Case study: Outrigger hotels and resorts

Published Date: 23 Mar 2015 Last Modified: 04 May 2017

The case study is about the Outrigger Hotels and resorts that whose foundation was kept by Roy C. Kelly in 1963 with the mission of bringing the dreams of vacation in paradise to reality for a middle-class consumer. In the next two decades it expanded through new construction and acquisitions and became the largest among its competitors with a centralized management structure. It also diversified its product portfolio with international expansions and rebranded its fifteen hotels by the name of OHANA for budget travelers on one hand and Outrigger hotels and resorts for high end travelers through the addition of condos that represented a unique business opportunity. With the international expansion the management style also changed from centralized to decentralized with independent operations and organized like traditional resorts.

Competition: The hotel group operated in direct competition with well established brands like Marriott International, Hilton Hotels and resorts, Starwood hotels and resorts, ASTON Hotels and resorts and Marc Resorts Hawaii which had a big market presence but the Outrigger group scored over them by long-term relationships with distributor network, local knowledge, strategic focus and good employee relations.

Its IT infrastructure was also considered to be strong which is exemplified with the fact that it implemented JD Edwards ERP years before its large scale implementation across industries. It also bought a business intelligence application from Epiphany to gain an insight into its business. In spite of all the above stated competitive advantages Outrigger Hotels and Resorts group is facing the following changes:

• Problem of integration of business operations across the countries
• The proliferation of choices for a consumer with respect to entertainment budgets
• The Hawaiian tourism industry was dependent upon the airlines industry which itself
  was under extreme financial pressure after terrorist attacks
• Inefficiency of wholesalers to utilize the changing technology and rely on fax machines
  for the same. Outrigger chose an open travel alliance XML standards but they were not
  clear about the right partner
• A lot of money was spent on business intelligence application but the organization
  didn't know its usage in the daily operations
• Problem of training the staff and providing technological facilities to the guests
• The change in the distribution network by the advent of Internet where most of the
  tickets were booked through third-party travel sites offering dynamic packages,
  degrading the advantage of wholesalers for the Outrigger group.