The Business Simulation Blog

NYU's Jukka Laitamäki Discusses The Cesim Hospitality Simulation

Posted by Zsuzsa Jakab on Monday, November 18, 2013 | Reading time: 7 min.

Jukka Laitamäki (Clinical Professor of Preston Robert Tisch Center for Hospitality, Tourism and Sports Management, NYU) shares his experiences using the Cesim Hospitality Hotel and Restaurant Management Simulation Game in a total of six different courses, including Business Development for Seniors (Undergraduate), and Strategy Formulation and Decision-Making (Graduate).

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Jukka: "My name is Professor Jukka Laitamäki and I'm here at NYU (New York University) and I'm a Professor at the Preston Robert Tisch Center for Hospitality, Tourism and Sports Management."

Cesim: What got you interested in business simulations and when have you first used one?

Download Cesim Hospitality Guide BookJukka: "Well I've been looking for a business simulation for several years. I used to run a global MBA program and that was in the early 2000, but there were not many good applications. But when I met Veijo at the Global Business Conference in Oulu - I think it was in 2010 - and then I saw that this is a little bit different, because you compete against other teams. Usually, students want to figure out how to beat the computer, and that's not really a deep learning. But if you need to learn how to compete against your competitors in other teams, I think that's a much richer way to learn. So I became interested in this, and I've been using Cesim Hospitality since January 2012 in a total of six different courses, which include Business Development for Seniors in our undergraduate program and Entrepreneurship also for Seniors in the undergraduate program. In the graduate program, I used it for Strategy Formulation and Decision-making class."

Cesim: Tell me a little bit about your decision to integrate Cesim Hospitality into your course. What type of course was it (blended, online, classroom), on what subject, and in what ways did you intend the simulation game to complement it?

Jukka: "Why don't I describe the graduate class in Hospitality. It's called Strategy Formulation and Decision-making. So what I do in this class is, that I use the Blue Ocean strategy framework and they develop Blue Ocean strategies for a specific company. And then I integrate readings in the decision-making, and that's the second part of the class. So they have Peter Drucker and several other classic Harvard Business Review managerial decision-making readings, and so when these two pieces are put together developing strategies for the Cesim Hotel they need to basically integrate the decision-making principles into a two-page memo. So every week, they need to make the decisions and it's competitive, so they see the net operating income and other statistics for their hotel versus others. But then I need to know what information they use for the decisions and what applications from the classic decision-making principles are they actually applying. They can't always just use their guts. There is one article 'Using your guts' but there are articles talking about how your decision-making style evolves when you become more experienced. So that's that class. Then in the Business Development, which is the undergraduate senior class (sort of a capstone class), there the key thing is the business plan for a new venture and then this hotel simulation is excellent for this because these seniors are very competitive, and there we use a similar type of approach. I have a set of readings that they need to read, and I need to see that they actually understood what the readings mean, and they need to integrate that into the memos."

Cesim: How did your students react to the simulation? What was the overall engagement level with Cesim Hospitality and what strikes you as the most exciting thing in the behavior of your students during the course of the game?

Jukka: "Well it's competitive, so you know that's always the case that they become very interested in it if they lose money. I had this one practice round where the team made a $200,000 loss and one team made $50,000 net operating income, so it was a quarter million difference. So this team that lost really woke up, and when the first round came, they came strongly back and I think they were the second or third for that round. So that competitive nature, and I like this simulation, because it's very simple. If you look at the results you can clearly see it's not complicated, so you can see which team is best. So they are excited about that. The harder part is that you really need to make sure they understand, they need to read the case description, and they need to understand the various areas of decision-making. I think there is about 80 decisions they need to make. That's hard. It's a lot of learning in a short time, so I think it's critical that you really make them understand, you push them in the beginning to learn about this decision-making. You know, what variables are there and then they do the practice round. And then you can run it."

Cesim: What do you think your own role was during the simulation game? How did you help your students to get the most out of the experience?

Jukka: "I think really it's helping them to understand that they are not competing against the computer, they are competing against each other. And then help them to see the correlations. Like in a hotel business, usually you set your rates for the rooms, and there is the average daily rate. So if a team goes really high on a rate for a certain period usually their occupancy suffers. So they need to understand the relationship between high rates, low rates, and what it means for the occupancy. The other thing is the relationship between different promotion programs, the differences in terms of how you set your menus (are you using fresh or frozen). One important area for them to understand is that if the scenario is that there will be a peak in the demand, then they can't permanently staff. They need to do more temporary staffing. Those are some of the areas, so there are a lot of practical things they need to understand about this simulation. But there is really no shortcut. Their understanding builds up when they make mistakes, then they want to fix it, and like I said they are very competitive so they don't want to be the last team again in the next round. And on the other side, these decision-making principles, I give them a sample memo about how to integrate Peter Drucker's principles into the memo. So that's another side. One side is to learn how the simulation runs and the relationship between their decisions and the results, and the other side is understanding decision-making principles. But after two-three rounds of doing this, I just put up the results and we have a good conversation. They try to figure out from each other what did this team do so well, that they actually got such great results. So I'm facilitating after two or three rounds."

Cesim: What are some of the most important takeaways that you have learned over the years about simulation based courses?

Jukka: "One key thing I always consider is that you need to integrate this. This is not a course by itself. And how you integrate it? Well like I said in my case it's about decision-making principles and then the actual competitive nature of these teams and their hotels competing. So that's one thing, integrating it into the course. You have to have something else also. I have either the business plan or the blue ocean strategy project. Then I think it's important that the students also get some testimonials. I usually invite a student from a previous class. I had a speaker from Expedia who is an executive there now, and he came to the class and explained for instance that they thought they had a Ritz Carlton in the beginning of the simulation, but they ended up having a Holiday Inn. And you know talking about his experience what he learned and how he can actually apply that in the real life in his current job. That's one important thing. And then setting the right type of culture, so that it's competitive, but it's also about learning. The beauty of this simulation is that when a team has made its decisions and they get a prediction that for example we should make $30,000 for the next round, and actually that's not gonna happen because the other teams made better decisions. So there are advantages here in terms of about our own decisions, but not in isolation from the competition. So the competitive and learning culture is crucial. And then also understanding the implications of various scenarios. Each round has a different scenario, so what does that mean for our hotel in terms of decision-making. I think those are some of the takeaways."

Cesim: What tips or words of advice would you give to other educators who are planning to use business simulation games in their course(s)?

Jukka: "Really I think that I touched a lot of those in my comments about integrating it into the class, setting the culture and competitive learning. The grading is one thing I forgot. What I do each round is that the teams can get up to 20 points based on their memo, where they tell the purpose for the round. First of all they start with the key lessons they have learned from the previous round. Then they say these are our main objectives for this round, and then they describe the different areas like front desk, restaurant, maintenance, housekeeping, human resources, procurement. So they describe their decisions and they integrate the information from the previous rounds and from the scenario into those decisions. So it's very structured. I need to know what information they are using and then they put those applications of decision-making principles and brief conclusions. So this is a two-page memo and every round is worth 20 points. And then I add depending on the team. So if you have six teams, the team that got the best results gets 6 points and then down to 1 point to the last team. So you could get 26 points per round and the emphasis here is in the actual content of the memo, not so much about the actual net operating income or the results per round, because that can be in this case only 6 points and 20 points come from the memo. And then there is the final summary where they put together all the key lessons that the team learned and that's a four-page memo, and that's 100 points. So it's a cumulative learning experience."

Cesim: Final thoughts?

Jukka: "I think that's it! I like this. It's nice, because as I said earlier, the students are not able to figure out the computer. They are not competing against the computer, they are competing against other teams, so that makes it so real. Oh yeah, one thing I forgot, that for each round, let's say If I see that the staff satisfaction is very low (this last round it was 1.2 out of 5), then I assign a specific goal to increase the staff satisfaction because I looked at the decisions, and they were not training them, they were just using temporary staff. So basically abusing the staff, which is not a real life strategy, because then it results in less customer satisfaction also. So you can't just shrewdly make money, you need to consider your employees. So what I do then is I assign X amount of points for the teams that do the best staff satisfaction and learn from that."


Did you like what Prof. Jukka Laitamäki had to say about Cesim Hospitality? Sign up for a one-on-one demo below to learn more about the restaurant and hotel simulation game for your own restaurant and hotel management simulation course!

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Tags: Educator 2.0, Case study, How to use business simulations

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