TYSONS CORNER Case Solution
1. Executive Summary
Hollinswood Associates, a joint venture organization, has created and operated a Marriott Hotel in Tysons Corner, Virginia for the past 8 years. The partnership has created the considerable worth in the project and has made the significant cash appropriations previously, but it is currently confronting a cash flow deficit. John-Green, the managing general partner of Hollinswood Associates has to resolve the impending Cash flow deficit in some way, or face losing or selling the hotel. John Green decided to generate a meeting to discuss the reasons of cash deficits and to discover appropriates procedures that would help them to overcome the deficits.
The several factors that created the shortfalls in the deficits includes the different competitive hotels surrounding the Tysons corner, lankness in administrations and work, lesser gathering space, states of being and evaluating techniques. John Green and its accomplice’s needs to look forward in improving the Marriot administrations and quality to contend it with its fellow competitors, arranging expense system to improve inhabitable of the occupancy, improvement in services and location.(Poorvu, 1989)
2. BriefOverview Of Key Case Facts
The Tyson corner has significant importance in Fairfax. It is the center of attraction in Fairfax country. It is located in the most crowded and competitive area of Virginia. The hotel is clearly well located and has enjoyed historical success for the past 8 years. The key facts lies to this case is that hotel is now facing the cash flow deficit which in turns lies in the market prospectus. The hotel manager has decided to schedule a meeting with the adjacent partners to discuss the declining factors and to find the reasons that would solve these factors. After looking into this matter the manager realized that by 1989, there is graduate decline in operating results for Marriot. The decline in operating condition of Marriot is due to several factors which are given below:
- Room rates had been leaved off
- Reduction in food and beverages profit
- Competitive hotels surrounding the hotel
- The hotel physical condition
- An inflationary cost spiral
- Increment in insurance premium
- Soaring labor costs
These factors were continuously declining the hotel’s cash flow deficits. The manager was worried about the hotel revenues because the hotel has to bear all the monthly commitments such as labor costs, taxes, and lender’s money to keep the hotel in the running position. The hotel manager has to resolve these issues by either facing or losing the hotel. To improve cash flow, the manager either has to improve fund capitals, to refocus on marketing strategies, to renovate the hotel construction, or to improve occupancy.
The main issue that arises because of the continuous deficits is that:
The opening of the different hotels surrounding the Marriot has decreased its competency and importance. The Tyson corner area is presently served by a Holiday Inn and Ramada Inn On different routes. Both of these hotels are in better condition. However holiday Inn is newer and is the centre of attractiveness in Tyson corner. Both of these hotels has become the competitors for Marriot and will create the negative impact in cash flow deficits.
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