HiLite Hotels (Dec ‘18 – Q1a)

The board of HiLite is currently looking to develop the HiLite business model in
Veelandia, a developing country with good growth potential. However, as operating in a
different country would be a new strategic direction for HiLite, the finance director has
stated that before any such strategy is considered, it is important to understand the key
factors in its home country of Deeland, which have driven HiLite’s success.

Required:
The chief business analyst has asked you to prepare briefing notes for the finance
director, for consideration at the next board meeting, which discusses the key factors
which have enabled HiLite to be successful in its home country of Deeland.
(16 marks)

Professional skills marks are available for demonstrating analysis skills in investigating
and considering information from a range of sources. (3 marks)
 HiLite Hotels (Dec ‘18 – Q1a)
Role: Senior Business Analyst
Format: Briefing notes
Recipient: Finance director

Marks/Time
Verbs Task/Answer points
allowed

Discuss The key factors which have enabled HiLite to be successful in its home country 16 marks –
8 points
Better to include both internal and external factors 32 minutes

Professional skill: Analysis

Scrutinise – Investigate - Consider: information from a range of sources. 3 marks

Technical skills: Useful model: Porter’s Diamond plus internal factors

 HiLite Hotels (Dec ‘18 – Q1a)
Factor conditions

• Well-developed transport infrastructure - new airport – brought additional 2.5m

international visitors to Deeland – creates a big demand for good hotels.

• Good education system - nearly half of the universities in Deeland offer travel and
tourism qualifications – easy for us to find expertise needed.

Demand conditions

• Highly demanding travellers (customers) – demanding high standards and VFM – drives
companies in the hotel industry to continuously improve.

• High economic growth – ideal for HiLite as both business and leisure travel increases.
 HiLite Hotels (Dec ‘18 – Q1a)
Related and supporting industries

• Highly developed travel and tourism industries – very supportive of the hotel industry.

• Hotel booking websites - particularly price comparison websites – have driven

customers to HiLite’s website because we offer best VFM.

• Growth in the overall economy – promotes both business and leisure travel.
 HiLite Hotels (Dec ‘18 – Q1a)
Firm strategy, structure and rivalry

• Continuing growth of the budget hotel market has been crucial for our success as we
provide the best VFM.

• Highly competitive environment - two new national branded chains of hotels opened in
main tourist centres of Deeland - keeps us ‘agile’ - however, high intensity rivalry
adversely affecting luxury hotel sector.

• Government supportive of travel and hotel industry – e.g. infrastructure investment

• Tax breaks for job-creating employers (any industry), promoting relevant education etc.

Remember: pick 1 point from each heading and

explain how they have contributed to HL’s success
 HiLite Hotels (Dec ‘18 – Q1a)
Internal factors
• Our strong and reputable brand
• Excellent location - locating hotels on major road networks and near to rail stations
• Offering services in line with customer demands
• Our competitive pricing strategy
• Perfectly placed to exploit overall market conditions
• Value for money approach in building sustainable competitive advantage
• Highly skilled, motivated staff leading to excellent customer service
 HiLite Hotels (Dec ‘18 – Q1a – examiner’s comments)
Technical marks were lost because weaker candidates:

• provided a very limited range of factors driving HiLite’s success

• provided examples of information included in the case, with little or no explanation of its
relevance to HiLite’s success – e.g. some candidates focused too much on the KPIs in
Exhibit 1, without explaining how these contributed to HiLite’s success.

• highlighted outcomes of success factors, such as “high level of customer satisfaction”

rather than the factors themselves.
 HiLite Hotels (Dec ‘18 – Q1a – examiner’s comments)
Professional marks were lost because candidates:

• spent time defining Porter’s Diamond or forced their discussion to fit the framework,
limiting their marks.

• produced an essay-type answer rather than concise briefing notes, therefore scoring low
or no marks.

• repeated points - demonstrates weak professionalism.

 HiLite Hotels (Dec ‘18 – Q1b)
The Board of HiLite has identified an existing chain of hotels called ‘Comfi Stay’, located in
Veelandia, which it is considering acquiring. The chief business analyst has passed you a
factsheet which he prepared containing data relating to the proposed acquisition.

Required:
Using the factsheet referred to above and any other relevant information, prepare a
report for the finance director, which evaluates the proposal to acquire the Comfi Stay
hotel chain. (16 marks)

Professional skills marks are available for demonstrating evaluation skills in presenting a
balanced and objective appraisal of the relevant information relating to the proposed
acquisition of the Comfi Stay hotel chain. (4 marks)
 HiLite Hotels (Dec ‘18 – Q1b)
Role: Senior Business Analyst
Format: Report
Recipient: Finance director

Marks/Time
Verbs Task/Answer points
allowed

Evaluate The proposal to acquire the Comfi Stay hotel chain 16 marks –
8 points
32 minutes

Professional skill: Evaluation

Assess – Estimate - Appraise: present a balanced and objective appraisal of the proposed acquisition 4 marks

Technical skills: Useful model: SAF

 HiLite Hotels (Dec ‘18 – Q1b)
Suitability Suitable, but need to be culturally sensitive
• Hotel Industry Report 20X8 - consolidation common in marketplace – hotels acquiring
other types to expand portfolio

• Fits with CEO’s aim to pursue growth and develop HL brand overseas

• Mitigates risk of depending on one business in one country

• But fit questionable – CS mid-range hotel – not a budget hotel – also, family-run –
potential organisational cultural differences - may be difficult to change and integrate into
our culture, but manageable.

• Additionally, Veelandia >5,000 miles away – developing country - ‘poor’ national culture -
poor employment practices and under-age labour must be thoroughly investigated –
opportunity and a priority for us to change things - otherwise reputation risk
 HiLite Hotels (Dec ‘18 – Q1b)
Acceptability
Returns
NPV – positive – about $10·6m - ROI of 13·2% - discounted payback at about 5y and 3m
• However, reliability of data in NPV needs to be questioned:
o Must assess whether revenue predictions realistic, based upon predicted customer
numbers and revenue per room calculations.
o Year 3 onwards, revenues and operating costs remain unchanged - unlikely
o Long-term training and environmental investment cost also see no increase – unlikely
as there has been a lack of investment previously - needs investigation.
• Must perform sensitivity analysis and wider range of NPV calculations from best to worst-
case scenarios.
 HiLite Hotels (Dec ‘18 – Q1b)
Risk
• Forex risk not considered - never operated any hotels overseas - NPV calculation done in our
own currency - must consider potential impact of Veelandia currency fluctuations on
forecasted revenues and operating costs.
• Must test sensitivity of assumptions to evaluate overall impact of and potential sensitivity of
these assumptions on final outcome – e.g., failure to achieve expected occupancy levels
from year 3 will reduce NPV significantly, as expected revenues would be significantly
reduced.
• Combination of variable changes needs to be tested, to assess sensitivity to potential
changes in underlying assumptions and risks changes may pose - must also verify accuracy
of assumptions.
If FDI/contractual arrangement, question if forex risk factored in NPV

For a given NPV/payback calculation, you can almost always recommend sensitivity analysis.
 HiLite Hotels (Dec ‘18 – Q1b)
Reactions
• Hotel managers asked to re-locate for training - may react negatively/positively - must
communicate effectively to managers in good time.
• Staff in Veelandia – likely to react positively to improved employment rights and working
conditions
• Shareholders - accept if returns positive – however, if they believe acquisition may impact
adversely on reputation, shareholder wealth diminished - assurance and communication
important.
• Customers may not favour acquisition if prices increase - however, investment should
increase quality of stay - should satisfy potential customers. .
• Wider community and media - negative – acquisition may be perceived as unethical –
must communicate intention to operate at highest ethical standards.
Acceptable if an expert consultant (in acquisitions particularly in the hotel sector in
Veelandia) is hired.
 HiLite Hotels (Dec ‘18 – Q1b)
Feasibility - must consider whether we have capabilities needed to carry out acquisition.
Money
• Available - combination of debt and equity - highly profitable business - shareholders
expect continued growth in profit - should be supportive of investment through equity and
debt finance.
Manpower
• Management skills - never undertaken acquisitions before let alone a foreign acquisition –
no internal expertise - again, expert consultant and proper due diligence needed.
• Operational skills:
1. Our highly skilled staff - can train and work with CS staff but need to determine
whether our managers will be willing to relocate to a country >5000 miles away.
 HiLite Hotels (Dec ‘18 – Q1b)
2. Veelandia staff - will not have same level of training, commitment and loyalty - must
be trained and developed – changing their mindset, large barrier to overcome -
training critical. Feasible with proper due diligence and expert consultant
Conclusion
• Many positive factors - suggest acquisition of CS hotel viable strategy for HiLite (SAF) -
however, BOD should prioritise which aspects most important to success of venture before
making final decision.
 HiLite Hotels (Dec ‘18 – Q1b – examiner’s comments)
Technical marks were lost because weaker candidates:

• provided very limited evaluation of information provided in the case - merely re-stated
data provided – e.g. to state ‘Veelandia is 5000 miles away’ is not sufficient, without
further evaluation of its relevance to its impact on this decision.

• framed answers as a series of questions – e.g. ‘Does HiLite have the staff skills to manage
a mid-range hotel?’, ‘How will shareholders react to the poor environmental practices of
Comfi Stay?’ - very poor exam technique - candidates strongly encouraged to frame their
responses as direct answers to the task set.
 HiLite Hotels (Dec ‘18 – Q1b – examiner’s comments)
Professional marks were lost because weaker candidates:

• failed to present a sufficiently balanced evaluation suitable to assist the Finance Director
in the decision

• merely repeated the material from the case, thus not demonstrating sufficient evaluation
skills.
 HiLite Hotels (Dec ‘18 – Q2a)
Following a subsequent decision by the HiLite board, the proposed acquisition of the Comfi Stay
hotel chain has recently been announced to the Deeland stock market and, generally, the market has
reacted positively to the announcement. However, there have been some negative press reports in
the Deeland Daily News about the proposed acquisition, criticising HiLite. The chief executive of
HiLite is very concerned about these reports and has asked the business analysis team to consider
HiLite’s response.

Required:
Prepare a draft press release responding to the criticisms assessing the social and environmental
impact of HiLite’s proposed investment in Veelandia, with a view to reassuring its stakeholders of
HiLite’s intentions to maintain its high principles and standards in acquiring the Comfi Stay hotel
chain. (10 marks)

Professional skills marks are available for demonstrating communication skills in clarifying and
conveying relevant information to HiLite’s stakeholders. (3 marks)
 HiLite Hotels (Dec ‘18 – Q2a)
Role: Senior Business Analyst
Format: Press Release Remember to keep it positive
Recipient:

Marks/Time
Verbs Task/Answer points
allowed

Assess the social impact of HiLite’s proposed investment in Veelandia

• Employee rights • Employment opportunities
Assess the environmental impact of HiLite’s proposed investment in Veelandia 10 marks –
• Environmental investment • Long-term approach 5 points
20 minutes
[Reassure stakeholders of HiLite’s intentions to maintain its high principles and
standards in acquiring the Comfi Stay hotel chain]

Professional skill: Communication

Inform – Persuade - Clarify : and convey relevant information to HiLite’s stakeholders 3 marks

Technical skills: common sense/practical approach

 HiLite Hotels (Dec ‘18 – Q2a)
1. Employee rights
• Child labour
• Excessive hours
Assure press/stakeholders that all these issues
• Poor wage rates
will be addressed and remedied immediately
• Lack of training
• Lack of job security
 HiLite Hotels (Dec ‘18 – Q2a)
2. Employment opportunities

• Currently investing $10m in training annually (in Deeland)

• So, will certainly invest $10.5m over 6 years in CS Hotel

• Will cease policy of employing male hotel managers only

• Staff selection and promotion will be based purely on merit only

• Will promote equality and diversity

The aim is to replicate our high ethical standards in Veelandia.

 HiLite Hotels (Dec ‘18 – Q2a)
3. Environmental investment
• Reputation as a sustainable and environmentally friendly business in Deeland – will
continue to do the same for CS in Veelandia.
• All CS staff will be trained in environmental management and sustainability
awareness – will replicate at all CS hotels
• Investing $6m in environment protection and to prevent further pollution incidents
• Will investigate existing CS hotel environmental practices and policies and amend if
needed - apply them consistently across all 20 hotels
• Will set KPIs for recycling, CO2 emissions, wastage, and environmental training –
similar to what we do in Deeland
 HiLite Hotels (Dec ‘18 – Q2a)

4. Long-term approach

Will:

• Work with Veelandian government, NGOs and travel and tourism industry

• Take pro-active approach to managing social and environmental impact

• Adhere to corporate guidelines and standards set by HLH in Deeland.

HiLite Hotels (Dec ‘18 – Q2a)

For more information, press only:

PR Contact Name:
Phone number:
Email:
 HiLite Hotels (Dec ‘18 – Q2a – examiner’s comments)
• Strong candidates:

i. used information in both Exhibits 1 and 3, relating to HiLite’s current and planned
action and investments in its staff and environmental awareness investment, to
counter criticisms presented in Exhibit 4.

ii. used the KPI’s in the CEO’s report to support HiLite’s strong social and ethical stance
and this was a useful way to convey the information.

• Weaker answers were poorly structured or failed to address a sufficient range of relevant
actions by HiLite to counter the potential concerns raised in the newspaper article
 HiLite Hotels (Dec ‘18 – Q2a – examiner’s comments)
• Candidates who scored high professional skills marks presented their press release in an
appropriate tone and communicated a strong and convincing message to most of its key
stakeholders.

• Candidates scoring low professional skills marks

i. presented answers in an essay style, without communicating a convincing and

appropriate message to its key stakeholders.

ii. structured answers poorly or failed to address a sufficient range of relevant actions by
HiLite to counter the potential concerns raised in the newspaper article.
 HiLite Hotels (Dec ‘18 – Q2b)
Although HiLite’s shareholders have generally responded favourably to the proposed acquisition of
the Comfi Stay hotel chain, HiLite’s board is considering how it should effectively communicate with
all of its key stakeholders to ensure that they understand the strategic decisions and direction of
the business. The finance director has recently asked the board to consider the use of integrated
reporting in assisting in this communication and in building relationships with HiLite’s key
stakeholders.

Required:
The finance director has asked you to provide her with briefing notes which she will use to assist
her in discussions with HiLite’s Board members, which assesses the role and benefits of
integrated reporting in assisting effective communication and in building relationships with
HiLite’s key stakeholders. (12 marks)

Professional skills marks are available for demonstrating evaluation skills in using appropriate
professional judgement to assess how useful integrated reporting could be to the stakeholders of
HiLite. (3 marks)
 HiLite Hotels (Dec ‘18 – Q2b)
Role: Senior Business Analyst
Format: Briefing notes
Recipient: Finance director

Marks/Time
Verbs Task/Answer points
allowed

Assess Role of integrated reporting Max 6 marks

• Broader scope and improved quality of information

Assess
in using appropriate Benefits of integrated
professional reporting
judgement in assisting
to assess effective
how useful communication
integrated Max 8 marksof
reporting could be to the stakeholders
HiLite. • Benefits all stakeholders – investors, employees, customers, community etc. (3
12marks)
marks –
• Benefits of reporting about relevant capitals. 6 points
24 minutes

Professional skill: Evaluation

Assess – Estimate - Appraise: how useful integrated reporting could be to the stakeholders of HiLite. (3 marks)

Technical skills: Integrated reporting

 HiLite Hotels (Dec ‘18 – Q2b)
Role

• Improve quality of information available to all our stakeholders by communicating

broader and more relevant information which can assist them in making effective
decision – also, research indicates that investors want broader information.

• Promote a more efficient and cohesive approach to stakeholder

communication/corporate reporting activities

• Provide information which stakeholders need, value and find useful - will help build
long-term relationships

• Designed to benefit ALL our stakeholders – shareholders, hotel staff, guests, local
communities

• Press release – one-off - <IR> - continuous reporting

 HiLite Hotels (Dec ‘18 – Q2b)
Benefits

• Provides us with greater understanding of drivers of our performance and value

creation, our use and dependence on different ‘capitals’ and our access to and effect
on them – we can be more confident of our long-term outlook and ability to create
value over time.

• Investors benefit – ‘financial’ capital information - informs investment decision-making

- broader information – e.g. explanation of our business model, how we generate
business/revenue, well-articulated strategy and a clear understanding of our
anticipated future direction, opportunities/risks – also improves investor decisions.
 HiLite Hotels (Dec ‘18 – Q2b)
• Can outperform hotels who do not provide <IR> - can have more long-term investors -
clearly benefits us and all our stakeholders, including staff and customers.

• Broader information about ‘human’ capital - important to our staff looking for
employment stability and future employment prospects – will make it easier to recruit
and retain employees in the future.

• Local communities – ‘social and relationship’ capital - we can demonstrate how we

stimulate local economies by bringing in tourists to spend money on local economies -
will be able to see our commitment to local economy.

• Veelandian government and citizens – will be able to see our future commitment to
environment through our ‘natural’ capital reporting.
 HiLite Hotels (Dec ‘18 – Q2b)
• Allows us to ‘tell our own story’ – proactive reporting - prevents analysts and external
observers (such as media) from making wrong assumptions on our behalf

o E.g. can clearly and regularly inform all stakeholders about how well we are
treating our employees, customers, suppliers etc. and measures we have taken to
reduce environmental impacts.

• We obviously benefit from all these in terms of increased investment, easier and
cheaper staff recruitment/retention and increased revenue/profitability.
 HiLite Hotels (Dec ‘18 – Q2b)
Additional optional points

Wider stakeholders can use information provided by <IR> - benefits for HLH:

i. Economic analysts: will help us understand trends and externalities in hotel industry
which could affect economic outlook and value creation of HLH

ii. Industry analysts: will help us understand factors driving competition in hotel
industry and potential for sustained value creation - understand management quality
and corporate strategy and evaluate our ability to respond to emerging trends, such
as DTs and consolidation of industry
 HiLite Hotels (Dec ‘18 – Q2b – examiner’s comments)
Technical marks - stronger candidates:

• recognised IR’s role in adding value to a wide range of stakeholders and also identified
HiLite’s key stakeholders who would be interested in such information.

• discussed a range of potential benefits for HiLite’s stakeholders, such as better

information for investors’ decision making and information for staff in relation to HiLite’s
investment in their development.

• correctly identified the ability to increase transparency and allowing stakeholders a better
understanding of what the business does, which in turn creates trust.
 HiLite Hotels (Dec ‘18 – Q2b – examiner’s comments)
Technical marks - weaker candidates:

• identified general benefits of <IR>, such as its role in communicating to a wider range of
information to stakeholders, other than financial reports.

• did not demonstrate a sound understanding of <IR> – instead, just described the 6
capitals.

• (some) went little further than basic definitions of <IR> and the 6 capitals, which did not
address the requirement - 6 capitals were credited, only where candidates correctly and
appropriately explained how these could add value to HiLite and its stakeholders.
 HiLite Hotels (Dec ‘18 – Q2b – examiner’s comments)
• Candidates who achieved high professional skills marks demonstrated strong professional
judgement in evaluating how important <IR> could be to HiLite, in particular in its role
and benefits in communicating to its stakeholders.

• Candidates who merely described the general benefits and features of <IR> or who gave
examples of the 6 capitals, with no application of their benefits to HiLite, failed to
satisfactorily demonstrate professional judgement, and so, scored low professional marks.
 HiLite Hotels (Dec ‘18 – Q3a)
At the most recent board meeting of HiLite, a discussion occurred on the potential threat
of disruptive technologies in the hotel industry. Following this meeting, the chief executive
has requested further information for the board on this issue.

Required:
The chief business analyst has asked you to write a report for the next board meeting
which discusses the potential challenges to HiLite posed by the development of the
disruptive technologies which are emerging in the hotel industry, and highlight the
potential application of disruptive technologies which may be considered by HiLite.
(14 marks)

Professional skills marks are available for demonstrating scepticism skills in probing and
challenging the opinions of the board. (4 marks)
 HiLite Hotels (Dec ‘18 – Q3a)
Role: Senior Business Analyst
Format: Report
Recipient: Board of HiLite

Marks/Time
Verbs Task/Answer points
allowed
Discuss Potential challenges posed by DTs
Question SMD & OD.
Challenges: 14 marks
1. Flexibility 3. Better product & price 5. Smartphone challenges: 7 points
• Security
in using appropriate professional judgement to assess how useful integrated & accessibility
reporting could be to the stakeholders
28 minutes of
2. Space-sharing 4. Personalisation
HiLite. • Costs & complexity (3 marks)
Highlight Potential application of DTs which may be considered by HiLite.
(assess) • Full range not possible – cost prohibitive – partial possible & must

Professional skill: Scepticism

4 marks
Question – Probe - Challenge: the opinions of the board.

Technical skills: wider knowledge & common sense

 HiLite Hotels (Dec ‘18 – Q3a)
Role: Senior Business Analyst
Format: Report
Do not forget to do this
Recipient: Board of HiLite

Marks/Time
Verbs Task/Answer points
allowed
Discuss Potential challenges posed by DTs
Question SMD & OD.
Challenges: 14 marks
1. Flexibility 3. Better product & price 5. Smartphone challenges: 7 points
• Security
in using appropriate professional judgement to assess how useful integrated & accessibility
reporting could be to the stakeholders
28 minutes of
2. Space-sharing 4. Personalisation
HiLite. • Costs & complexity (3 marks)
Highlight Potential application of DTs which may be considered by HiLite.
• Full range not possible – cost prohibitive – partial possible & must

Professional skill: Scepticism

4 marks
Question – Probe - Challenge: the opinions of the board.

Technical skills: wider knowledge & common sense

 HiLite Hotels (Dec ‘18 – Q3a)
Challenging board opinions:

• DT - new technology that unexpectedly displaces an established one – outcome: ‘re-

shapes’ an industry, or creates a new one - today’s customers seek unique and personal
experiences - value flexibility, choice and individuality – DTs aim to address these.

• Rent-a-Room (R1R) – e.g. of DT affecting hotel industry - real threat to HL – can directly
affect revenue and profitability - comments made by OD that ‘it’ll blow away’, incorrect -
the threat is a ‘when’ rather than an ‘if’ – clear and a present danger.

• However, SMD perhaps over reacting – not the end of hotel industry – many customers
still prefer traditional hotels – however, her overall assessment of the growth and
influence of DTs must be taken seriously.
 HiLite Hotels (Dec ‘18 – Q3a)
Challenges posed by DT

1. R1R hosts – flexible - offer wide range of services: individually tailored breakfast, local
knowledge, up-to-the-minute recommendations, introductions to local contacts – offer
latest & best deals.

2. ‘Space-sharing’ environment - offer high-speed internet and web-movies meant for their
own use - so automatically included in price - considerably less than a hotel room as
significantly lower overheads.

3. Challenging us on product offering and price - we are a low-price business – whole basis
of competitive advantage challenged by these hosts and DTs.
 HiLite Hotels (Dec ‘18 – Q3a)
4. Personalisation
o Much easier for R1R hosts - deal with only one customer at a time - straightforward
process
o HL - 46,000 rooms; 510 hotels - personalisation logistically difficult and expensive –
low levels of staff, high levels of personalisation very challenging.
 HiLite Hotels (Dec ‘18 – Q3a)
5. Smartphone challenges
Many possible uses - from customisation through to door-entry technology – although
customers demanding greater flexibility & convenience, major challenge for us.
a. Security and accessibility
o New software needed to manage secure interface between customers’ smartphone
apps and hotel property management system - risk of data corruption and hacker
threats
o Universal access issues - many customers may not possess smartphones.
b. Costs and complexity
o Also very expensive - need new software and multiple-access systems including
smartphone and key card access - adds unnecessary operational complexity - major
challenge.
 HiLite Hotels (Dec ‘18 – Q3a)
Potential application of DTs

• Cannot implement full range of DTs - nevertheless, should consider less expensive and
more simple DTs - personalisation opportunities - smartphone apps capable of providing
value-adding information to guests throughout their stay in hotel.

• E.g. app can provide info about local weather, events, offer tickets

• Can allow restaurant, theatre or visitor attraction booking directly or through our agents
– also offer booking to local gyms or sporting events – can enhance guest experience.
 HiLite Hotels (Dec ‘18 – Q3a)
Potential application of DTs (cont’d)

• Overall - look into offering a mobile/online interactive concierge facility for our guests
which provides the facility to book rooms, services and personal experiences unique to
them, on the move.

• Above - starting point for us to move into personalised services - addresses some threats
of DTs - however, more evaluation of this threat must be done on an on-going basis - can
no longer be ignored.
 HiLite Hotels (Dec ‘18 – Q3a – examiner’s comments)
Technical marks – worst performed question – however, stronger candidates:

• achieved high technical marks by recognising the direct threat of Rent-a-room to HiLite,
as a budget hotel.
 HiLite Hotels (Dec ‘18 – Q3a – examiner’s comments)
Most candidates:

• did not demonstrate a sound knowledge of disruptive technologies

• merely repeated information relating to Rent-a-room, directly from the case.

• provided vague descriptions of disruptive technologies

• wrongly focused on benefits of setting up a website or subscribing to price comparison

sites, as well as discussing OTA’s and big data.

• did not have sufficient syllabus knowledge or understanding of disruptive technologies to

make a successful attempt at this question.
 HiLite Hotels (Dec ‘18 – Q3a – examiner’s comments)
• Most candidates achieved no or low professional skills marks because failed to
demonstrate any scepticism skills at all - several comments made by EDs (Exhibit 6) could
have been challenged to demonstrate scepticism, but very few candidates did so.

• Shows poor exam technique, as candidates clearly failed to read professional skills
requirement in conjunction with technical skills requirement – otherwise would have
noted need to consider scepticism and question the opinions of the board members.
 HiLite Hotels (Dec ‘18 – Q3b)
At the board meeting, the finance director presented information on three risks in HiLIte’s
current information systems environment and the board has requested further analysis of
these risks.

Required:
The finance director has asked you to prepare three presentation slides (one for each
risk identified) and accompanying notes for the next board meeting assessing the
potential outcomes of each of the information systems risks identified by the finance
director and recommend actions for each risk which HiLite should take in order to
control these risks. (12 marks)

Professional skills marks are available for demonstrating commercial acumen skills in
demonstrating insight and understanding of the information system risks and controls.
(3 marks)
 HiLite Hotels (Dec ‘18 – Q3b)
Role: Senior Business Analyst
Format: Slides & notes
Recipient:

Task/Answer points Marks/Time

Verbs
allowed

Assess The potential outcomes of each of the information systems risks identified
(impact) 12 marks
• 4 marks
per set of
in using appropriate professional judgement to assess how useful integrated reporting could be to the stakeholders
HiLite.
Recommend 24marks)
(3 minutes
Actions for each risk which HiLite should take

Professional skill: commercial acumen

Show insight; use judgement; demonstrate awareness: and understanding of the IS risks and controls 3 marks

Technical skills: Risk management process

 HiLite Hotels (Dec ‘18 – Q3b)
Slide 1

Risk 1: Lack of focus on IT/IS strategy

Outcomes
• IT/IS strategy not aligned with business strategy
• Missed business opportunities
• Wasted resources
Recommended actions
• Appoint IT director
• Devise IS strategy aligned with business strategy
 HiLite Hotels (Dec ‘18 – Q3b)
Notes for outcomes

• IS’ lack of strategic focus - major risk to long-term success - cannot pursue business
strategy efficiently and effectively - if no IS strategy to support & if not integrated with
business strategy, business objectives unachieved.

• Business opportunities such as CEO’s ‘innovation in product and service’ missed -

harms our competitive advantage – will waste resources on irrelevant/duplicated IS
which don’t add value to our business.
 HiLite Hotels (Dec ‘18 – Q3b)
Notes for actions

• Contributory factor - no IT director – large business - DTs occurring – employing one is

essential – will design IS strategy to ensure strategic focus of IS and that IS strategy
supports & enhances business strategy.

• Future - any business strategy must be supported by IT/IS strategy - consider how IT/IS
can enhance or inhibit our strategic direction – must develop IT/IS capabilities to
support our strategic direction.
 HiLite Hotels (Dec ‘18 – Q3b)
Slide 2

Risk 2: Cyber and data security breaches

Outcomes
• Loss of key organisational and customer data
• Severe business interruption
• Reputation risk and legal cost
Recommended actions
• Invest in latest cyber security systems
• Implement physical and logical access controls
 HiLite Hotels (Dec ‘18 – Q3b)
Notes for outcomes
External
• Cyber and data security breaches - hackers and viruses - significant threat - could
corrupt/delete data or disable critical systems – consequences: severe business
interruption - loss of business - dissatisfied customers.

Internal
o Physical and logical access control weaknesses – result in system failure or data
corruption
o Unauthorised or untrained staff-access - result in data breaches and incorrect
processing of bookings
• Costly and time-consuming to correct - high reputation risk and compensation claims
from affected customers.
 HiLite Hotels (Dec ‘18 – Q3b)
Notes for actions

External

• Must operate latest industry-standard firewalls, anti-virus software and procedures -

regular testing of our security systems necessary - back-ups undertaken regularly and
stored separately.

Internal

• Access to authorised and trained staff only - authority of systems usage should be set -
strong passwords and user ID systems should be used - system should produce regular
reports on access and usage which should be monitored by IT staff - any exceptions
should be reported.
 HiLite Hotels (Dec ‘18 – Q3b)
Slide 3

Risk 3: Business continuity threat

Outcomes
• Unable to operate effectively due to no disaster recovery plan
• Loss of business/damage to reputation
• Cease to operate
Recommended actions
• Develop disaster recovery plan
• Strategic level focus on role of IT/IS in overall business activities
 HiLite Hotels (Dec ‘18 – Q3b)
Notes for outcomes
• Lack of awareness at board level of:
1. How critical our IS’ are for continuity of our operations and
2. The need for a disaster recovery plan to ensure business continuity.
• Insufficient planning and risk assessment – we will not be ready for a business-critical
event/disaster.
• Results in business interruption - will lose customers - revenue severely affected -
reputation also damaged if disaster recovery plans ineffective or inadequate - worst-
case - cannot recover - we could go out of business.
 HiLite Hotels (Dec ‘18 – Q3b)
Notes for actions

• Board must implement a disaster recovery plan for a range of potential threats to IS
including terrorist attacks, cyber-attacks, fire, flood etc.

• Must identify which disasters may occur - assess their probability and potential
impact - ensure we have sufficient measures (responses) to manage such an event.

• Reiterates point made in a previous slide that focus of IS should be at the

strategic/board level - our IS should be seen as a critically important business asset
and as a key driver of our competitive advantage.
 HiLite Hotels (Dec ‘18 – Q3b – examiner’s comments)
• Technical marks – poorly answered – however, stronger candidates:

i. correctly recognised need for appointment of an IT Director to overcome the lack of

strategic focus on IT/ IS, for Risk 1.

ii. provided a good range of outcomes and recommendations for the second risk
identified.

• However, Risk 3 not well addressed by most candidates - most did not understand what
business continuity actually meant - many talked about risk committees and
appointments of NED’s - not appropriate or relevant to this risk.
 HiLite Hotels (Dec ‘18 – Q3b – examiner’s comments)
Weaker candidates:

• had not left themselves sufficient time to answer this question adequately - presented
answers as slides only or notes only.

• failed to meet the requirements of the question, by not presenting outcomes and
recommendations of the three risks identified by the Finance Director in Exhibit 6.

• significant proportion did not provide slides covering the 3 risks or the outcomes and
recommend actions.

• provided weak outcomes - merely repeated the same outcome (such as ‘the business will
lose its competitive advantage’) for each of the three risks.
 HiLite Hotels (Dec ‘18 – Q3b – examiner’s comments)
• Professional skills - candidates who scored high professional skills marks showed a good
commercial understanding of impact of the risks identified and the most appropriate
solutions for HiLite.

• Candidates who could not score well:

i. failed to address the requirements of the question on the as they had not provided the
discussion of risk outcomes and recommendations on which their commercial acumen
could be judged.

ii. Provided generic recommendations not clearly related to HiLite’s risks.