Running a simulated hotel

Published in El Pais, 8 September 2018.

When I started my class the other day, I asked how all was going with the business simulation. In the back of the room a few guys were looking at me with a very bright smile, which obviously answered silently my question for that group. In another row a few girls and boys shouted out a cry of desperation and one of them looked sad into my direction and mentioned silently but hearable to me, that they were heading for bankruptcy and didn’t know what to do.

There was no doubt that they took it all very seriously and although it was of course a simulation of the reality, their emotional and professional responses where all real. It was also good to notice that even the almost bankrupt group, had no intention on giving up.

In this simulation they had to create and run a hotel. This meant that they had to decide for the number of rooms, marketing budget, amenities, personal, training, technology, number of stars etc. One critical aspect was that they needed to find a segment where the competition was not too fierce and thus could ask a higher price for the stay. This proved to be a hard task, beside picking the right price and quality.

In general, I am not that fond of business simulations, since part of running a business has nothing to do with picking the right numbers for certain parameters. It is about the art of dealing with the many decisions that appear throughout the day that cannot be captured in some mathematic model and is a more qualitative in nature. However, I am sure that my students learned a lot from this business simulation and it gave them a feeling on how a business works. Of course, some of them might have not reached the high position they hoped for. But fortunately, they found out afterwards what they did wrong and what they would do different next time. This is a very important characteristic of a good business administrator, evaluate your mistake and take actions so that it doesn’t happen again.

Concerning the qualitative aspects, I hope that one day when they are working as a boss or running their own company, they will remember that although making profit is a main objective of a company, it is the way how you manage decision and people in your company that defines if you will reach it.