| ITIL® Case Study |

THE
ROYAL
CHAO PHRAYA
HOTEL

THE HOTEL CHALLENGES ORG. CHART MANAGEMENT & STAFF

Disclaimer: Any resemblance to real persons, living or dead, is purely coincidental.

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THE
ROYAL
CHAO PHRAYA
HOTEL

The Royal Chao Phraya Hotel (nicknamed the Royal) is a city hotel situated on the banks of the Chao
Phraya river in Bangkok.
Built in 1983 by the Chinese-Thai businessman, Teck-Wee Lim (Harry Lim to his friends), its 32 floors
have been a fixture on the city skyline for almost 25 years. The Royal is modeled after its neighbor, the
historic Oriental Hotel. Its dominance on the five-star hotel market is increasingly challenged by many
newcomers, such as the Peninsular (1998) and the Royal Orchid Sheraton (remodeled in 2001),
some with the backing of multinational brands.
As the competition has grown over the past 10 years, it is becoming more difficult to achieve the
occupancy rate that the hotel is used to while maintaining its target room rates, which vary from $145
to $445.
Despite the newfound rivalry, the Royal is well appreciated by its guests, many of whom are repeat
business customers.
As a rule of thumb, from May through October, the guests are mostly business visitors while November
through April and most weekends tend to be dominated by tourists. The Royal has always had a
considerable advantage over other five-star hotels through its connection with the Saphan Taksin
Conference Center.
This is because the Revenue per Available Room (RevPar) from conference attendees is, on an
average, 30-50% higher than that from regular hotel guests. This is especially true when conferences
are organized for medical, legal, insurance, or IT professionals, who spend up to three times the
amount a regular hotel guest does on lodging and ancillary services.
As a city hotel, the Royal depends on good access to public transport. It is less than 100
yards from Bangkok’s upscale sky train service (BTS), which allows guests to reach the
most attractive parts of the city comfortably, quickly, and safely. It also has its own boat
service offering guests river tours as well as trips to more exotic parts of the city, such as
the floating market.

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FACTSHEET

Rooms 340
Standard 130
Sky View
Sky Executive 130
80
} Suites 30

The average guest stays 3.5 days at the hotel.

FACILITIES

Rating:
Business center, restaurants, bar, fitness center with sauna and spa, and outdoor pool
Signature restaurant Heavenly 33
Lobby bar Sugar Reef
Smoking Club Harry’s
Four restaurants Leased to outside companies

PERSONNEL

Over 200 people work at the hotel, with only the front desk employing 70 people, 24 of whom
work in shifts in guest services and reception.
The average staff attrition is 30% per year. So, on an average, a complete replacement of
personnel is seen every 3 years. Of course, in reality, a core team of employees has worked at
the hotel for many years. In fact, 32 staff members have celebrated over 20 years of service at
the Royal.

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THE Business CHALLENGES that lead to it challenges

SERVICE QUALITY
The General Manager (James) recently sponsored a thesis project on service quality from the
Hospitality School of the University of Queensland at the hotel. The results were a shock to the
management. In the 1 month that the project ran, 73 critical incidents resulting in unhappy guests
were discovered.
The students found that 50% of the complaints concerned discrepancies in guest expectations and
services offered. Thirty-five percent were actual service failures, such as over-booking or the incorrect
fulfillment of a guest’s request; and about 13% were described as “demanding guests” whose requests
were excessive and whose judgment was harsh, even by objective, fair standards.
James and the Manager - Rooms Division (Dimitri) are particularly concerned about the 85% of
complaints that were considered avoidable. Further analysis has revealed that 50% of these complaints
originated in the early stages of the stay and, consequently, meant revenue was lost because clients
opted to shorten their stay or cancel altogether.
The report also found that the Royal, while employing a number of gifted and highly motivated
personnel, did not have a structured Service Recovery or Compensation plan. In fact, some of the
complaints were because of the guests’ perception that some of them were treated differently (better)
when they complained about similar incidents.
NEW FORMS OF COMPETITION
The Royal has made its mark as a city hotel, but its leading competitors from the chains are winning
some of its clients by assembling different tourist experiences from various Thai hotels into one
package.
For example, some clients are spending 3 days in Bangkok and then a number of days in the luscious
countryside of Chiang Mai with its vibrant local markets and elephant treks or perhaps one of the
islands such as Ko Samui or Ko Phi Phi.
Conference guests traveling with their spouse or entire family are particularly attracted to this offering.
The Royal’s management is actively looking at how new services can be introduced into the portfolio
to combat this erosion of the valuable repeat/conference guests.
SCALABILITY
Another challenge for the Royal is partially due to its own successful collaboration with the Saphan
Taksin Conference Center. Building on the success of the past 10 years, Saphan Taksin has recently
decided to expand its conference facility by 70%. This will lead to a peak demand for accommodation
in excess of 1,100 rooms. The Royal has the land and the financial means to expand,
but this type of move requires investment from the holding company. While James
is concerned that the Royal hasn’t really analyzed this new development sufficiently,
the hotel owner (Harry) is convinced that Saphan Taksin will never achieve its goal of
attracting so many more new conference guests.

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the royal’s response to business and it challenges

THE KIOSK SOLUTION

To help handle the increase in guest traffic while improving the guest experience, the Royal has
decided to install and commission kiosks to provide guests with the self-service capability. The kiosks
will enable guests to book services at the spa, book a scuba lesson in the pool, get printed information,
such as maps and coupons to local restaurants, and so on.
The new system uses the guest’s room entry card extensively. The rationale is that guests must have
their room key to be able to get into their room. So, in almost all situations at the hotel, it is reasonable
to expect the guests to have their room card with them. The most important aspect of the card is that
it authenticates who the guests are. The cards will also have the capability to have new or updated
information written to them by the kiosk hardware. While this is a great advance for the Royal, kiosks
rely on IT, so there are many issues that need to be thought through before they go live.
Through a previous hotel loyalty program, customers were given paper coupons for using additional
services around the pool such as the sauna or for free meals and drinks. Unfortunately, the customers
kept losing these paper coupons frequently and complained that there must be a better way to manage
these perks of membership. The use of room cards combined with the kiosk functionality should be
the solution to this situation.
In addition to kiosks, the Royal wants to allow guests who are using their laptops in their rooms (an
ever-increasing number) to be able to do all the functions that are available from the kiosk. One big
difference between the two situations is that when
using a laptop, there is no way to update the guest room access card, although the application can
link the ordered services to a particular room.

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nonessential reading
background information

HOW IT ALL BEGAN

THE OWNER
TECK-WEE LIM (HARRY)
Harry Lim made his money as a silk trader in the 1970s. His original business was based on trading
in cheap and cheerful clothing aimed at the tourists passing through Bangkok. His company’s
success accelerated when Ralph Lauren signed up one of his textile factories in Udon Thani to
produce suits, under contract to the Lauren brand, for export to the US. Since then, Harry hasn’t
looked back.
In 1981, one of his creditors had severe financial difficulties and to clear his debt, Harry took on
the Royal Chao Phraya Hotel as payment. At the time, the Royal was a partially completed hotel
at a superb location. Harry financed the completion of the hotel and threw open the Royal in 1983.
Harry is a very cautious and astute businessman. He does not really understand the intricacies
of the hospitality industry, so he works on the simple premise that quality works. “The guests are
always right, so get the right guest and treat them right, and you will be successful.” Harry does
not like spending on things that are not visible to the customer. As a result, while his Smoking
Club is ostentatious, with leather chairs, teak finishing, and gold trimmings, there has been little
investment in supporting infrastructure, such as IT applications.

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THE ORG. CHART

TECK-WEE LIM
(HARRY)
Owner

AKKARAT LIM
(JAMES)
General Manager

DIMITRI VAN CHE KIET KANYA

RIJN INGLESIAS APILUKTOYANUNT UNGVICHIAN
(DIMITRI) (CHE) (PAP) (NEE)
Manager Manager Manager Manager
Rooms Division Food & Engineering Sales & Marketing
Beverage

SUVARNA KATSUSHI STU

Manager FUJIYAMA MILLER
Recreational Manager Manager
Services
Finance Human Resources

DANIAL ISABEL MARY JUANITA YVETTE JEAN

KIDWAI O’HARA
SANCHEZ SANCHEZ LEROUX Assistant
(DAN) Front Office
Executive Accountant Chef Chef
and
Maintenance Housekeeper
Business
Chief Center Head

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THE MANAGEMENT

THE GENERAL MANAGER

AKKARAT LIM (JAMES)
James is Harry’s second son. It was always Harry’s intent for James to take on the hotel business.
After attending the Harrow School in Bangkok, James went on to study at the International Hotel
and Tourism Industry Management School in Bangkok. On completion, he attended the New York
University’s Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management, where he
graduated with MSc Honors in 1997.
James has inherited his Thai mother’s free spirit. His mother, Isra Sangsirithorn (everyone calls her
Elle), was raised on the Thai island of Ko Pha Ngan and has always been an extrovert lover of life,
somewhat balancing her husband’s more-cautious, introvert character.
James is now 36 and keen to escape his father’s yoke and really modernize the hotel. James, who
can sense the winds of change in the industry, is now actively challenging the natural thrift of Mr. Lim,
which helped build the Royal Chao Phraya Hotel.
His comparative youth, modern outlook, and the islanders’ love of enjoying the moment makes it
somewhat frustrating for him to keep his plans for expansion and personnel changes in check.

MANAGER — ROOMS DIVISION

DIMITRI VAN RIJN
The biggest job at the Royal is arguably that of Manager — Rooms Division. Harry knew early on that
he needed real expertise to take on this task and has always filled it with Dutch graduates from the
well-respected Maastricht Hotel Management School in Holland.
Dimitri is the fourth graduate from the school to take on this role. He is typically Dutch in his focus on
being practical and pragmatic. He also believes that it is important to be very close to his employees,
through his empowered and collaborative approach to management. That doesn’t always work in the
traditional Asian culture, and Dimitri is often at odds with Harry, who doesn’t ever trust employees who
aren’t family. The staff, frequently from the rural province of Isan, don’t quite know what to make of the
eccentric Dutchman and his unusual style!

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MANAGER — FOOD AND BEVERAGE

CHE IGLESIAS
Che is a flamboyant man of Cuban descent, whose parents fled to Florida in the 1960s. Preferring
the slow rhythm of the tropics, he is a natural counter-balance to the ever-energetic Dimitri. Harry and
Che share a love for cigars and believe that spending lavishly on guests is key to success. Che has
not had any formal training in this role and, as a result, does not make use of regular F&B metrics,
such as the Pour/Cost percentage1 for efficiency in the bar.
Che has grown through the ranks after settling in Bangkok while on a post-graduation, sabbatical
world tour. He worked as a waiter and short-order cook in Miami while working his way through his
BBA at the University of Miami. This limited exposure to the business and strong support from Harry
has enabled Che to muddle through as F&B Manager. His day begins a little later than that of all other
personnel and a siesta is always on the schedule,
— “why kill yourself working today when you will only miss the party tomorrow?”

MANAGER — ENGINEERING
KIET APILUKTOYANUNT (PAP)
Pap is a cautious engineer who graduated from the prestigious Chulalongkong University. He is a
very good technical engineer who takes his work seriously. He believes passionately in quality but, as
a result, some of his tasks take longer to complete than guests expect. Pap hasn’t traveled outside
of the country other than on vacation, and he isn’t very comfortable with English or conversing with
foreign guests.
Like many Thai, Pap does not like any form of confrontation. Consequently, he sometimes finds
himself promising things to guests or colleagues to avoid an issue and then being “unavailable” in the
event that he cannot deliver on the promise.
Dimitri and James would like to bring in someone who is more comfortable dealing with international
guests to work with Pap. To some extent, Dan Kidwai, the maintenance chief with his experience in
South East Asia is a help. However, he prefers to stick to his beloved machines rather than to engage
with guests. The problem is that Pap would see that as a loss of face, and because he is Elle’s cousin,
he has significant support.

1. The pour cost percentage is determined by dividing the cost of goods sold by sales (portion cost/selling price). Consequently,
a 20% pour cost means that it costs the taxpayer $.20 to generate $1.00 of liquor sales, which translates to a gross profit
margin of 80% and a markup on cost of 400%.

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MANAGER — MARKETING AND SALES

KANYA UNGVICHIAN (NEE)
Nee is a young, well-connected, confident professional. She originally studied finance but quickly
found out that she has flair with customers. She studied economics at Harvard in the United States
and received an MBA in Europe.
Her family consists of well-connected traders, and Nee has successfully tapped into their network
of friends and relatives to ensure a steady stream of clients for the Royal. In addition, many of her
former classmates are active in the medical, legal, and IT sectors. These contacts give her access to
lucrative conference and banquet events.

MANAGER — RECREATIONAL SERVICES

SUVARNA
Suvarna is the darling of the Royal. She just appeared at Harry’s door one day, confidently asking for
a chance to set up a small massage facility. This has since grown into a significant recreational facility.
No one seems to know her full name or how old she really is. “It didn’t seem polite to ask,” Harry is
fond of saying.
Suvarna is charming and elegant; she is a former champion swimmer who learned her trade at the
prestigious Tettucio spa in Montecatini, Italy. Her next ambition is to set up a fully equipped daycare
center, but Harry does not see the need for such innovation. “Crying babies would just disturb the
other guests and our own staff would probably bring all their children from the provinces and crowd
the place up.”

MANAGER — HUMAN RESOURCES

STU MILLER
Stu is a colorful American who moved to Thailand with his partner in 2001, after 9/11. The tragedy
in New York altered his view of the meaning of life. He wanted to tone down his existence in the fast
lane, and Thailand seemed a good place to go. Ultimately, Stu wants to move to one of the islands
and open his own resort. He
somehow finds it difficult to escape the trendy excitement of Bangkok, even though, after New York,
it still seems provincial in many ways.
Stu has a PhD in education and feels a little underutilized in his current role, but it is a good job and
he likes the interplay of cultures that make up his portfolio.

MANAGER — FINANCE
KATSUSHI FUJIYAMA
Fujiyama-san is Japanese and a trained accountant who has worked in many different fields, including
IT and education, before settling in his current role. Fujiyama-san met Harry many years ago in Tokyo
when Harry was negotiating an export deal with a Japanese importer and Fujiyama-san was the
negotiator. Harry was so impressed, he made an offer that “could not be refused,” and Fujiyama-san
has now worked at the Royal for 6 years.
While Fujiyama-san is serious and conscientious about his tasks, he also loves to have fun outside
of the office. He can often be found with Che and Harry at the Amadis, an upscale Karaoke bar, or at
one of the prestigious sake bars, such as Wasabi, in town.

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THE STAFF

FRONT OFFICE AND BUSINESS CENTER HEAD

ISABEL O’HARA
Responsible for the front office, including the lobby, Isabel plays a key role at the Royal. In fact, her
energy and love of technology is what made both Harry and James give her additional charge of the
business center and the coffee shop, which James envisages as an informal chill-out zone for the
business guests and the young, techno-savvy tourists. A whirlwind of energy, she is literally wherever
the action is, and as some might say, if there is no action, she creates it!
Isabel believes in personal attention and keeping tight control over every customer interaction. No
detail is too small to escape her notice, so much so that her team is now happy for her to take on the
responsibility of every decision because their initiative seems unwanted. Small wonder then that she
is exhausted at the end of the day and wonders how much more she can manage just by herself!
Advice she has received includes adjusting her intense approach or face a possible burnout. These
days, she barely has time for jazz and is usually too tired for scuba diving, her favorite leisure activities.

CHEF AND ASSISTANT CHEF

YVETTE LEROUX AND JEAN
Madame Yvette Leroux is an institution at the Royal. She can literally change the mood at any time,
especially if her decisions are not accepted. Mme. Yvette is a gifted chef and a master of several types
of cuisine. “Food,” she proclaims, “can be cooked by anyone, but only the French make it divine.” The
management is only too happy
to humor her, given the mouth- THE ROYAL GRAND PRIX
watering food she conjures up,
including her unbeatable range A group of local vendors, preselected through years of
of pastries. experience, is in a state of high alert. The hotel van, with Mme.
Yvette’s young assistant — Jean — pacing, cell phone in hand,
But, Che knows how many is on standby. The moment the phone rings and the instructions
anxious moments she gives are noted, the vendors swing into action and the loading frenzy
her team as she ponders and begins.
broods over her menu till the
last moment, and then spews Within minutes, the van is loaded and Jean’s speed on the Royal
forth the list of provisions she Grand Prix is unrivalled. There is a discreet betting ring that lays
needs. The fresh seafood, odds on how long it will take Jean to make it back to the hotel.
vegetables, and fruits that she There was even talk of turning this into a professional race till
insists on are purchased from the otherwise easy-going police nipped such ideas in the bud.
the local market at Saphan
Mai, an hour away. This has
led to a popular local tradition
called the Royal Grand Prix.

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Jean, with Che’s tacit support, has made some not-so-subtle suggestions about making this a weekly,
and not a daily, ritual — not least because of the expense. However, till now, no action has been taken
to resolve this issue.
Knowing he is facing a formidable adversary, Che is quietly pushing for the upgrade of the coffee
shop, offering a variety of food that can be served quickly and Wi-Fi areas for the business guest. At
least publicly, Madame Yvette remains unconcerned about the threat from the coffee shop and the
other “fast-food” ideas of James.

EXECUTIVE HOUSEKEEPER
MARY SANCHEZ
The elder of the two Sanchez sisters, Mary is a perfectionist who is intolerant of any sloppiness. Her
white-glove inspections would do credit to a drill sergeant of the Marine Corps — one reason why the
entire staff trembles in her presence.
Nobody doubts her integrity; however, it is her impossibly high standards that often terrify the
housekeeping team.
Mary has a passion for flowers, her favorite being the rare Parrot flower, and counts the elderly
gardener, with whom she has coffee at 11 am every day, as among her few friends. Very thorough with
her planning, control, and instructions, she is at her wits’ end with the increasing number of complaints
about housekeeping. No amount of repeated instructions or scolding seems to make a difference to
the personnel.

ACCOUNTANT
JUANITA SANCHEZ
Juanita Sanchez is the younger, fun-loving sister of Mary. Juanita’s encouraging manner goes a long
way to energize the young people at the Royal with her natural leadership qualities. The confidant of
many of the younger girls, including and especially in Housekeeping, she is often caught between two
contradictory influences. On the one hand is her loyalty and affection for her older sister, and on the
other is her growing concern that the quality of service for which Housekeeping was known is slipping.
Much better with people and figures than her elder sister, she is contemplating a formal course in
management (apart from her basic qualification in accounting) because she feels that qualifications,
savvy, and experience are never enough in an increasingly competitive world.
Juanita is a firm friend of the Business Center Head, Isabel O’Hara, who has not only helped her
explore technology, but with whom she spends time as a student, learning all things fun, educational,
and practical online.

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MAINTENANCE CHIEF
DANIAL KIDWAI (Dan)
Dan is a stocky, quiet, 37-year old, who loves to work with machinery. As his seniority increases, he
resents the time he needs to spend in meetings and drafting memos and seeks every opportunity to
get his hands “dirty.” He is happiest with a flask of tea and his tool kit.
However, he is smart enough to realize that growth means that he either sets up his own “shop” or
he grows in the hotel hierarchy. With a big, extended family dependent on him, the former option is
more risky.
His grandparents migrated from Dhaka, Bangladesh, to Myanmar, and finally reached Thailand. He
has come up the hard way, and educated himself at night school, leading to an Engineering diploma,
while working during the day.
He has worked for several establishments, including a business center in Indonesia, a hotel in
Thailand, and a resort in Malaysia.
He is respected by his staff for his mechanical skill and his ability to insulate them from the management.
In turn, the management respects Dan’s ability to get along with his people, and his “noiseless” ability
to get things done. Despite his quiet demeanor, he is very effective at negotiating with vendors.
Dan likes listening to folk songs in his mother tongue, Bangla, and enjoys playing football on the
weekend. When not wearing overalls, simple cottons are his preferred mode of dress.

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