leadership crisis challenge 1-428-930

May 27, 2010

Leadership Crisis Challenge:

Timora International

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Overview:
The most important elements of leadership are very difficult to teach. Intangibles such as judgment,
courage, and integrity are difficult to broach in any real way in a classroom setting. They also can be quite
expensive to learn in the field where there are real consequences, both financial and career-related. This

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Leadership Crisis Challenge pushes students to integrate or trade off competing demands (thereby working
on integrity and judgment) and pushes them out of their comfort zones (thereby working on courage).

This role-playing simulation presents students with a realistic business challenge that sits at the
intersection of social, environmental, and financial constraints. It encourages students to practice and gain
critical leadership skills such as using judgment to navigate an ambiguous crisis situation, thinking on their
feet, and persuasively articulating a point of view. It also allows faculty to guide students in a realistic high-
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pressure meeting, while the faculty role-play a tough Board of Directors.
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Published by GlobaLens, a division of The William Davidson Institute at The University of Michigan.
© 2010 William Davidson Institute. This Leadership Crisis Challenge was developed by Cynthia Koenig under the
supervision of Professor Susan Ashford.
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Student Packet
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Student Packet

Leadership Crisis Challenge 2010

You and your team are executives at Timora International (Timora), a $13 billion hospitality company with
a global presence. The well-established company recently became entrenched in a crisis that has the
potential to threaten its global reputation. It is up to you to determine how to deal with this crisis, both
internally and externally. The documents included in this packet will help you analyze the situation and
determine a path for moving forward.

Your team is composed of the following members:

1. Alex Owens: marketing and communications manager

2. Blair Manzella: finance manager
3. Pat Wolski: human resources manager
4. Devon Delpriore: operations manager

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Student Packet

Profile of Timora International

Timora International (NYSE: TIO) is a leading hospitality company with a global presence. Timora has
more than 3,000 hotels and resorts in 80 countries. Timora hotels aim to provide consistent, dependable,
and genuinely caring experiences to guests. Features include:
• Fully equipped fitness centers
• Gift shops

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• Swimming pools
• Concierge levels

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• Business centers
• Meeting facilities

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The company is headquartered in Miami, Florida, and had approximately 148,000 employees at 2008
year-end. It is consistently ranked as one of the lodging industry's most admired companies and one of
the best places to work by Fortune Magazine. In fiscal year 2008, Timora International reported sales
from continuing operations of nearly $13 billion.

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Timora International's goal is to create significant value by aggressively building its brands and growing
its businesses. The company is dedicated to providing exceptional service to customers, growth
opportunities for associates, and attractive returns to shareholders and owners.
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Student Packet

From: ytolle@Timora.com
To: aowens@Timora.com, bmanzella@Timora.com, pwolski@Timora.com, ddelpriore@Timora.com
Subject: Urgent – El Tigre Situation

Thanks for your time this afternoon. I can’t stress enough how important this situation is for the future of
our company. As you know, competition in the tourism industry is cutthroat, but given the current
economic climate, business has never been tougher. Global tourist arrivals fell by 1% in 2008, down from
7% growth in 2007. Experts estimate a 2% decline in 2009. Anecdotal accounts suggest that high-end
luxury travel has been hit hardest, while ecotourism has dropped off more slowly. Timora’s revenues fell
by 8% last year.

At the same time, our latest (and most ambitious) project to date, El Tigre -- an eco-resort located on the
grounds of the recently excavated Mayan ruin site of El Mirador in Guatemala – is behind schedule and
over budget. To make matters worse, we’ve had some major staff changes, with all four of the original El

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Tigre project management team members vacating their positions within the last two weeks. As our most
promising and talented associates, you have been hand-picked to lead the new project management
team. Thank you again for stepping up to the plate. As you are aware, this is a difficult assignment, but
rest assured that getting the project back on track will put you on the fast track for advancement within the

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company.

The development of El Tigre is the pet project of Dr. J.T. Anderson, the famous archaeologist. Anderson

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has not only lent his name to the project, he has proven invaluable in liaising with the Guatemalan
government and local communities. We believe that Anderson’s support, combined with our exclusive
access to the site, its historic significance, and remote location, will give us an edge in the
ultracompetitive luxury tourism market.

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We’re six months away from opening, and some difficult decisions need to be made in order to get the
project done on time and within budget. My team has compiled a list of time and cost saving measures for
you to use as you develop a plan. My assistant, Stephen, has been tasked with gathering additional
information that will help inform your plans. Look out for an e-mail from him. Remember, we need to cut
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costs by $2,125,000 and save 22 work-days.

Please be prepared to present your strategy to the board of directors. You will only have five minutes to
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make your case, and they will want to know every detail of your plan.

Thank you.
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Yvonne Tolle
CEO
Timora International
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Student Packet

From: swright@Timora.com
To: aowens@Timora.com, bmanzella@Timora.com, pwolski@Timora.com, ddelpriore@Timora.com
Subject: Background Information
Attachments: Competitive Landscape.doc, Competitors.doc, BoDprofiles.doc, Financials.doc,
TravelNewsexcerpt.doc, ElTigrePromotionalMaterials.doc, 2008AnnualReport.doc,
HumanRightsGuatemala.doc

Hello all,

Yvonne has asked me to send you the attached documents to help you prepare for your meeting. She
said that you should prepare no more than five slides because your presentation is a last-minute addition
to the meeting, and she wants to make sure that there is enough time for questions.

I pulled together some information from various reports, strategy documents, presentations and websites

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to bring you up to speed on the project. I’ve also included a list of the people you can expect to see at the
meeting. As Yvonne probably mentioned, the group includes a mix of board members and special
advisors to the project. I’ll update you if there are any changes to the list.

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At Yvonne’s request, I also did some of the legwork on cost-saving measures, based on information left
behind by the former project management team and conversations with colleagues in various divisions
here at Timora. You’ll see my comments on a few of the documents. I hope it helps!

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Also – keep in mind that Yvonne is looking to fill the position of VP of New Projects, and she will likely
select a member of your team!

http://www.sacredland.org/index.php/tikal/
www.peopleandplanet.net/doc.php?id=1110
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These sites provide good background information on the region and trends in the tourism industry:
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Regards,
Stephen
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Stephen Wright
Executive Assistant, Office of Yvonne Tolle
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Timora International

P.S. Watch out for Robin Reddick. Robin has been opposed to the project from the start, and has an axe
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to grind with Yvonne!

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Student Packet

Competitive Landscape
The 2009-2010 period finds the travel industry continuing to face challenging times. Consumers’ budgets
are tight, and they are cutting down on unnecessary expenses. When the middle class does take a
vacation, it is on a reduced budget. Meanwhile, corporate and business travel budgets are tight as well.
The travel industry is acutely aware of this problem. Most airlines have cut routes and reduced the total
number of seats available. Travel providers of nearly all types are competing fiercely on price or are
offering their customers special inducements and packages.

According to the World Travel & Tourism Council (WTTC), the global travel and tourism industry
supported 77.2 million jobs on a direct basis in 2009 (a 1.9% decline from 2008), generating $1.87 trillion
in direct global revenues (a 3.5% decline from 2008, and an amount representing about 3.2% of total
global GDP).

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Hotels throughout the world enjoyed a major boom through mid-2007, with high occupancy levels, rising
room rates and strong levels of both business and leisure travelers. However, the global financial crisis
put a damper on hotel occupancy that continued into 2008 and 2009. Many major hotel construction
projects have been cancelled or put on hold.

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The profitability of hospitality companies depends on efficient marketing and, because many costs are
fixed, on effective operations. Large companies have advantages in economies of scale in operations,

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can more easily raise capital, and have strong name recognition. Small companies, such as boutique
hotels, can compete effectively in favorable locations and by providing specialty services. Increasingly,
large hotel chains are looking to leverage the benefits of their size with the customization more often

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associated with smaller properties. To this end, large hotel chains are beginning to embrace industry
trends like ecotourism, nature tourism, cultural tourism and geotourism, in the hopes of capturing a larger
share of the fastest growing sector of the tourism industry. According to The Center for Sustainable
Destinations, these terms all describe tourism that sustains or enhances the character of a place—its
environment, culture, aesthetics, heritage, and the well-being of its residents.
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In 2004, ecotourism and nature tourism were growing three times faster than the global tourism industry
as a whole. According to Travel Weekly, sustainable tourism could grow to 25% of the world’s travel
market by 2012, taking the value of the sector to approximately $473 billion a year. According to the 2008
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Travel Monitor, 47% of respondents were willing to pay higher fees to travel suppliers who demonstrate
environmental concern; 53% were not. Overall, 85% considered themselves to be environmentally
conscious.
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Student Packet

Competitors
Hilton Worldwide
If you need a bed for the night, Hilton Worldwide (formerly Hilton Hotels) has a few hundred thousand of
them. The company is one of the world's largest hoteliers with a lodging empire that includes about 3,200
hotels and resorts in nearly 80 countries operating under such names as Doubletree, Embassy Suites,
and Hampton, as well as its flagship Hilton brand. Many of its hotels serve the mid-market segment,
though its Hilton and Conrad hotels offer full-service, upscale lodging. In addition, its Homewood Suites
chain offers extended-stay services.

InterContinental Hotels Group

InterContinental Hotels Group (ICH) is the world's largest hotel company by room count, with more than
4,000 properties in nearly 100 countries. Its mainstay chain, Holiday Inn, offers mid-market
accommodations at nearly 1,400 locations in the US, Europe, and Asia, along with some 1,900 limited-

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service locations operated under the Holiday Inn Express brand. ICH also serves the upscale market with
its Crowne Plaza and InterContinental chains, while its Staybridge Suites and Candlewood Suites brands
offer extended stay services mostly in the US. The company's newest brand, Hotel Indigo, targets mid-
market travelers with upscale appointments.

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Ritz-Carlton Hotel Company
The Ritz-Carlton Hotel Company operates 70 luxury hotels in more than 20 countries offering premium

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accommodations and amenities for both business and leisure travelers. Its hotels can be found in prime
destinations and are consistently rated among the best in the world. The company also manages four
Ritz-Carlton Destination Club time-share properties (Aspen, Colorado; St. Thomas, US Virgin Islands;

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San Francisco; and Jupiter, Florida). Ritz-Carlton was established in 1983 when real estate mogul and
former CEO William Johnson acquired the rights to the name made famous by Swiss hotelier César Ritz.
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Student Packet

Profiles of Board of Directors and Special Advisors in Attendance

1. Dana Barron's (board of directors) last name is synonymous with the word "hotel." As the
child of Taylor Barron, one of the founders of the modern US hotel tradition, Barron assumed
control of the family-owned Timora Corporation in 1979, after the death of Taylor Barron,
ushering in a new era of prosperity for the company. Barron is a graduate of the Hillcrest School
in New Hampshire, and earned a BA in art and architecture from the Sorbonne. Barron is an
active member of numerous philanthropic and community organizations.

2. Jesse Willis (board of directors) is the president and CEO of TransFair USA, a 501c3
nonprofit that audits transactions between US companies offering Fair Trade Certified products
and the international suppliers from whom they source, in order to guarantee that the farmers and
farm workers behind Fair Trade Certified goods are paid a fair, above-market price. Previously,
Willis served as the executive vice president of College Summit. Prior to moving to the nonprofit

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world, Willis held management positions at Coca-Cola and Microsoft. Willis earned a BA in
economics from Williams College and an MBA in marketing and entrepreneurial studies from the
University of South Florida.

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3. Chris Heredia (special advisor) was born in La Antigua, Guatemala, on October 9, 1951, and
graduated from Universidad del Valle de Guatemala with honors, receiving a BA from the
Tourism and Hospitality Program. Heredia began a political career when elected to the position of

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mayor of Antigua in March of 1974, and has held various positions over the years, including
mayor of Guatemala City (1992-1998). Heredia has also served in numerous government
departments and held a number of management positions. On February 21, 1999, Heredia was

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officially announced as the minister of Tourism and Civil Aviation by the prime minister of
Guatemala. Since then, Heredia has strived to push the limits and increase the growth of tourism
by expanding economic opportunities for all stakeholders. By building a strong relationship with
the private sector, Minister Heredia strives to introduce the rest of the world to the home country
of Guatemala.
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4. Parker LaForgia (special advisor) became the president and CEO of The Nature
Conservancy in April 2001. Previously, LaForgia was a managing director at Goldman Sachs,
and responsible for the firm’s Center for Environmental Markets and its Environmental Strategy
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Group. At Goldman Sachs, LaForgia played a major role in designing and implementing the firm’s
environmental strategy. LaForgia is a member of the Council on Foreign Relations and serves on
its independent task force on climate change. LaForgia is also a member of the steering group on
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the Prince’s Rainforest Project, which was launched last year by his royal highness the Prince of
Wales. LaForgia is also a frequent public speaker on topics connected to business and the
environment. LaForgia has recently lectured at events sponsored by the Council on Foreign
Relations, World Wildlife Fund, Columbia University, New York University, National Conference
on Science, Policy and the Environment, Ceres, Business for Social Responsibility, and Fortune
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Magazine. LaForgia is an adjunct professor at Georgetown University, with appointments in both

the school's finance and its management and organization departments.

5. Robin Reddick (special advisor) is the director of the Smithsonian Institution, the world’s
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largest combined museum and research complex. From 1991 until 2004, Reddick served as
president and chief operating officer of Continental Airlines. Prior to joining Continental, Reddick
served as vice chairman and chairman of the executive committee of the boards of directors of
Citicorp and Citibank, N.A. Reddick serves on the board of directors of the Woodrow Wilson
International Center for Scholars and the Museo Popol Vuh, which is home to one of the most
comprehensive collections of Mayan art and artifacts in the world.

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Student Packet

Timora Income Statement

Timora International Inc. Income Statement

All amounts in millions of US dollars except per share amounts.
1-Dec-08 1-Dec-07 1-Dec-06
Revenue 12,879 14,402 15,808
Cost of Goods Sold 11,256 11,917 13,614
Gross Profit 1,623 2,122 2,194
Gross Profit Margin 13% 16% 18%
SG&A Expense 783 829 880
Depreciation & Amortization 190 213 244
Operating Income 857 1,427 1,457

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Operating Margin 6% 11% 12%
Non-operating Income 53 103 85
Non-operating Expenses -124 -- --

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Income Before Taxes 694 1,228 1,296
Income Taxes 350 476 372

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Net Income After Taxes 344 752 924
Continuing Operations 359 753 932
Discontinued Operations 3 -1 0
Total Operations
Total Net Income
Net Profit Margin
Diluted EPS from Total Net Income
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2%
0.98
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6%
1.88
932
932
8%
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Dividends per Share 0.26 0.31 0.31

Timora Balance Sheet

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Assets 1-Dec-08 1-Dec-07 1-Dec-06

Current Assets
Cash 134 359 199
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Net Receivables 898 1,234 1,151

Inventories 1,981 1,682 1,244
Other Current Assets 355 578 820
Total Current Assets 3,368 3,858 3,413
Net Fixed Assets 1,443 1,435 1,275
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Other Noncurrent Assets 4,092 4,364 4,157

Total Assets 8,903 9,657 8,846
Liabilities and Shareholder's Equity
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Current Liabilities
Accounts Payable 704 852 678
Short-Term Debt 120 189 15
Other Current Liabilities 1,709 2,065 1,904
Total Current Liabilities 2,533 3,106 2,598
Long-Term Debt 2,975 3,013 1,873
Other Noncurrent Liabilities 2,015 1,995 1,679
Total Liabilities 7,523 8,114 6,149
Shareholder's Equity
Preferred Stock Equity -- -- --
Common Stock Equity 1,380 1,543 2,697
Total Equity 1,380 1,543 2,697
Shares Outstanding (thou.) 356,024 384,506 366,705

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Student Packet

El Mirador: A New Direction for Hospitality Leader Timora

Excerpted from: Travel and Tourism Industry News, October 23, 2009
The massive Mayan city of El Mirador was rediscovered in 1926, but has only recently become the focus
of ongoing excavations. It holds great promise both as a tourism destination rivaling the magnitude of
Tikal, and as an important piece in the puzzle concerning the advancements of Preclassic Maya society.
El Mirador flourished between 200 BC and 150 AD, much earlier than Tikal, and has revealed a greater
level of sophistication than once thought concerning early Mayan society. It is thought to have been home
to 80,000 people at the height of its occupation.

The site sits on a series of limestone hills at an altitude of just over 240 meters (800 feet) and occupies
about 16 square kilometers. El Mirador is dominated by two large pyramid complexes. The architecture is
characterized by triadic structures composed of one large temple pyramid flanked on either side by two
smaller pyramids, a pattern that is repeated elsewhere in the Preclassic sites of the El Mirador basin.

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Jaguar and vulture heads are built into the sides of El Mirador’s smaller temples and the spectacular
views from the top of the pyramid provide views of nearby Mayan sites, including Nakbé and Calakmul.

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Excavations of El Mirador are being conducted under the direction of Dr. J.T. Anderson, who has led the
El Mirador project for the past 12 years. The preservation of its delicate monuments is being aided by
technological advances, including covering structures with polycarbonate roofs designed to protect them
from rain and ultraviolet light. Critics have suggested that the Mirador / Timora partnership was simply a

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way for the cash-strapped archaeologist to continue funding his (expensive) pet project, but in reality, the
El Tigre Jungle Resort emerged out of the decades-long friendship between Anderson and Timora’s
CEO, Yvonne Tolle. Regardless, Anderson has been instrumental in bringing Timora International’s vision

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of a luxury ecotourism property to fruition. “Without J.T., El Tigre would still be a dream,” said Tolle a few
months ago, “With his help, Timora is bringing the wonders of El Mirador to the world. Without his help in
the future, our prospects are clearly weakened.”

The El Tigre project will cost $75 million and will consist of 60 jungle chalets and 20 luxury villas with
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private plunge pools.
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Student Packet
El Tigre Jungle Resort Promotional Materials

Cool garden waterfalls. Elegant thatch-roofed villas nestled in Guatemala’s most remote
jungle. Centuries of history around every turn. The El Tigre Jungle Resort is a hideaway
like no other.

A completely carbon-neutral property, El Tigre

Jungle Resort hotel in Petén, Guatemala blends
casual elegance with the coveted seclusion of a lush
garden retreat. Eighty guestrooms and suites afford
stunning jungle views and unparalleled access to the
recently opened El Mirador archaeological site as
well as the J.T Anderson Museum, a local effort to Stephen Wright 12/18/09 4:33 PM
Comment:
showcase the art and artifacts of the site. Relaxed Compliance with building codes entails
contentment is made complete with award-winning fusion cuisine, three swimming making the site completely handicap
pools, an intimate spa and superb service. Experience the ultimate vacation getaway. accessible. In reality, we aren’t likely to

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receive visitors who would require special
access. If we find this not to be the case,
Property Map we can always retrofit the property.
Eliminating handicap access would save
$650,000 and 14 days. However, it will be

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20% more expensive if it turns out that we
have to retrofit

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Region Map
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Student Packet
Trends in International Resort Development: 2008 Timora Annual Report

In recent years, sophisticated developers have increasingly been gravitating to lower-

density, more environmentally-sensitive destinations and projects while large-scale
resorts are increasingly perceived as sterile and inappropriate. In addition to seeking out
dramatic natural environments, high-end developers are seeking a private sanctuary
with a distinctive “sense of place” amidst an increasingly crowded world. Timora’s own
experience bears this trend out, as we have been moving away from the “mega-resort”
paradigm toward smaller, more exclusive destinations.

Our newest project, which is currently under development in Guatemala, epitomizes this
trend: The El Tigre Jungle Resort is located in the remote department of Petén, on the
grounds of the magnificent (and historically significant) Mayan ruin site of El Mirador. El
Tigre is entirely contained within a 2,000-acre natural preserve and a “wellness center”
spa focusing on ancient Guatemalan healing arts. The property will be 100% carbon
Stephen Wright 3/26/17 12:20 PM
neutral, and certified as a sustainable resort – both firsts for Timora!

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Comment: Our VP of Sustainability says
there are more than 100 sustainable
Resort trends are changing globally, and creative new project concepts are essential if tourism certification programs for the
we are to limit our financial exposure and attract sophisticated guests who have many industry! We would save $175,000 by
choosing the least expensive (less
alternatives. Our claims must be credible and our evidence transparent. Integrating

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reputable) option. Alternatively, we would
marketing and sales into that process at the earliest possible stage of the development save $295,000 and 5 days by not pursuing
process has been an important part of achieving this goal. certification at all.

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Our research is pointing to the need for more creative amenities at our properties. For
example, by focusing on a site’s historical associations, emphasizing extraordinary
architectural design, providing a higher level of personal service, or simply providing an
“authentic” regional experience for residents. In all cases, these alternative emphases

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position the projects as contrasts to conventional competitors.
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Student Packet
2008 Human Rights Report: Guatemala

Guatemalan law sets national minimum wages for agricultural and nonagricultural work
and work in garment factories. The daily minimum wage was 52 quetzales ($6.73) per
day for agricultural and nonagricultural work and 47.75 quetzales ($6.18) per day for
work in garment factories. Stephen Wright 12/18/09 4:35 PM
Comment: Former team’s notes say that
According to the US Department of State, the minimum wage did not provide a decent there are 302 local laborers employed on
the job site at $40.00 per day. Given the
standard of living for a worker and family. The National Statistics Institute estimated that fact that there are few job opportunities in
the minimum food budget for a family of five was 1,976.05 quetzales ($256) per month, the area, Yvonne is confident that a 75%
18.85% higher than in 2007. Labor representatives noted that even where both parents pay cut would be tolerated - its still well
above the minimum wage! This would
worked, the minimum wage did not allow the family to meet its basic needs. save us $1,163,000.

Noncompliance with minimum wage provisions in the informal sector was widespread.
The Ministry of Labor conducted inspections to monitor compliance with minimum wage
provisions, but the government allocated inadequate resources to enable inspectors to

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enforce the minimum wage law adequately, especially in the very large informal sector.
Advocacy groups focused on rural sector matters estimated that more than half of
workers in rural areas who engaged in day-long employment did not receive the wages,
benefits, and social security allocations required by law. According to credible

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estimates, between 65% and 75% of the workforce continued to work in the informal
sector and outside basic protections afforded by the law.

The legal workweek is 48 hours with at least one paid 24-hour rest period, although in

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certain economic sectors workers continued to operate under a tradition of longer work
hours. Daily and weekly maximum hour limits did not apply to domestic workers. Time-
and-a-half pay was required for overtime work. Although the law prohibits excessive
compulsory overtime, trade union leaders and human rights groups charged that

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employers forced workers to work overtime without legally mandated premium pay.

Labor courts have responsibility for sanctioning employers found violating labor laws.
Labor inspectors are not empowered to adopt administrative measures or to impose
fines for labor violations. The labor courts received 1,619 cases from the Labor
Stephen Wright 12/18/09 4:36 PM
Comment: I just got off the phone with
the project manager in Guatemala.
Working hours are 7am – 4 pm, 5 days a
week. If we add a night shift and work 6
days a week, we’ll be able to finish
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Inspectorate and ruled in favor of reinstatement of the worker in 571 cases. Court construction sooner. However, this will
mean working in the dark, which will
decisions favorable to workers were rarely enforced due to frequent refusals by increase the risk of accidents (and add
employers to honor these decisions. Management or persons hired by management $1.1 million to the final budget), but it
reportedly continued to harass and make death threats against workers who did not
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would save 30 days. If we don’t pay time-

and-a-half, and instead pay $15 / day, it
accept employer dismissals or refused to forfeit their right to reinstatement. will only cost $290,000 (and will still save
30 days).
The government sets occupational health and safety standards, which were inadequate
and poorly enforced. When serious or fatal industrial accidents occurred, the authorities
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often failed to investigate fully or assign responsibility for negligence. Employers rarely
were sanctioned for failing to provide a safe workplace. Legislation requiring companies
with more than 50 employees to provide onsite medical facilities for their workers was
not enforced. Workers have the legal right to remove themselves from dangerous work
situations without reprisal. Few workers, however, were willing to jeopardize their jobs
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by complaining about unsafe working conditions.

Stephen Wright 3/26/17 1:56 PM
Comment: The project manager wanted
me to emphasize to you that serious
accidents at the site will likely increase if
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we begin working at night, even with

additional lighting and safety precautions.

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Student Packet

From: Anya Valez

To: aowens@Timora.com, bmanzella@Timora.com, pwolski@Timora.com, ddelpriore@Timora.com
Subject: El Tigre Project Completion Options

Hello Team-

Yvonne has asked me to share my insights about the options for completing the El Tigre project. Unfortunately,
I’m about to get on a flight to Australia for the opening of our new hotel in Sydney, and will be out of touch for
the next 21 hours. I hope this information helps.

At the rate we’re going, the project will be 22 days behind schedule and $2,125,000 over budget. Based on my
review of the information left by the former project management team, it appears that there are several areas
where we can save time and money.

• As a gesture of goodwill, Timora pledged to construct a school in the community. However, we have

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recently learned that there is already a school with sufficient capacity for all the students (I saw
firsthand that the school is large enough to fit all the students). Therefore, construction of a second
school is unnecessary, and not building one would save us $345,000 and 5 days.

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• Timora’s original plan was to hire local staff for 90% of the positions. However, we didn’t anticipate the
local population’s low levels of literacy and lack of experience in the service industry. If we revise our
training program to eliminate the need for written materials (a cost of $51,500) we think we can

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successfully complete the training we have begun with the current group, although it will take 5 extra
days. Bringing in trained staff to make sure things run smoothly will save us $212,000 and will not add
time to the project. However, Dr. Anderson suggests that we stick to the plan. He feels that it will all
come together, and that it’s important to show the community that we trust them and value their

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involvement.
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Cancel commitment to make property carbon neutral (through the purchase of carbon offsets). This
may impact our ability to be certified as a ‘green’ property, but the savings are substantial - $1,119,000.
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• The original plans call for the use of forest-certified wood throughout the site. However, more trees
have been felled than we thought necessary, and the foreman proposes using local timber that is not
certified. This would save $1,320,000 but add 10 days.
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• The nesting site for a species of snake is located on the future site of the spa. The site manager
ensures me that no one else knows about this, and is recommending that we move ahead with
construction as planned (this would have no effect on the budget, but construction on the spa has
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already begun and the site manager believes it will be completed 5 days ahead of schedule). I asked
him how much it would cost to relocate the spa, and he estimated the cost at $422,000 and 10 days of
labor.

I know this is a lot of information to digest, but I’m confident that you’ll be able to develop a plan to get the
project back on track! I’m sure you’re planning a site visit soon – I don’t know if any of you have visited
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Guatemala before. If not, you should take a look at the information available from the US State Department:
http://travel.state.gov/travel/cis_pa_tw/cis/cis_1129.html
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All the best,

Anya

Anya Velez
V.P. Special Projects
Timora International

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