Project Management of Hotel Opening Processes in Greater China.

Executive Summary by Gert Noordzy - June 2013

The Chinese hotel industry has started the steepest new hotel development curve the world has ever experienced.

By 2039 China is expected to reach 9.1 million hotel rooms, four times its current number. Development on this scale generates specific dynamics and challenges. It will require proven project management approaches that are widely used in other industries to meet these challenges head on and improve the efficiency and effectiveness of opening new hotels in China.

Traditionally, hotel opening efforts have been driven by corporate operations, invariably supported by task force teams drawn from existing hotels. This specific approach only works on a small scale and has several limitations. These and other problems have recently led to some hotel management companies establishing dedicated corporate hotel opening support functions to support hotel management teams.

In view of the anticipated phenomenal growth in China, we asked the question: "How can hotel operators open new properties on this scale effectively, efficiently, and in a consistent and predictable manner?" In our view, the traditional approach alone cannot meet the challenges and dynamics of new hotel development on a large scale and will contribute to causing delays in the technical, operational and commercial readiness of hotel projects.

It is interesting to note that there is no conventional literature on hotel opening processes. Very few independent articles and reviews on the subject are up to speed. We therefore decided to explore better ways of managing new hotel opening processes and write a dissertation exploring the issues and opportunities for improvements.

Project management

"A project is a temporary endeavour undertaken to create a unique product, service, or result. The temporary nature of projects indicates a project has a definite beginning and end." (PMI, 2013). It is important to understand that by definitions new hotel openings are essentially projects and not part of on-going hotel operations. The approach to manage them should fundamentally not be different from projects conducted in information technology, consulting, banking, telecommunications, aerospace, and other industries.

Various consecutive global surveys on project management practices have been conducted by PricewaterhouseCoopers (2004 / 2007 / 2012). The most recent survey of over 1'500 respondents from 38 countries within 34 industries reflects that project management maturity levels are on the rise.

The same report shows that "97% agreed that project management is critical to business performance and organizational success, and 94% agreed that project management enables business growth." (PWC, 2012). Similarly, a study by Anderson Economic Group found that "project management is now used in more than 85 occupations across a wide swath of functions and industries" (PMI, 2010). The hotel industry is not included!

Dissertation

The dissertation briefly considers published plans for future hotel openings in Greater China to explain the scale of the problem. It briefly analyzes why traditional approaches to opening new hotels do not work efficiently and cannot be scaled, and why project management methodologies are the best way forward.

The major part of the dissertation examines modern project management concepts to determine the feasibility of reorganizing a hotel management company and developing a new hotel opening "how to" guide so that a hotel management company can use project management to effectively and efficiently open new hotels in Greater China.

The main outcome of the dissertation is a working document for senior hotel executives involved in new hotel opening projects (who may be new to the Greater China region, new to a hotel opening project related position and new to project management).

The target audience includes whoever manages hotel opening projects: hotel management company CEOs and managing directors, hotel owners and asset managers, hotel management corporate officers, hotel general managers and functional heads, hotel project developers, project managers and consultants, contractors and sub-contractors, and vendors.

Outline

Whereas project management concepts have been embraced and methodologies successfully implemented across a multitude of industries, they have not been embraced by the hotel industry, let alone introduced at hotel management company level.

Consequently, the dissertation is in large part a pilot study that is based on comparison with other industries, as well as extensive professional experience. Following is an outline of the content.

Chapter 1 describes the lay of the land of China's hotel industry and the outlook for the future.
Chapter 2 identifies and reviews the root causes of hotel opening delays and analyses the causal chain leading to hotel opening delays. It determines the impact of delays on the technical, operational and commercial readiness of a new hotel and identifies which causes and factors can be influenced more readily and which not. Finally it establishes whether various causes originate from a single root cause or multiple root causes.
Chapter 3 builds on the outcomes of the causal chain analysis and explores how hotel management companies can prepare their organizations to effectively utilize project management to run new hotel openings as projects. It explains the commitments and fundamental changes senior management has to make before this can be done to build a foundation for success.
Chapter 4 then explains the possibility of creating a project based “how to?manual for executing new hotel openings.
Chapter 5 provides the conclusions, recapitulates the key success factors and addresses the potential challenges which will be faced. The dissertation concludes with an outline of the potential cost of not embracing project management and intended next steps.

Building blocks

Chapters 3 and 4 combined are working documents offering 5 building blocks, outlining how to address the root causes and intermediate causes effectively and improve project performance. Please refer to figure 1.

Chapter 3 outlines the first 3 building blocks, which form the fundamental components before project management can be implemented in a hotel management company. Chapter 4 outlines the last 2 building blocks, which form the technical components for implementing project management in a hotel management company.

Figure 1: Five Building Blocks to effectively improve project performance:

Hotel opening building blocks Source: Noordzij & Whitfield, 2011.

Conclusion / Next Steps

The dissertation is a "proof of concept" project and so the "how to" guide is incomplete. Therefore, we intend to conduct further research to gauge the level of effectiveness of the building blocks and to validate the value of project management for hotel opening processes.

Second, we intend to further develop the draft introduction of the proposed Standards Extension as presented in Appendix L of the dissertation into a full-fledged New Hotel Opening Extension to the PMBOK© Guide Fifth Edition.

Contact Gert Noordzy to request more details.

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Hotel Openings - Deadlines - Processes - Projects - PMI

About this site

Hotel Opening Processes explores ways to better manage new hotel openings and improve the efficiency and effectiveness of processes.

Hotel Opening Processes endeavours to conduct and publish research in this field and challenges the hotel industry to improve its new hotel opening track record. Initially, the primary focus will be on Greater China.

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Research

Root cause analysis & causal chain of hotel opening delays
Quantifying new hotel opening delays
Impact of psychological typology and cultural dimensions on new hotel opening processes


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