Seaside Hotel (SH) SH is a large hotel located in a tourist area of country H. SH has 120 rooms and employs 42 workers during the peak (busiest) season which is from April to September. Table 2.1 shows employee data for SH's peak season. Table 2.1: Employee data for SH's peak season | Type | Number | Main tasks | |:----------------|:-------|:------------------------------------------------------------------------| | Manager | 3 | • decision making | | • supervising other employees | | Cleaner | 12 | • cleaning rooms, corridors and reception area to required standard | | • maintaining a clean and safe working environment | | Customer service| 16 | • greeting guests upon arrival | | • making sure guests are satisfied | | Marketing | 7 | • designing promotional materials | | • promoting hotel to increase number of guests | | Other | 4 | • various | SH makes half of the cleaners and customer service employees redundant at the end of the peak season. To break even, the hotel must sell 72 rooms per night. The hotel offers good views of the sea and it is very busy in the peak season when the weather is hot. Table 2.2 shows SH's sales of rooms. Table 2.2: SH's sales of rooms 2021–2022 | Time period | Average percentage of rooms sold per night | |:--------------------------|:-------------------------------------------| | April 2021 – September 2021 | 95% | | October 2021 – March 2022 | 45% | SH does not have a restaurant. It has a joint venture with a restaurant close to the hotel where SH's customers receive a discount on their food and drink. The hotel advertises the restaurant on social media and the restaurant advertises the hotel on its menu. Tia is one of the managers of SH. She has an autocratic leadership style and is responsible for the cleaners and marketing employees. The directors of SH aim to increase the value added to the service that SH provides.

Mark scheme

Marking points from the official mark scheme (May/June 2022). The mark or mark type is shown in brackets.

1. [1] A form of dismissal (e.g. they lose their job, 'let go' etc...)
2. [1] When the job role is no longer needed
3. [1] Two or more businesses/parties agreeing to work together
4. [1] Shared risk/reward/facilities/staff/capital/knowledge/experience/promotion etc...
5. [1] Example or some other way of showing good understanding, i.e. formal contract. To award C there must be understanding that this is not a merger (i.e. remain separate businesses).
6. [1] Current level of production: (120 / 100) × 95 = 114 rooms
7. [1] Margin of safety calculation: 114 rooms – 72 rooms = 42 rooms
8. [2] Answer = 42 rooms is the average margin of safety (accept 35% if includes % sign)
9. [1] Assumes each room is sold at the same price, which is unlikely for a seaside hotel.
10. [1] Assumes fixed costs are constant, which may not hold true for market costs of promotional materials.
11. [1] Assumes constant average variable costs, which is challenged by 42 workers employed at peak season.
12. [1] Based on an average, which may not be useful information about peak (busy/holiday) and off-peak times.
13. [1] Does not include any income from the joint venture with the restaurant.
14. [1] Assumes all output will be sold.
15. [1] Knowledge of advantages of autocratic leadership (e.g., Speed of decision-making, Unambiguous objectives/commands, Clear chain of command, May increase productivity).
16. [1] Knowledge of disadvantages of autocratic leadership (e.g., Lack of creativity, May cause demotivation, May stifle communication, Subordinates are unable to make any decisions).
17. [1] Application to SH/Tia's context (e.g., Tia manages cleaners and marketing employees, cleaners need standard quality/H&S, marketing needs creativity, 12 cleaners/7 marketing employees, 95% capacity in peak season).
18. [1] Analysis of one advantage in context (e.g., Speed of decision-making can be efficient for controlling many employees (19 workers) in peak season, ensuring timely cleaning of 120 rooms and maintaining quality).
19. [1] Analysis of one disadvantage in context (e.g., Lack of creativity for marketing employees may lead to less effective promotional materials, impacting sales/revenue for the hotel as promotion is key to attracting guests).
20. [1] Knowledge of ways of adding value (e.g., Branding, Advertising, USP, Additional services, Additional product benefits, Reducing cost, Increasing quality).
21. [1] Application to SH's context (e.g., Hotel rooms, Customer service - guests, Cleaning, Promotional materials (SH branding), Views of the sea, Local tourism, Joint venture with local restaurant).
22. [1] Analysis of impact (e.g., Branding can increase the price of a room, increasing profit margin).
23. [1] Analysis of impact (e.g., USP can differentiate SH from competitors, allowing higher price and increasing profitability).
24. [1] Analysis of impact (e.g., Reducing costs (e.g. by making cleaners redundant) may increase profit, but could lead to lower quality rooms).
25. [1] Analysis of impact (e.g., Increasing quality can increase price customers are willing to pay and thus increase profit).
26. [1] Evaluation of suitability/usefulness of way(s) of adding value.
27. [1] Evaluation of relative benefits/costs of different ways.
28. [1] Evaluation depends on factors (e.g., tourism, weather, current perception of SH, response from local competitors).