Paper Example on AAA HotelCo Representatives

Introduction

The Lambert hotel was in the second round of negotiations with the AAA HotelCo a Brazilian chain of hotels for a possible merger. Moreover, Lambert is a strong brand with upscale and luxurious comfortable services and products with a Michelin rating. The negotiations involved the stock ownership, new company names, voting seats, the timing, separate sale of Ecotourism business, management of the hotels' chain, and compensation for managers. Lambert had an informative list of the essential factors that they should be aware of during the negotiations with the Brazilians. First, Lambert discussed how they would develop a smooth flowing relationship, and the talks started with small talk. However, during the talks, Lambert's team aim was to be aggressive and aim higher thus providing room for negotiations towards the first target objective of stock ownership. However, since the two companies had already exchanged the information regarding the operating figures and appraisal information, Lambert's belief was that we were entitled to 72% ownership of the combined companies due to the difference of the values of the two hotels, with the respective holdings entitled to Lambert.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Order now

However, the Brazilians disagreed with this because they believed that they deserved about 60% stake of the combined companies since their gross operating profit of about 30% of gross revenues was higher than that of Lambert. Alternatively, Lambert tabled this issue and went ahead to name the new company by suggesting the name Lambert-AAA. Conversely, AAA suggested that they name the company AAA-Lambert. Consequently, Lambert agreed to their proposal immediately and proceeded to the next issue of management of the AAA hotel property, as well as one-month training to all the AA general managers. With regard to the management of the properties, AAA proposed that Lambert was to provide two regional representatives to AAA corporate offices as well as provide training to all AAA general managers. Moreover, AAA had suggested 5% of the salary bonus be based on commission, although Lambert resisted the idea of the full base salary structure. Therefore, Lambert issued another offer with a 10% commission which AAA dismissed.

Lambert proposed another 5% of the salary bonus be based on commission with revisits on the pay structure after one fiscal year to slowly change the structure towards the salary bulk, which was agreed upon by both companies. Another significant issue that came up was the cross-training and team management, where Lambert proposed to provide the training to the employees while AAA did the local team management and vetting. However, Lambert explained that training of the managers was expected from AAA specifically to their middle management team thereby allowing free movement of training resources and labor. Therefore, AAA HotelCo would manage training their local staff, while Lambert would assist when need be. On the other hand, other issues such as the compensation of the property managers were discussed although Lambert particularly wanted to know their cultural views on the payment of contingent on performance.

Conclusion

The AAA representatives said they believed that the contingent payments would bring unnecessary competition among the property owners. Therefore, they thought that this was not an appropriate measure, so we countered this by offering the 10% to 20% of pay contingent on property performance. Additionally, the AAA representatives raised another on the Ecotourism business. We asked if there were any imminent risks on this type of business and they said that it was a profitable venture.