the hotel
industry in UK until he retired.
Martin Kimathi
 Jomo’s son, born in London
 grew up in a multicultural society
 he was a victim of racist bullying
Graduated from
university with a degree
in Hotel Management.
When Jomo retired and
returned to Kenya,
Martin decided to go
home as well.
Martin @ The imperial
The Imperial was recruiting & Martin
was hired as one of five receptionists.
Promoted to head of reception
Expectations & career
Martin spoke
some Kikuyu,
but…
…Kenyan
employees
thought he was
too westernized.
Martin
• Well-paid professional; salaryperformance related pay.
• Married Anima & had 2 daughters.
Proud of managing the hotel where
his dad was groundskeeper.
Long-term problems
Once the premiere seaside hotel – The Imperial’s
competitive position had slowly deteriorated.
Competition




Modern, high tech feel
Luxurious hotels
Spas
Themed restaurants
WiFi access
Colonial charm i.e. old fashioned
Long-term Trend
Imperial
Decline in
bookings.
Kenya
# tourists
increasing.
Market research
Martin’s efforts:
• statistics from KNBS
• secondary market data
• marketing audit
Financial worries
Martin found that:
• Working capital presented difficulties – seasonality of
hotel operations
• Occasional problems following the monthly budget
• He had to design & implement strategies for dealing
with liquidity problems.
AccountAnt recommends…
Hotel,
restaurant &
special
events
Non-revenue
producing
departments
(i.e. housekeeping)
Martin had
to prepare
final
accounts
for GP:
• Profit &
loss
• Balance
sheet
Stock control
Catering Department CHALLENGE:
• struggle to manage stock
• make appropriate calculations for closing stock
Craig chapman
Early 20th century
Humanitarian Motivations
• Opened an orphanage
• After independence stayed to work
for other non-profit organizations.
Susan chapman
Craig’s grand-daughter left to study hotel
management & returned to work at The Imperial.
Head of Housekeeping
Susan applied for the manager position,
however Martin was appointed.
Human resources
Martin needed to improve
his working relationship
with Susan.
Three years after she was
not selected she was still
angry.
She felt she had been
discrimated against.
Leadership Styles
Susan:
Martin & Susansimilarities:
• same age
• similar university
educations
• neither fitted
perfectly well in
Kenyan society.
• efficient, hard-working and committed, was
very task-oriented
• liked bureaucracy, formal accountability, and
a clear chain of command.
• had a scientific approach to decision-making.
• staff found her cold, official and impersonal
Martin:
• much more laissez-faire style
• believed in empowerment and delegation.
• was always careful to let supervisors resolve
problems (even if anxious about problems)
• warm, friendly and outgoing
Autocratic
Susan wants to prove
GP made a mistake.
Focusing on her job – goal to make the hotel spotless & shining.
 she demanded more of the employees
 was intolerant of even minor mistakes
Employees began to complain amongst themselves.
Informal communication
Gossip moved quickly through the hotel-stories and
anecdotes of Susan acting overly autocratic.
appraisal
Martin suggested:
Susan soften her leadership style.
Susan’s response:
She resisted any discussion about
how she managed her staff.
Martin:
Did not want to dismiss Susan; he
considered her a valuable member of
the staff.
Quality
Article by French travel
journalist praised the high
quality of its housekeeping:
“We reach here the top of the highest
international standards”, he wrote, “in
terms of benchmarking, The Imperial
is très magnifique”.
*Martin appreciates professional importance of Susan;
professionally, she needed leadership training.
The Imperial is
très magnifique
November, 2013
GUTHONI: Housekeeping Department employee frequently calling in
sick and did not come to work.
SUSAN: Rather than enquiring about the reason, she dismissed Guthoni
for repeated absenteeism.
Unbeknownst to Susan, Guthoni had been diagnosed with a terminal
illness and required frequent medical treatment.
Employees react!
December: busiest month; Martin
worries he won’t make his target
profits if employees go on strike.
• Collective action gave the employees a sense of
solidarity that they previously never displayed.
• Martin noticed that many other frustrations were coming
out into the open –the threat of strike action as
empowering for the employees.
• Employees taking responsibility for the operations of the
hotel to a far greater degree than before.
Martin wanted to channel their frustrations toward
constructive ends.
• The Imperial would emerge stronger from the conflict;
necessary with big changes on the horizon.
External Environment
Martin believes with the long-term external
issues facing The Imperial that strategic
decisions were necessary.
Option 1
Make the case to GP that The Imperial needs to close for a whole year to
allow for mass renovations in order to upgrade the hotel and reposition it to its
former place as the premier hotel in Mombasa. Martin had recently travelled to
Dubai and Muscat to see the most luxurious hotels in these regions. He
understood that The Imperial had reached the decline phase of its product life
cycle and needed rejuvenation. He believed that it was possible, although this
would require substantial investment:
• in the physical condition of the hotel almost to rebuild it entirely
• in its marketing in order to relaunch it, maybe even with a new brand name.
The new hotel would attract the same customer types, but the product would
be much improved. It would also need an improved workforce to match its
new vision. Martin sketched out two possible approaches for a Human
Resources Strategic Plan
Option 1
Make the case to GP that The Imperial needs to close for a whole year to
allow for mass renovations in order to upgrade the hotel and reposition it to its
former place as the premier hotel in Mombasa. Martin had recently travelled to
Dubai and Muscat to see the most luxurious hotels in these regions. He
understood that The Imperial had reached the decline phase of its product life
cycle and needed rejuvenation. He believed that it was possible, although this
would require substantial investment:
• in the physical condition of the hotel almost to rebuild it entirely
• in its marketing in order to relaunch it, maybe even with a new brand name.
The new hotel would attract the same customer types, but the product would
be much improved. It would also need an improved workforce to match its
new vision. Martin sketched out two possible approaches for a Human
Resources Strategic Plan
Option 2
Change the nature of the hotel by transforming all the rooms into self-contained
apartments with small kitchens. The target market for these apartments would be
business travellers staying at least one week. The marketing audit had revealed
that:
• there is an increasing demand for such apartments
• very few hotels in Mombasa offer such apartments
• the market is still small
• the market has high growth potential.
The revenue from these apartments would almost match the revenue from the
current hotel operations; it would be more stable, with fewer seasonal
fluctuations; both fixed costs and variable costs for cleaning and maintenance
would be much lower. The apartments would be serviced once a week, rather
than daily. According to Martin’s workforce planning, this option could reduce the
housekeeping staff by 70 %.
Option 2
Change the nature of the hotel by transforming all the rooms into self-contained
apartments with small kitchens. The target market for these apartments would
be business travellers staying at least one week. The marketing audit had
revealed that:
• there is an increasing demand for such apartments
• very few hotels in Mombasa offer such apartments
• the market is still small
• the market has high growth potential.
The revenue from these apartments would almost match the revenue from the
current hotel operations; it would be more stable, with fewer seasonal
fluctuations; both fixed costs and variable costs for cleaning and maintenance
would be much lower. The apartments would be serviced once a week, rather
than daily. According to Martin’s workforce planning, this option could reduce
the housekeeping staff by 70 %.
Option 3
Form a strategic alliance with the famous safari tour company KenSafar. Together
they would offer a two-week package tour. Customers would arrive in Mombasa,
spend three nights at The Imperial, go on a seven-day safari tour, and then return
to The Imperial for four more nights. This would allow tourists to go on a safari,
first getting adjusted to the time zone and climate and later rest for four days
before returning home. The owner and manager of KenSafar was Kamau
Onyango, a spontaneous, dynamic and charismatic Kenyan who had many
networks and contacts, and intuitively knew market trends, even without market
research. Kamau insisted that if the strategic alliance were to go ahead The
Imperial would have to:
• make some improvements to the appearance of the hotel
• pay Kensafar a 20 % commission for all hotel guests staying at The Imperial and
booking through KenSafar
• undertake a marketing audit.
Option 3
Form a strategic alliance with the famous safari tour company KenSafar. Together
they would offer a two-week package tour. Customers would arrive in Mombasa,
spend three nights at The Imperial, go on a seven-day safari tour, and then return
to The Imperial for four more nights. This would allow tourists to go on a safari,
first getting adjusted to the time zone and climate and later rest for four days
before returning home. The owner and manager of KenSafar was Kamau
Onyango, a spontaneous, dynamic and charismatic Kenyan who had many
networks and contacts, and intuitively knew market trends, even without market
research. Kamau insisted that if the strategic alliance were to go ahead The
Imperial would have to:
• make some improvements to the appearance of the hotel
• pay Kensafar a 20 % commission for all hotel guests staying at The Imperial and
booking through KenSafar
• undertake a marketing audit.