Employer-Engagement: What does it mean for HLST?

“Working with Industry Research to Consultancy”

(informing practice)

Thursday 6th November, 2008

St Anne’s College, Oxford

Peter HarrisProfessor of Accounting & Financial Management

Working with IndustryOxford Brookes University

& Rezidor Hotel Group

(a decade of collaboration)Peter Harris & Knut Kleiven

• One of the fastest growing hotel groups

• Based in Europe - Middle East - Africa (45 countries)

• Corporate office: Brussels

• Operating some 287 hotels = 50,000 rooms (approx.)

• Results for year (approx.): Revenue €785m; GOP €291m; Profit after tax €46m

The Company (at 31 Dec. 2007)

Consulting • Designed business analyst in-company project(1999)

• Key development: Stockholm, company embraced “marginal accounting construct” (2001)

• Designed company-wide cost analysis process(2001)

• Designed programme for financial controllers & general managers (drivers at properties)

Sweden (trialled analysis process) (2002)

• Delivered seminars in-country at the regions Germany, Belgium & Norway (2003)Poland, UK & Ireland (2004)

France, Denmark & Iceland (2005)Austria, Switzerland & Italy (2006)

• Embedded through the company’svirtual management school (2002-2006)

Consultancy (reflection)

• Natural platform for co-operation and interaction between industry & education

• Opportunity to reflect on strengths/contributions ofthe organisation and the university

• Practitioners obtain new/novel applications

• Faculty research endeavours tested/refined/adapted inrigours of ‘live’ commercial environment

• Cutting-edge experience to bring back to teachingenvironment

• Financial rewards to university, school & individual

• Raises faculty profiles(companies tend to engage with individuals)

Contribution to research

• European hotels performance project (a) company-wide questionnaire distribution

(b) facilitated follow-up field interviews

• PhD industry-wide CPA project (Vira Krakhmal)(a) part-funded full-time candidate (b) provided complete data collection access to build a constructive case study model (13-month period)

• PhD pricing project (Jean-Pierre van der Rest)(a) funded complete data collection stage (b) arranged access to 33 hotels -18 cities -16 countries in Europe

• MSc dissertations: generous fieldwork access e.g. (a) one student is currently interviewing corporate office executives in Brussels for “investment appraisal project”

(b) plus another student granted access at two Radisson SAS hotels: Birmingham (for pilot) & London (part of main study)

Partnership beyondthe ordinary

• Sponsored professorial inaugural lecture event –champagne reception & buffet for over 100 guests

• Kurt Ritter, President & CEO attended and deliveredkeynote address for our major alumni event at

Chelsea Football Ground

• Contributed ‘forward’ for new accounting & finance book(& almost a chapter on corporate governance..!!!)

• Sponsor annual Master’s book prize for top student

• Joint authored “a decade of collaboration” article

The company has always said‘yes’

(carry’s responsibility!)

Research to Consultancy/Practice

Institute of Chartered Accountants in England and Wales

Tourism and Hospitality Group Annual Conference, November 2006

Customer Profitability AnalysisResearch Findings

Prof Peter Harris &

Dr Vira Krakhmal

Purpose of the projectConstruct a model to assist hotel companies

to improve customer mix decisions

Phase 1: PhD Research Project (2002 – 2006)

ResearchProject

Model construction

Development of a CPA Model(using activity-based costing)

Case property is a 280-room, four-star, full-service international city-centre hotel

Customer Characteristics by Profit Contribution(size of the bubble denotes the relative number of customers)

Rack

Meetings &

Confe

rences

Consort

ia R

ate

d

WH

P M

eetings

Contr

act

blo

cks

Weekend &

SM

agic

Oth

er

Indiv

idual

No-s

how

Hotd

eals

Tour

series

Non r

oom

Ad-H

oc G

roups

Leis

ure

Dis

counts

Tour

Opera

tor

Oth

er

leis

ure

gro

ups

Non R

oom

Confe

rencesL

ocal W

HP

/WH

P B

usin

ess

-120%

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

140%

160%

Pro

fit

Co

ntr

ibu

tio

nCustomer characteristics by profit contribution

Profit

Loss

Case hotel customer profit profile

50%

100%

150%

200%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

250%

Cumulative % of Customers

Cum

ulative Operating P

rofit

20 % of the customers generate 250 % of the

profits

80 % of the customers lose most of the extra 150 % of

the profits

Unrealised Profit Potential

Actual Profit

Dependence

Ideal situation; little or no subsidising

Room for action; small number of very

unprofitable customers

Low risk situation; no extremes

High risk situation;dependence on few

customers; extensive subsidising

Subsidising effect High

High

Low

Low

Source. Storbacka, 2001

Customer-base portfolio analysis(strategic tool)

Profit profile at the site

Phase 2: Dissemination to Industry (2006 – 2007)

Joint Publication (BAHA, Oxford Brookes University & The Open University)

“Recommended Practice Guide for Customer Profitability Analysis”

(revised draft guide submitted September, 2007)

Phase 3: Informing practice(2008)

Friday 25th April:Presentation of CPA research findings at corporate office, Brussels

Monday 26th May:Meeting with corporate office team from Brusselsat Radisson SAS Portman Hotel, London to:

“Explore the implementation of CPA in the Rezidor Hotel Group”

Meeting resolved to develop a system and pilot in the newRadisson SAS EU Hotel, Brussels

Consulting opportunities are already beginning to flow