Systems Analysis of DiamondRock Hospitality Company

| February 14, 2020

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Contents

Management system literature. 2

Strength and Weakness of the System.. 3

Summary of key activities, roles, and functions. 4

References. 7

Management system literature

DiamondRock Hospitality Company is a lodging-based hospitality business entity that operates 20 premium hotels containing a total of 9,600 guestrooms. The company invests in full-service hotels as well as limited-service hotels in order to maximize shareholder value. All the hotels are located in different parts of the United States. The full-service hotels are located in key gateway cities as well as in destination resort locations. All these hotels are operated in the name one of the three top national branding companies (Starwood Hotels & Resorts Worldwide, Inc., Marriott International, Inc. or Hilton Hotels Corporation).

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According to the information provided at the company’s official website, www.drhc.com, DiamondRock Hospitality Company not only operates but also owns the 20 hotels. Therefore the company enjoys the profits generated and bears the losses incurred. Hotel managers are paid a fee based on the number of revenues made. The company then reimburses all the operating costs incurred by each of the hotels. The company maintains value in terms of its operating platforms through openness and transparency in matters of communications with investors, monitoring of corporate overhead and governance. Gunn(2008), reports that the company, which started operations in July 2004, is listed in the New York Stock Exchange.

The overall management of DiamondRock Hospitality Company is done by a board of directors. The board of directors ensures that the management of different hotels is acting in the long-term interests of all stakeholders. The board selects, evaluates and compensates the CEO. It also provides oversight and counsel in the process of selecting, evaluating and compensating members of the senior management. The oversight and counsel seem to be motivated by the globalization standards that Go& Pine(2007) spell out in their book entitled Globalization Strategy in the Hotel Industry.

      The board of directors also reviews, approves and monitors all fundamental business and financial strategies as well as major corporate undertakings. It is also the duty of the board to understand all the major risks faced by the company as well as to determine the best measures to be taken in order to mitigate these risks. The board also ensures that all processes and structures are put in place for the company’s reputation and integrity to be preserved. Additionally, the board ensures that financial statements are accurately reported, ethical standards are maintained and good relations exist among shareholders, hotel managers, employees, and all other stakeholders.

Strength and Weakness of the System

The main strength of the management system of DiamondRock Hospitality Company is that the majority of board members are completely independent of DiamondRock Hospitality Company as well as its management. The same case applies to members of all board committees. This ensures that there is objectivity in terms of the policy and management decisions that are made by these crucial organs. The professionals who sit on the board, as well as committees, are able to see the company through impartial fresh eyes. They can make crucial, landmark decisions without bowing to internal elements with strong vested interests.

            The main weakness in the organization’s management system is the lack of a central communications center for all 20 hotels. Therefore, any shareholder who wants to express any concerns has to communicate with the company through presiding directors, the board of directors, or non-management directors.

            Additionally, the procedures put in place by the audit committee are very convoluted and seem very complex to stakeholders as well as outside the community(Anderson, 2007). By engaging the services of a third-party provider of these services the company entrusts crucial in-house matters to outsiders who may provide such information to competitors. Once in the hands of competitors, the information may be used in designing strategies that capitalize on the weaknesses to create a competitive advantage.

Figure 1. A diagram illustrating the main components of DiamondRock Hospitality Company’s management system

Summary of key activities, roles, and functions

DiamondRock Hospitality Company operates full-service hotels. Its portfolio is made up of resorts, hotels, and conference centers. The company maintains a balance in all these portfolio areas. The company is, therefore, a good choice for travelers looking for executive suites for accommodation purposes. Urban center service hotels target international business and leisure tourists. They are conveniently located in prime market areas across the United States.

 The company strives to leverage on national hotel brand. The main strategy is always to make use of branded hotels in order to outsmart unbranded hotels in the provision of quality accommodation services. Diamondrock Hospitality Company not only acquires properties, it operates them in order to ensure that they generate profits. Therefore, this company hires employees who offer quality hotel-related services in order to be able to generate revenue for purposes of the acquisition of more properties.

The company contributes to quality international tourist and business and travel experience through responding to demand in high-potential market areas. The success of the company depends entirely on the efficiency of tour operations since many of the costs incurred are fixed. Effective marketing is also part of the company’s day-to-day activities in an effort to reach out to local as well as international tourists.

The services offered include tour guiding, hospitality, and provision of transport systems that provide connectivity between hotels and locations that the tourists are interested in. the company also runs boutique hotels which are aimed to present effective competition to small local hospitality firms in areas with potential for growth of the tourism sector. These small companies provide specialty services in order to create strong name recognition. The labor insensitivity of Diamondrock Hospitality Company operations is evident in the fact that on average, the revenue per employee every year is about $80,000.

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            The day-to-day activities of employees at Diamondrock Hospitality Company are typical of all the tasks that have to be performed in order for a hospitality company to offer quality services to customers in order to achieve long-term goals. These activities include maintenance of hotels, provision of catering services, creation of a habitable business and leisure environments within different hotels as per the needs of customers as well as procurement, provision, and maintenance of guest amenities. Additionally, the employees of the company always ensure that customers are linked up with the best attractions within the U. S. this is normally done through the facilitation of tours to these attractions. Different hotels ensure that tourists have all the amenities that they need while touring different areas within the country.

References

Anderson, R. 2007. Measuring Efficiency in the Hotel Industry: A Stochastic Frontier Approach. International Journal of Hospitality Management. 18(1), 45-57.

Diamondrock Hospitality Company, www.drhc.com visited on March 18, 2010.

Go, F. & Pine, R. 2007.Globalization Strategy in the Hotel Industry. New York: Routledge

Gunn, C. 2008. Tourism Planning, Journal of Travel Research, 27(2), 59-60.

Hanks, R., Cross, R. & and Noland, R. 2006. Discounting in the Hotel Industry: A New Approach. The Cornell Hotel and Restaurant Administration Quarterly, 33(1), 15-23.

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