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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Hotel Management
Chapter 1:Hotel Industry
Overview & Professional Career Opportunities
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
third largest retail industry following automotive & food storesnation’s largest service industryone of the nation’s largest employers
Tourism Industry
Hospitality Retail (Shopping)Stores
TransportationServices
Destination(Activity) Sites
Lodging is Part of Tourism Industry:Tourism Industry
LodgingOperation
F&B Operations
Tourism industry is
Figure 1.1: Segments in the Tourism Industry
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Lodging is Part of Tourism Industry:Lodging (Hotel) Sector
Lodging properties are a segment within tourism industry
Figure 1.2: Range of lodging property alternatives
Destinationresorts
Full-servicehotels
Limited-service hotels
Sleepingrooms
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
1900
Lodging is Part of Tourism Industry:A Brief History of Hotels
Figure 1.3 : Highlights in the modern history of the US hotel industry
1910
Fewer than 10,000 hotels750,000 to 850,000 rooms
10,000 U.S. hotelsOne million rooms300,000 employeesAverage size: 60-75 rooms
1920
Occupancy: 85%Hotel construction reaches an all-time peak asthousands of rooms are added along the new stateand federal highways
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
1930Occupancy: 65%AHA’s Hotel Red Booklists 20,000 hotels
Lodging is Part of Tourism Industry:A Brief History of Hotels (continued….)
1940Occupancy: 64%Average room rate: $3.21
1950Occupancy: 80%Typical hotel: 17 roomsAverage room rate: $5.91
1960
Occupancy: 67%$3 billion in salesTypical hotel rooms: 2,400,450Typical hotel: 39 rooms, independent and locally ownedAverage room rate: $5.91
Figure 1.3 : Highlights in the modern history of the US hotel industry
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Lodging is Part of Tourism Industry:A Brief History of Hotels (continued….)
1970
Occupancy: 65%$8 billion in salesTotal hotel rooms: 1,627,473Average room rate: $19.83
1980
Occupancy: 70%$25.9 billion in salesTotal hotel rooms: 2,068,377Average room rate: $45.44
Figure 1.3 : Highlights in the modern history of the US hotel industry
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Lodging is Part of Tourism Industry:A Brief History of Hotels (continued…)
1990
2000Occupancy: 63%$97 billion in sales
Occupancy: 64%$60.7 billion in salesTotal hotel rooms: 3,065,68545,020 propertiesAverage room rate: $58.70
Figure 1.3 : Highlights in the modern history of the US hotel industry
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Close Look at Lodging OrganizationsFigure 1.4: 2000 Property / Room Breakdown
22.5%35.1%21.3%9.9%
11.2%
51.5%33.5%10.9%2.8%1.3%
Under 75 rooms75 –149 rooms150 –299 rooms300 –500 roomsOver 500 rooms
By size
3.3%18.1%27.3%25.3%26.0%
13.8%26.9%34.1%16.2%9.0%
Under $30$30 - $44.99$45 - $59.99$60 - $85Over $85
By rate
10.2%33.6%42.2%7.7%6.3%
Property16.0%30.4%31.0%10.2%12.4%
UrbanSuburbanHighwayAirportResort
RoomsBy location
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Close Look at Lodging Organizations:Typical Lodging Guests
Figure 1.5: Typical lodging guests
28.8% are transient business travelers
25.3% are attending a conference/group meeting
24.6% are on vacation
21.8%are traveling for other reasons (for example,personal, family, or special event)
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Emphasis on safety, cleanliness & service- Guests also consider “intangible”aspects of the purchase
decision
Close Look at Lodging Organizations:Lodging Industry Characteristics
Inseparability of manufacture & sales- A room exists & is sold at the same site
Perishability- If a room is not rented on a specific date, the revenue is
lost forever
Repetitiveness- Some operating procedures are routines
Labor Intensive- Much of a hotel’s daily work involves employees
providing services
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Close Look at Lodging Organizations:Lodging Industry Overview
Largest hotel affiliations
333,110
337,226
374,010
481,482
554,834
Rooms
1,9105.HILTON HOTELS CORPORATION
1,8463. MARRIOTT INTERNATIONAL
4,2194. CHOICE HOTELS INTERNATIONAL
3,0302. BASS HOTELS&RESORTS, INC.
6,5401. CENDANT CORPOPRATION
PropertiesBrands
These five represent some 28 % (14,884 / 53,500 properties) of alldomestic properties, & 42 % (1,708,617 / 4,100,000 rooms) of all rooms.The majority of these brands do not “own”their hotels, but hotel ownerselect to affiliate with the brand, for a fee.
Figure 1.6: Top 5 lodging brands
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Single-unit property not affiliated with any brandSingle-unit properties affiliated with a brandMulti-unit properties affiliated with the same brandMulti-unit properties affiliated with the same brandMulti-unit properties affiliated with different brandsMulti-unit properties operated by the brand or othersMulti-unit properties owned by the brand
Hotel ownership / management
Close Look at Lodging Organizations:Lodging Industry Overview (continued….)
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Close Look at Lodging Organizations:Lodging Industry Overview (continued….)
Figure 1.7: Hotel Ownership / Management Alternatives
Hotel property
Franchisecompany
(Franchisor)IndependentOwnership Independent
Franchisecompany
(Franchisor)IndependentOperation IndependentManagement
companyManagement
company
Franchise Non-FranchiseAffiliation
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Close Look at Lodging Organizations:Hotel Organizational Structures
Figure 1.8: Organizational Chart for Small (75 Rooms),limited-service hotel
Small Hotel (75 rooms)
Manager
Custodialpersonnel
Housekeepingpersonnel
Bookkeeper/Accountant
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Close Look at Lodging Organizations:Hotel Organizational Structures (continued….)
Large Hotel (350 rooms)
Figure 1.9: Organizational Chart for Large (350 rooms),full-service hotel
G.M.Administrativeassistant
Assistant G.M.
Controller F&Bdirector
H.R.Manager
Directorof sales &marketing
Frontoffice
manager
Executivehousekeeper
Chiefengineer
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Linedepartment
Those directly involved in the “chain of command”.Directly responsible for revenues- Front Office & Food / BeverageAlso responsible for property operations- Housekeeping, Maintenance, & Engineering
Staffdepartment
Providing technical, supportive assistance tosupport line decision-makersMaking recommendations to (but not decisions for)line decision-makers- Purchasing, human relations, and accounting
Close Look at Lodging Organizations:Hotel Departments
Line & staff departments
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Revenuecenter
A hotel department that generates revenue- Front office & food / beverage departments- Also revenues from telephone services, spacerental and fees from parking garages, vendingmachines, and golf courses
Cost centerA hotel department which incurs costs in supportof a revenue center- Marketing, maintenance, accounting, human
resources, & security departments
Revenue and cost centers
Close Look at Lodging Organizations:Hotel Departments (continued….)
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Successful hotels greatly emphasize serving their guests tothe best possible extent.
Lodging is a Service Business
The brand name a hotel uses is not the most importantfactor in a hotel’s success.
When hotels put guests’needs first, those hotels will dowell.
Facility Engineering & Maintenance
Consistent delivery of quality of products and services to guestsmust be addressed first, rather than considering tactics tomaximize revenue; minimizing costs comes next!
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
How will we show our staff and tell them about the need forhigh quality guest service?How exactly will we evaluate the level of service quality beingprovided to our guests?What exactly are our service strategies and our serviceprocedures?How will we train our staff about service concerns and thetactics to deliver service?How will we reinforce our service strategies?What can we do to emphasize service as a philosophy ratherthan as a program with a definite start & end time?What can we do to excel in the guests’moments of truth?
Questions that must be addressed to deliver quality service:
Lodging is a Service Business (continued….)
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Overbuilt problem
Hoteliers should examine ways to reduce costs withoutimpacting quality.An excessive emphasis on cutting service or productquality will ultimately result in reduced hotel revenue.
Managers should implement procedures to: a) reduceturnover levels, b) increase productivity levels, c) recruitfrom non-traditional employee labor markets.
Labor shortages
Current Issues confronting Hoteliers:Operating Issues
Cost containment
Increased competition
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Various amenities (e.g., business centers) increase costs forhotel owners yet sometimes appeal to only a small segmentof the hotel’s market.
Results in a more competitive selling environment forhoteliers (e.g., online room booking)
The more the number of brands increase, the harderconsumers find it to differentiate between them.
Efforts to focus on a highly defined, smaller group oftravelers.
Market segmentation is increasing
Current Issues confronting Hoteliers: MarketingIssues
Brands overlap
Increased sophistication of consumers
Increased number of amenities
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Interactive reservation system- Allows potential guests to make reservations at preferred
room rates in reduced timeGuestroom innovations- Two (or more) telephone lines enabling Internet access /interactive menu ordering for room service / electronic gamesand guestroom checkout
Data mining technology- Analyzing guest- (and other) related data to make bettermarketing decisions
Yield management- Matching guest demand with room rates
Recent technological innovations include:
Current Issues confronting Hoteliers: TechnologicalIssues
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
“As goes the economy, so goes the lodging industry”
Impact of globalization on the lodging industry
Lodging industry is an integral part of the tourism industry- It is affected by the extent to which travelers, both withinthe country and worldwide travel
Facility Engineering & Maintenance
Economies of the world, the country, the state and the communityplay on the financial success of a lodging organization & theindividual properties which comprise it.
Current Issues confronting Hoteliers:Economic Issues
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
G.M / Rooms division M. / Front office M. / Controller /Executive housekeeper / Catering M. / Executive steward / F &B M. / Banquet M. / Chef / Executive chef / Food productionM. / Pastry Chef / Sous chef / Room service M. / F & Bcontroller / Restaurant M. / Beverage M. / Purchasing Director /Human Resource M. / Credit M. / Executive assistant M. /Convention M. / Marketing & sales M. / Auditor / Director ofsecurity / Convention services director / Resident M / Chiefengineer
Typical Multi-Unit Positions: Area G.M. / Regional G.M. /Director of Training / Vice president, finance / Vice president,real estate / Director of franchising
Close Look at Lodging Organizations:Lodging Industry Overview (continued….)
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Enrolling in and graduating from hospitality-related programsof studyWorking in a variety of lodging positions (includingeducational internships)Developing a career ladder for professional development withinthe lodging industry- Working with a mentorObtaining suggestions by talking with G.M.s at hotels nearbyindustry leaders and educators
How does one start to plan for a career in the lodging industry?
Professional Career Opportunities in Lodging:Get Started With Career Planning
Chapter 2:The Hotel General Manager
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Responsibilities
G.M.s
G.M.s’tasks
Investor relations Community relations
Brand affiliationmanagement
Executive Committeedevelopment
Propertymanagement
The single most important human variableaffecting a hotel’s short-term profitability“Wear many hats”(perform multiple tasks)
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
G.M.s’ability to effectively inform investors & owners aboutcurrent performance & future needs of their hotel/s
Responsibilities: Investor Relations
Property’s long-term success
To successfully manage owner / investor relations:
G.M.s’talents
Financial analysis abilityProficiency in written communicationEffective public speaking / presentation skills
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Continually monitor operational standards set by the brand toensure property performanceCommunicate effectively with franchise brand officials aboutmarketing & sales programsImprove profitable operation of hotel by using activities &programs offered by the brand
Managing brand at the property level
Responsibilities: Brand AffiliationManagement
To successfully manage owner / investor relations:
G.M.s’talents
Well developed interpersonal skillsPersuasive abilityListening skillsEffective writing ability
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Result of annual (or more frequent) inspections by franchisecompanyUsed as measure of effectiveness of G.M., of hotel’s managementteam, and of owner’s financial commitment to the property.Ensuring franchiser-mandated standards are met by franchiseeBecoming an important example of how the G.M. interacts withfranchisers and/or management companies
Quality Inspection (or Assurance) scores
Responsibilities: Brand Affiliation Management(continued…)
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Attract new businessesExpand tourism opportunitiesProvide input regarding local business community needsHave charity events and fundraisers at the hotel
Opportunities to assist the local community
Responsibilities: Community Relations
To successfully perform community relations
G.M.s’talents
Outgoing personalityWell-developed social skillsEffective public speaking & presentation skills
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Responsibilities: Executive Committee Facilitation
Food & beverage production & serviceFood & Beverage Director
Guest, employee & property safety/securitySecurity Director
Revenue production & promotionsSales & Marketing Director
Guest services and salesFront Office Manager
Property cleanlinessExecutive Housekeeper
Upkeep of hotel’s physical facilityChief Engineer
Accounting for hotel assets and liabilitiesController
Hotel staffing needsHuman Resource Manager
Responsible forFunctional area
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Responsibilities: Executive CommitteeFacilitation (continued…)
General Manager
HumanResourceManager
SecurityDirector
ControllerFrontOffice
Manager
ExecutiveHousekeeper
Food &BeverageDirector
Sales &MarketingDirector
ChiefEngineer
Typical mid-sized, full-service hotel department organizational chart
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
That he/she works with EOC to improve skills & efficiencies of thedepartments these individuals manage
That he/she assists their professional development
That he/she must be an expert in specific day-to-day operations of eachhotel’s department
Wrong expectations regarding the G.M.
Responsibilities: Executive Committee Facilitation(continued…)
Right expectations regarding the G.M.
To successfully manage the EOC facilitation
G.M.s’talents
Good listening skillsAbility to evaluate / implement managerial training &development programAssisting in professional improvement & growth of EOC team
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Responsibilities: Property Management
To successfully handle property management:
G.M.s’jobs
G.M. should be able to direct overall property management.
Process of planning, organizing, staffing, directing,controlling and evaluating human, financial and physicalresources, to achieve organizational goals.
Organizational & coaching skillsAnalytical & financial analysis skillsAbility to anticipate guest needsCompetitive sprit & high attention to detail
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Responsibilities: Property Management(continued…)
To provide leadershipStaffing / directing
To measure and evaluate resultsControlling / evaluating
To maximize deployment of resourcesOrganizing
To establish goals and objectivesPlanning
PurposeFunctional area
Management process
Controlling & evaluating
Planning
Organizing
Staffing & Directing
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Responsibilities: Property Management(continued…)
What is the goal of providing in-room, high-speedInternet access to guests?Planning
What needs to get done to keep staff “on task”with project completion timelines?
How will the hotel measure sales volume or reputationvalue gained versus cost of providing in-room Internetservice?
Controlling /Evaluating
How will the hotel allocate necessary dollars toachieve this goal?
Organizing
Staffing /Directing
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Hotel admin. / hotel & restaurant mgt. / hospitality admin. / restaurant, hotel, &institutional mgt. / food service mgt. / hospitality business / tourism admin. /culinary arts
Program titles
Skills Development: Formal Education
For whom
Designed for both traditional college students & non-traditionalworking studentsWish to terminate their formal education after several years ofstudyHave a B.A. degree in another subject & wish to gainknowledge of the hospitality industry
Two-year degree
Highly practical & currentPractical professional instructors who may be well connectedin the community (assisting job placement)
Benefits
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
ChecklistsAdmission requirementsProgram designs
Advanced degrees
Skills Development: Formal Education(continued…)
For whom
Four-year degree
Have diverse faculty & quality facilitiesOffer an excellent learning environment
Benefits
Wish to complete a B.A. degreeSeek to learn from a larger number of qualityfacultyWish a “more advanced”degree than two-year
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Impact of advancing technologyImpact of a changing workforce
OJT trends / focuses for hotel G.M.s
Skills Development: On-the-Job Training
OJT
Learning activities designed to enhance skills ofcurrent employeesOffered by management with intent to improveguest service & employee performanceGenerally no charge to employee for training
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Membership benefits / activities of local business associations(e.g., local Chambers of Commerce)
Business / skills enhancement programsNetworking opportunitiesTimely publications & seminars including local economic data & best
management practicesIn some cases, providing low- or no-cost training for entry-level
workersLobbying for business interests & facilitating public-private
employment initiativesUpdating on recent business thoughts & methods
Business associations
Skills Development: Professional Development
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Current two major interestsTechnology applications / human resource management
Help staying updated on current info
Serve certification, educational, social and legislative needs of theirmembersHold monthly and annual gatheringsOffer educational seminars / workshopsHave Trade Shows
Efficient way to see new products & service offerings of a large numberof vendors in a short time
Example of the hotel industryEducational Institute of the American Hotel & Lodging Association
Trade associations
Skills Development: Professional Development(continued…)
Trade publications
Chapter 3:Management and Supervision
Skills for the G.M.
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
The G.M. Sets the Pace
G.M.s feelings & actions about issues will likely impacthotel staff attitudes about those issues.
G.M.s personally direct only the work of department headsand, perhaps, relatively few other staff.
G.M.s’interaction with department heads directly impactshow they interact with their own staff.
Influence
Level of morale Desired product& service quality
Employeeturnover rates
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
G.M.s Must Manage: Organizational Levels
Of resources available, people (human resources) are themost complex and important for success!
Entry-Level Employees
Top-Level Management (G.M.)
Middle-Level Management(Department Heads)
Supervisory-Level Managers(Supervisors/Managers)
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
G.M.s Must Manage: G.M. Functions
Assess the extent to which long- and short-range plans wereattainedEvaluating
Take corrective action(s) when budgeted financial plans arenot attainedControlling
Supervise the work of department headsDirecting
Recruit, select, orient and train new department headsStaffing
Assign responsibilities for an upcoming banquet or conferenceeventOrganizing
Develop an operating budget or a marketing planPlanning
Examples of activity: Working withdepartment head (if applicable) to:
ManagementFunction
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Ability to performmanagement-specificaspects of the jobForecasting guest demand forrooms and establishing roomrates, etc.
Ability to understand andinteract well with guests,employees, suppliers, etc.
Ability to organize anddirect required work efforts
Ability to develop policies andoperating procedures necessaryfor guest safety
Ability to collect, interpret,and use information logically
Learning about a new, competinghotel opening nearby and makingfuture marketing decisionsaccordingly
G.M.s Must Manage: G.M. Skills
Conceptual Interpersonal
Administrative TechnicalSkills
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Joining professional business andcommunity service organizations
Meeting with communitygovernment representatives
Participating incommunity social events
Attending school & athleticevents with their children
Yesterday: dictatorialleadershipToday: facilitatorsTomorrow: empowerment
“Manage by walkingaround”
G.M.s Must Manage: G.M. Relationships
G.M.
Staff members Other hotel employees
External organization Others in community
How the hotel can meet andexceed guest expectations
Guests
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
G.M.s Must Manage:G.M. Manage in Times of Change
Relative to their counterparts “yesterday”G.M.s must
Interact with a more diverse workforce
Emphasize teams rather than individual performance
Cope with fast-paced technology changes
React to global challenges
Improve quality while increasing productivity
Improve ethical / social behaviors
Adjust to workplace changes (e.g., re-engineering, downsizing)
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Evolution of Traditional Hotel H.R. Practices
Participative decision styleAutocratic (dictatorial) decision style
Team behaviorIndividual behavior
Manager shares responsibility for resultsManager personally responsible for results
Manager listensManager tells and sells personal views
Pride, recognition, and growth are used tomotivate staffFear and pressure used to motivate staff
Team problem-solving is employedManager personally solves problems
Manager encourages changeManager seeks stability
Emphasis on employee facilitation skillsEmphasis on technical skills
Manager is supportiveManager is dominant
Team-focused work unitManager-focused work unit
ContemporaryTraditional
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Evolution of Traditional Hotel H.R. Practices(continued…)
Long-term H.R. strategiesShort-term H.R. strategies
Multi-directional communicationTop down –one way communication
Flexible routinesBureaucratic “rituals”
ConsensusPower
EmpowermentHierarchy of control
Proactive management/supervision styleReactive management/supervision style
Consistent “moments of truth”Inconsistent “moments of truth”
What one says is consistent with what onedoes
What one says is inconsistent with whatone does
G.M. earns the team’s supportG.M. forces compliance
ContemporaryTraditional
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Management Basics: Planning
Vision
Mission Statement
Long-Range Plan
Operating Budget
Short-Range (Business) Plan
Marketing Plan
What the hotel will strive to be
What the hotel must do to be successfuland how this will be accomplished
Hotel’s goal for long-range (e.g., fiveyear) time span
Hotel’s goal within a one-year time span
Anticipating revenues and expensesduring short-range plan implementation
What must be done to generate revenuesanticipated by the operating budget
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Management Basics: Decision Making
Routine and repetitive decisionsmade after considering policies,procedures, or rules
Infrequent decisions requiringcreative decision making abilities
Programmed decision Non-programmed decision
Before making a decision
Who is the correct person to make decisions?Will a decision about a specific issue bring the hotel closer toattaining objectives and goals?How will the decision affect guests?Is there only one acceptable alternative?How much time and effort can be spent on the decision?How does one’s experience help with decision making?Must the decision please everyone?What are the ethical aspects of the decisions?
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Management Basics: Decision Making Approach
Manager makesdecisionsunilaterally
Manager makesdecisions afterinput fromothers
Manager allowsteam to makedecisions
Traditional Recent Contemporary
Continuum of decision making
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Management Basics: Decision Making(continued…)
Advantages Disadvantages
Groupdecisionmakingprocess
Considering broad rangeof informationGenerating more creativealternativesWhole team keenlyaware of issues andproblems
Achieving higher morale
Easier implementation
Possible conflictsMay be forced to “takesides”if alternativeopinions are expressedDomination by staffmembers with strongestpersonalities
Time-consuming
Not applicable when fastdecisions necessary
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Limit to how many staffmembers one supervisor canmanage effectively
Each employee should reportor be accountable to onlyone boss for a specificactivity
Management Basics: Organizing Principles
Unity of command Span of control
Distribution of authority
Executive housekeeper establishes table linenlaundry schedule with F&B dept.
Line managers (betweendepartments)Functional
Hiring and firing employees within a specificdepartment
Line managers(within departments)Line
Develop orientation program for all hotelemployeesStaff managersAdvisory
ExampleUsed byTypes ofauthority
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Work that others cando as well as the G.M.
Work that is lessimportant than otherwork
Work that should belearned by more thanone person
Management Basics: Delegation
What work might bedelegated by the G.M.?
Allows the G.M. to domost important thingsfirst
Effective process totrain employees
Allows more work tobe accomplished
Improves controls
Delegation benefits for theG.M.
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Management Basics: Delegation (continued…)
Organizational climate necessary for delegation
Assign specific duties & responsibilities to employees
Grant sufficient authority for carrying out assignments
Supervisor & employees agree on expected results
Managers make feedback system to measure progress
Communicate responsibilities to minimize confusion
Steps in effective delegation
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Management Basics: Flow of CommunicationMulti-directional communication
Formal channel (example): coachingInformal channel (example): grapevine / rumor mills
Managers/Supervisors
Department Heads(Executive committee)
G.M.
Employees
VerticalComm.
HorizontalComm.
Managers/Supervisors
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Management Basics: Motivation
Poorly motivatedstaff
Inconsistent performance for required quality or quantity standards
Guest dissatisfaction
Increased operating costs
Hotel suffers
More motivated employees’leave
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Management Basics: Motivation (continued…)Strategies to motivate employees
Follow sound management advice
Effective orientation
Train correctly
Manage a professional hotel
Supervise as you want to be supervised
Encourage effective communication
Manage a friendly hotel
Help your employees succeed
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Management Basics: LeadershipEffective leaders will:
implement the property’s Mission Statement
have an objective & measurable “picture”of hotel’s desiredfuture
help others develop the knowledge and skills needed toattain hotel’s vision (e.g., orientation, training, andcoaching)
utilize the empowerment process
develop team of staff committed to hotel’s successachieve a reputation for quality service consistentlydelivered to guestscultivate a reputation for fairness and honesty
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Management Basics: Discipline
Steps in a progressive discipline process
Discipline: activities reinforcing desired performanceor correcting undesired performance.
Oral warning (no entry in employee’s record)
Discharge
Oral warning (entry in employee’s record)
Written reprimand
Suspension for specific number of days
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Have high standards andexpectations
Support individual membersand maintain trusting andrespectful relationships
Practice participativemanagement and solicit inputfrom members
Demonstrate that own personalgoals and individual teammember goals should not beplaced before team goals
Share credit for team successes
More control over workresponsibilities
Make work assignmentswithin the team
Schedule themselves
Evaluate each other’s work
Assign compensationincreases
Team Building Tactics
Self-directed team To be a good team leader,the G.M. must
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Employee Selection, Orientation, and TrainingPersonnel tactics checklist
Recruitment / selection tactics
General orientation tactics
Correct training
Departmental / orientation and workstation / induction tactics
Train-the-trainer tactics
On-the-job training (OJT) tactics
Supervisory / other training tactics
Training budget
Other training issues
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G.M. Interactions
G.M.s never have a daily routine; every day is different
Daily involvement in guest relations are quite visible
Actual daily activities undertaken by a G.M. vary from day-to-day & month-to-month as well as from property-to-property
G.M. is on duty eight or more hours daily and is often on-call even when not on the property
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G.M. Interactions: Employees
Observing employees at a company picnic enjoy themselves
Providing non-job related advice when requested
Observing staff who participate in community organizations/activities
Mentoring younger workers
Following employees’careers as they are promoted within the organization
Congratulating personnel about significant events in their families’lives
Welcoming new staff to the team
Learning employees’suggestions about possible operating improvements
Daily conversations with long-term staff
Possible interactions with employees: positive examples
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G.M. Interactions: Employees
Observing an intoxicated employee attempting to come to work
Comforting an employee whose child has passed away
Explaining to staff why they did not get promotions they sought
Discovering employee “sabotage”
Supervising staff violating hotel policies, requirements, and rules.
Assigning work responsibilities to cover “no show”employees
Learning about illegal acts committed off-property by staff
Confronting staff known to be stealing
Disciplining or terminating staff
Possible interactions with employees: negative examples
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Receiving guest input about hospitable staff members
Providing accommodations to guests stranded by adverse travelconditions
Interacting with frequent guests
Receiving input from guests who genuinely want the hotel to besuccessful
Interacting with guests as peers at community / professional meetings
Providing service / assistance to guests
Observing hotel guests celebrate significant family / professionaloccasions
Receiving spontaneous “Thank You Notes”from happy guests
Interacting with frequent guests
Possible interactions with guests: positive examples
G.M. Interactions with Guests
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Discovering overt guest room damage
Calming irate guests stranded by adverse travel conditions
Interacting with police called to hotel for disturbances or illegal guestactivities
Preventing guest theft of money, products and/or services from the hotel
Preventing property vandalism
Preventing on-site prostitution
Dealing with visibly intoxicated guests
Guest deaths in sleeping rooms or in the hotel’s public spaces
Interacting with police called to hotel for disturbances or illegal guestactivities
Possible interactions with guests: negative examplesG.M. Interactions with Guests
Chapter 4:Human Resources
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H.R. Department Roles
H.R. is bothline & staff
function
Helping line managerswith H.R. related duties- employee selection- orientation- training- evaluation- compensation
H.R. specialists
G.M. must define authority boundariesbetween line- & staff managers.
Making final employeeselection decision
Providing departmental-specific orientation
Initiating ongoing training
Supervision activities(e.g., performance appraisal)
Line managers
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How H.R. personnel assist in hotel’s overall operation
H.R. Department Roles (continued…)
Implementing policies to effectively recruit, select, motivate, and retainthe most qualified management and non-management staff
Developing and delivering orientation, safety, security, supervisory, andsome department-specific training programs
Developing and communicating H.R. policies that are equitable and fairto all employees while protecting the rights of the hotel
Interpreting, implementing, and enforcing the ever-increasing body oflaws and regulations
Helping to maintain appropriate standards of work life quality andethical business policies and practices
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Job descriptions Job specifications
Twostaffing
tools
Staffing the H.R. Department
A list of tasks that anemployee in a specificposition must be able toperform effectively
Statements about duties,responsibilities, workingconditions & specific jobactivities
Example: H.R. Director(recruitment, selection,evaluation, promotion)
A list of personal qualitiesnecessary for successfulperformance of the tasks requiredby the job description
Statements about knowledge,skills, education, physical &personal characteristics
Example: H.R. Director(considerable knowledge ofprinciples & practices ofH.R. management)
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Legal Aspects of H.R.: Employee Selection
Bonified Occupational Qualifications (BOQs):Qualifications to perform a job that are judged reasonablynecessary to safely or adequately perform all tasks within that job
Education or certification requirementsLanguage skillsPrevious experienceMinimum age (for jobs such as waitress or bartender)
Physical attributes (amounts able to be lifted, carried etc.)
Licensing
Legitimate BOQs
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Employmentapplications
Tools to screen employee applicants
Legal Aspects of H.R.: Employee Selection(continued…)
Interviews
Only provide info directly relating to the jobDemographic info, employment history, educationalbackground, criminal history, employment status, references,drug testing
Testing
Other
Race, religion and physical traits should not be askedAge may be asked only for the purpose of legal requirements
Follow strict state guidelines and requirements for pre-employment drug testing
Obtain applicant’s permission in writing for background andreference checks
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Legal Aspects of H.R.: Employee Selection(continued…)
Equal Employment Opportunity Commission:Employers cannot discriminate against employees on the basis of race,color, religion, sex or national origin.
Protects young workers fromemployment interfering with educationor that is detrimental to health
Fair Labor Standards Act(1938)
Prohibits hiring illegal immigrantsImmigration Reform &Control Act (1987)
Protects individuals 40 yrs and olderAge Discrimination inEmployment Act (1967)
Prohibits discrimination against jobcandidates with disabilities
Americans withDisabilities Act (1990)
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“At-will”employment Employment agreement
Legal Aspects of H.R.: Employment Relationships
Employees can elect towork for the employeror terminate the workrelationship anytime
Employers can hire orterminate any employeeswith or without cause atany time
Document specifyingthe terms of the employer–employee workrelationship
Indicates rights andobligations of bothparties
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Legal Aspects of H.R.: Workplace Laws
One cannot ask favors of a subordinate in exchange for employmentbenefits; neither can one punish an employee if an offer is rejected.A G.M. should follow strict zero tolerance policy & procedures- issuing of appropriate policies- conducting applicable workshops- developing procedures to obtain relief- developing written protocols for reporting- investigating & resolving incidents & grievances
Hotels (employing 50 or more staff) should provide up to 12 weeks ofleave (unpaid) to an employee for a birth, adoption of a child or seriousillness of immediate family members.
Sexual harassment
Family & Medical Leave (1993)
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Unemployment insurance (allowing temporary financial benefits to employeeswho have lost jobs)
Unemployment claim (asserting the worker is eligible for unemploymentbenefits)
Employee evaluation (assuring work performance [nothing else] forms the basisfor employee evaluations)Discipline (effectively communicating and consistently enforcing workplace rulesand policies)Termination (preventing unacceptable termination of employee/s)
The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime workrates, and equal pay regardless of gender.
Compensation
Legal Aspects of H.R.:Workplace Laws (continued…)
Employee performance
Unemployment issues
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Selected employee records should be maintained.
Examples of record keeping:- Department of Labor records (e.g., employee’s name, address, gender, job
title, work schedule, hourly rate, regular and overtime earnings, wagedeductions and payday dates)
- any deductions from wages for meals, uniforms, or lodging
- amount of tips reported (for tipped employees)
- covered leave and amount of leave for eligible employees(Family & Medical Leave Act)
- employment eligibility verification (Immigration Reform & Control Act)
- personnel matters & benefit plans (Age Discrimination & Employment Act)
Employment records
Legal Aspects of H.R.:Workplace Laws (continued…)
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Internal recruiting External recruiting
H.R. Department at Work: Recruitment
Focusing on internalapplicants for vacantpositions
Focusing on internalapplicants for vacantpositions
“Promotion from within”Alerting friends andrelatives of currentemployees
Recruitment is not solelythe job of H.R. departmentCurrent staff can impacthotel’s turnover rate
Hiring from outsidesourcesNewspaper and other
media advertisements /job fairs / executivesearch firms / recruitingat schools / “helpwanted”signsAttracting externalcandidates
Recruitmentmethods
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Selection:Evaluating job applicants to determine those more qualified(or potentially more qualified) for positions.
H.R. Department at Work: Selection
Selection devices
Employment interviewsEmployment tests
Preliminary screening (reviewing application)
Reference checksDrug tests
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Orientation:Providing basic information about the hotel which must be known by all itsemployees.
H.R. Department at Work: Orientation
Goals
Reducing anxietyImproving moraleReducing turnoverProviding consistencyDeveloping realisticexpectations
Contents
Hotel overview(mission statement)Guest service / relations trainingEmphasis on teamworkPolicies and proceduresincluding handbookCompensation and benefitsGuest safety & securityEmployee & union relationsProperty tour
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Training is absolutely critical to the hotel’s success !
H.R. Department at Work: Training
Group trainingEffective when several (or more)staff must learn the same thingUse of a role-play (e.g., upsellingtraining for front desk agents)
Individualized training
One-to-one training method
Mainly responsible forindividualized line departments
Improve knowledge or skills of staff
New employees and experienced staff need training
Ongoing professional development can motivate staff andhelp employees’advancement opportunities
Implement “train the trainer”program
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H.R. Department at Work:Performance Evaluation
Goals
Determine where staff can improve performanceAssess eligibility for pay raises and promotionsImprove moraleAssure legal compliance
H.R.Dept.Roles
Develop policies & procedures for property-wide systemCommunicate these policies & procedures to all staffAddress and resolve employee concerns as they ariseFile performance evaluation results in employee records
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Steps of performance appraisal system
H.R. Department at Work:Performance Evaluation (continued…)
Performance standards are established for each position
Evaluation information is filed
Policies (e.g., frequency of rating) are established
Data is gathered about employee performance
Raters must evaluate performance
Discuss performance evaluation with employees
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What other employers attempting to attract the same applicants pay.What employees working on different jobs in the hotel are paid.What other employees working on same jobs within the hotel are paid.
Legal / fair / balanced / cost effective / viewed as reasonable by staff
Compensation:All financial & non-financial rewards given to managers & non-management staff in return for their work.
The H.R. Department at Work: Compensation
Effective compensation programs should be:
Establish pay for specific positions based on:
Salary / wagesDirect financial compensation
Benefits (health insurance, paidvacations, etc.)
Indirect financial compensation
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Work-related accidents & illnesses
H.R. Department at Work:Employee Safety & Health
Working conditionse.g., greasy floors in kitchen
Work to be donee.g., cooks using knives
H.R. staff assistance for health related activities
Developing and selecting programs to help employees cope with stress
Developing procedures applicable to workplace violence
Communicating updated info about HIV in the workplace
Providing info about cumulative trauma disorders
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H.R. Department at Work:Workforce & Work Quality Improvement
Professional development
Cultural diversity
Continuous qualityimprovement
Improving
work
quality
TECHNIQUES
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Chapter 5:The Controller
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Development of systems to collect and report financialinformationAnalyzing this same informationMaking finance-related recommendations to assistmanagement decision making
Record and summarize financial data
Purpose of bookkeeping
Accounting
Facility Engineering & Maintenance
Controller: individual responsible for recording, classifying, andsummarizing the hotel’s business transaction.
Purpose of accounting
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Financial management system that collects accounting datafrom an individual hotel site and combines and analyzes thatdata at the same site.G.M. and controller have larger role in preparing financialdocuments
Financial management system that collects accounting datafrom an individual hotel(s), then combines and analyzes thedata at a central sitePrevails in chain-operated or multiproperty hotel companiesCompany will likely employ C.P.A. for data analysis
Centralized accounting systems
Decentralized accounting systems
Accounting (continued…)
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Rooms available for forecasted periodEstimated rooms for the periodEstimated occupancy rate for periodTotal rooms sold / total rooms available = Occupancy percent (%)Estimated ADR (average daily rate) for period- Total room revenue / total number of rooms sold = ADRRevPar (revenue per available room) for forecasted period- Occupancy % X ADR = RevPar
Rooms revenue forecast should include at minimum:
Revenue Forecasting: Rooms Revenue
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Number of guest rooms sold directly impacts amount ofF&B sales volume
Revenue Forecasting: Food & Beverage Revenue
Controller will forecast sales generated from:- Room service- Banquets- Meeting room F&B revenue- Audio visual equipment rental- Service charges
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Pay-per-view moviesParking chargesInternet access chargesGift shop sales of newspaper / cigarettes / candy / lotions / pop / etcTelephone (local / long distance calling)Guest laundryCoat check feesGolf feesTennis feesHealth club usage feesPool fees
Typical examples of other revenue sources include:
Revenue Forecasting: Other Revenue
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Allowing management to anticipate / operate for future businessconditionsProviding communication channel whereby hotel objectives arepassed to various departmentsEncouraging department managers who have participated inbudget preparation to establish own operating objectives /evaluation techniques / toolsProviding G.M. with reasonable estimates of future expenselevels and serving as tool for determining future room ratesHelping controller & G.M. to periodically evaluate hotel and itsprogress toward financial objectives
Important function of budget
Budgeting
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Long-rangebudgets
Encompass relatively lengthy period,generally 2-5 years or moreUseful for long-term planning, consideringwisdom of debt financing / refinancing andscheduling of capital expenditures
Budgeting (continued….)
Annualbudgets
Must be produced by individual hotels andsubmitted to central office for review in large,multiunit hotel companiesDeveloped to coincide with calendar year
Monthlybudgets
Helps determine whether maintaining progresstoward goals developed in annual budgetGreat use for seasonal hotelRefer to Figure 5.1 (Waldo hotel propertyoperations & maintenance departmentoperating budget for January)
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Known as profit and loss statementLists hotel’s revenues, expenses, GOP, & fixed charges forspecific time (month, fiscal quarter, or year)In no case should this period exceed middle of nextreporting period
Income statementBalance sheetCash flow statement
Key financial documents
Income statement
Financial Statements: Income Statement
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Figure 5.2: Income Statement InformationThis period’s actual
RevenuesLess Direct operating expenseEquals Department operating incomeLess Overhead (undistributed) expenseEquals Net income (GOP)Less Fixed expenseEquals Income before taxes
Financial Statements: Income Statement
G.M. can answer: How did hotel perform during this period?
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Figure 5.3: Tricolumned Income StatementThis
period’sactual
Thisperiod’sbudgeted
Last yearsame period
actual
Revenues
Less Direct operating expense
Equals Department operating income
Less Overhead (undistributed) expense
Equals Net income (GOP)
Less Fixed expense
Equals Income before taxes
Financial Statements: Income Statement
G.M. can answer:Hotel performance during this period?Hotel performance compared with performance estimate (budget)?Where did estimates vary significantly?How did hotel perform compared with same period last year?Where were significant changes from last year evident?
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Of all assets, none consider relative value / worth of staff,including the G.M, actually operating hotelValue of experienced, well-trained staff is not quantified.
Provides a point-in-time statement of overall financialposition of hotel“Snapshot”of financial health of hotelCapture the financial condition of hotel on day it is producedNot telling how profitable the hotel was in given accountingperiod
Functions of balance sheet
Financial Statements: Income Statement
Limitation of balance sheet
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Financial Statements: Balance Sheet
Figure 5.9: Accounts receivable aging report
Assets
Cash $75,000
Accounts receivable 50,000
Inventories on-hand 25,000
Prepaid expenses 10,000
Total assets $160,000
Property and equipment $7,000,000
(Less accumulated depreciation) 500,000
Net property and equipment 6,500,000
Total assets $6,660,000
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Financial Statements: Balance Sheet
Figure 5.9: Accounts receivable aging report (continued….)
Liabilities and Owners’equity
Current liabilities
Accounts payable $75,000
Wages payable 25,000
Total current liabilities $100,000
Long-term liabilities
Mortgage payable $6,300,000
Total liabilities $6,400,000
Owners’equity 260,000
Total liabilities and owners’equity $6,660,000
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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How much cash was provided by hotel’s operation duringaccounting period?What was hotel’s level of capital expenditure for that period?How much long-term debt did hotel commit to during thatperiod?Will cash be sufficient for next few weeks or will short-termfinancing be required?
It is critical that the hotel not only is profitable, but also that itmaintains solvency.
Statement of cash flows can answer to the following:
Financial Statements: Statement of Cash Flows
It shows cash effects of hotel’s operating, investing, andfinancing activities.
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For room- Number of rooms available for sale / number of rooms sold / occupancy rate /
ADR / RevPar / Other room revenue info
F & B- Restaurant sales / bar & lounge sales / meeting room rentals / banquet sales /
other F& B revenue
For other income- Telephone revenue / in-room movie revenue / no-show billings / other income
“Daily”
Controller’s office should provide G.M. with atimely recap of prior day’s rooms, F&B & otherrevenues.Prepared from data supplied nightly by PMS.
Daily Operating Statistics:Manager’s Daily Sales Report
Daily includes the following:
The more detail you desire, the longer the Daily !
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Rooms availableTotal rooms occupiedRooms occupied by guest typeOccupancy percentTotal ADRADR by guest typeTotal RevPar
Documentation & verification of night auditor’s report is animportant function of controller’s office.
Detailed room revenue report include:
Night auditor report provides wealth of info on room sales.
Daily Operating Statistics:Detailed Room Revenue Statistics
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Allowance &adjustments
Reduction in sales revenue credited to guestsbecause of errors in properly recording sales or toappease a guest for property shortcomings.
Daily Operating Statistics:Adjustments & allowances
Figure 5.7: Adjustment VoucherADJUSTMENT
NO 348685
(1)
DATE (2) 200xxNAME (3) ROOM OR
ACCT.NO. (4)
EXPLANATION (5)
SIGNATURE
X (6)
11-09-0199 (7)
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Employee error in charge- Employee training program, cash sales systems, or guest service techniques
Importance of completion of allowance & adjustment voucher
Daily Operating Statistics:Adjustments & allowances (continued….)
Hotel-related problems- Equipment inspection programs, guest service training
Guest-related problems- Total monthly Allowance & Adjustments/ total room revenue = Room
allowance & adjustment %- This percentage varies based on hotel age, quality of staff & training
programs, & type of guest typically served
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Changing guest’s credit cards for items not purchased, thenkeeping money from erroneous chargeChanging totals on credit card changes after guest has left orimprinting additional credit card charges and pocketing cashdifferenceMis-adding legitimate charges to create higher-than-appropriatetotal, with intent to keep the overcharge.Charging higher-than-authorized prices for products/services,recording proper price, and keeping the overchargeGiving/selling/credit card numbers to unauthorized individualsoutside hotel
Credit card-related techniques to defraud guests
Internal Controls: Cash
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Cashier training programsSales revenue recording systemsCash overage/shortage monitoring systemsEnforcement of employee disciplinary procedures fornoncompliance
Methods of evaluating cash control systems
Internal Controls: Cash
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Facility Engineering & MaintenanceAccounts receivable (AR): money owed to hotel because of sales
made on credit
Internal Control: Accounts Receivable
Facility Engineering & Maintenance
Direct bill: an arrangement whereby a guest is allowed topurchase hotel services and products on credit
Guest seeking credit would complete a “Direct BillApplication”(Refer to Figure 5. 8)
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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which guests are allowed to purchase goods/services oncredit.how promptly those guests will receive bills.what is total amount owed to hotel and how long have thosemonies have been owed.
Controllers’jobs to establish:
Internal Control: Accounts Receivable
Facility Engineering & Maintenance
A controller together with a G.M. should establish credit policiesthat maximize number of guests doing business with hotel, yetminimize hotel’s risk of creating uncollectable accountsreceivable.
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Figure 5.9: Accounts receivable aging reportWaldo Hotel: Accounts Receivable Aging Report For January,200X
Total amount receivable $100,000.00
Number of days past due
Less than 30 30-60 60-90 90+
$50,000
$30,000
$15,000
_____ _____ _____ $5,000
_____ _____ _____
_____ _____ _____
Total $50,000 $30,000 $15,000 $5,000
% of total 50% 30% 15% 5%
Internal Control: Accounts Receivable(continued….)
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Payment of proper amountsPayments made in a timely mannerPayment records properly maintainedPayment totals assigned to appropriate departments
Charge for goods / services used by hotel, invoiced byvendor, not yet paidSum total of all invoices owed by hotel to its vendors forcredit purchases made by hotel
Account payable (A.P.)
Internal Control: Accounts Payable
Four major concerns in A.P. systems
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Use a system of coding to assign actual costs to predetermined cost centersImplement functioning expenses coding system
Create system whereby total payments to vendors match vendor billings exactly
Maintains good relations with vendors by prompt payment of invoices
Take advantage of discounts offered by vendors for prompt payment
Ensure legitimate invoices are paid only for amount actually due.Invoices and payments for those invoices should be checked by at least twopeople
Payment of proper amounts
Internal Control: Accounts Payable(continued….)
Payments made in a timely manner
Payment records properly maintained
Payment totals assigned to appropriate departments
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Ensuring payment is made to vendors only for goods /services actually received
Internal Control: Purchasing & Receiving
Payment should be withheld if all services have not beenperformed.
Before A.P. invoice is paid, check terms of sale, productprices quoted by vendor, & list of products against actualvendor’s invoices.
Devising payment system ensuring members of propertymgt. Team has:- Preauthorized work- Confirmed cost of work- Verified work is satisfactorily completed
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Internal Control: Inventories
Facility Engineering & Maintenance
Secure accurate inventory from each department wheremonthly inventories are taken (refer to monthly incomestatement)
Beginning period value of towel inventory+ Towel Purchase
= Cost of Towels Available
- Ending period value of Towel Inventory
Cost of Towels used in period
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Proper payment of employees’salaries and wages is animportant function of the controller’s office
Keep detailed, department-specific (individual) payroll info.- important due to fluid nature of labor usage in hotel
Advice to G.M. about prevailing wage rates, workerproductivity, variation from budget, and future labor needs
Internal Control: Payroll
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Internal auditIndependent verification of financial recordsperformed by organization operating hotelCost-effective in multiunit hotels
Audits
Facility Engineering & Maintenance
Auditor: individual conducting independent verificationof financial records.
External auditIndependent verification of financial recordsperformed by accountants employed byorganization operating hotel
Chapter 6:The Front Office
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Front Office Function
Front Office Manager(FOM)
RevenueManagement
Reservations GuestServices
NightAudit
DeskStaff
Concierge BellStaff
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Front Office Functions With Other Positions
Front OfficeManager
Revenue managerEstablishing room ratesReservation manager Managing the reservation processDesk staffGuest registration
Concierge Guest information
Bell staff Guest assistance
Night auditor Managing the Front Office related
accounting and data collection process
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Responsibilities of Front Office
Functionalareas
PMS & itsmanagement
Revenue &reservation
management
Management ofguest Services
Accounting forguests
Datamanagement
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Front Office: The PMS & Its Management
PMS:Computerized
system
Room rates,reservations, androom assignments
Guest histories
Reservations
Other selectedguest services
Managementinformationfunctions
Accountinginformation
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To maximizehotel’s revenueper availableroom (RevPar)
Front Office :Revenue & Reservations Management
Occupancy % &Average Daily Rate
(ADR)Increase
Occupancy % x ADR = RevPar
To improve RevPar:
Estimate (forecast) guest demand for rooms
Practice yield management
Control occupancy
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Revenue & Reservations Management:Forecasting Guest Demand For Rooms
When demand for rooms is high, drive ADR(e.g., college football game: sell-out at a high ADR)
When demand for rooms is low, drive occupancy(e.g., night before Thanksgiving: offer lower rate)
Knowing demand for rooms is key !
keep accurate historical records to understand past demand
know of special events or circumstances that impact futureroom demand
For forecasting demand, Front Office should:
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Revenue & Reservations Management:Practicing Yield Management
Offer discounts up to 30%Less than 50% occupancyOffer discounts up to 20%50 - 70% occupancyOffer discounts up to 10%70-90% occupancyOffer no discounts90-100% occupancy
Rate strategyForecasted room demand
YieldManagement
A strategy using demand forecasts to maximizeRevPar.A strategy using demand forecasts to maximizeRevPar.Demand for rooms > supply, sell at “rack rate”Demand for rooms < supply, offer at discounts
Yield Management strategy based on room demand
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Revenue & Reservations Management:Managing Occupancy
25Saturday
120Friday
250Rooms left to sellSunday
Example: Forecasted room demand (Hotel with 300 rooms)
“Closed to Arrival”(CTA) : Hotel declines reservation forguests attempting to arrive on this specific date.
“Minimum Length of Stay”(MLOS) : Hotel declinesreservations for guests seeking to stay for fewer days thanthe minimum established by the hotel.
Identifying Saturday as day that is CTA & MLOS of two daysto maximize total weekend occupancy
Room availability strategies
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Managing Guest Reservations:By Types & Delivery Methods
Transient sales: rooms and services sold primarily via FrontOffice & its staffGroup sales: rooms and services sold primarily via Sales &Marketing department, and given to the Front Office for recordingand servicing.
Global distribution system: great use by travel agents worldwide.
Hotel direct: effectiveness of the telephone sales effort is important.Walk in: “curb appeal”is important.
Internet: accuracy of current info on web-site is important.
Franchise 800 numbers: significant source of transient roomreservations.
By reservation type
By delivery method
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Managing Guest Reservations:Delivery Methods (Global Distribution System)
Travel agents,or Third-partysites
GDS Users GDSes Switches HotelsWorldspan,Amadeus,Sabre, orGalileo
Pegasus orWizCom
Hotel’sReserv.system
to to to
To Make Reservations:
Hotels
Hotel’sReserv.system
SwitchesPegasus orWizCom
GDSesWorldspan,Amadeus,Sabre, orGalileo
Travel agents,or Third-partysites
GDS Users
tototo
To Confirm Reservations:
Information Flow of the GDS
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Managing Guest Services
Airport transportationParking carsHandling luggageProviding directions to local attractionsMaking restaurant reservationsTaking guest messagesRouting mailNewspaper deliveryManagement of safety deposit boxesSupplying directions for areas within the hotelSetting wake-up callsProviding guest security via careful dissemination of guest-related informationHandling guest concerns and disputes
Variety Of Guest Services
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Assisting guests in getting baggage into hotel and their roomsExplaining hotel services and guest room features to guests
Printing “reg card”for guests scheduled to arrive next dayReg card: legal contract existing between hotel and guest(guest name / guest address / guest telephone number / arrival date / departuredate / # of adults in the room / rate to be paid / room type / form of payment)
Managing Guest Services: Front Desk - Arrival
Pre-arrival
Bell station
Bell staff should be friendly, well groomed, properly uniformed,and respectful of guest property
Valet
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Managing Guest Services: Front Desk - Arrival(continued…)
Five-step registration process
Minimize wait / make guestsfeel welcome
Greeting guests
Reg card serves as the recordof guest’s stay
Authorize (validate) the cardat time of registration
Accommodate guest preference for roomtypes (location, view, bed type & amenities)
Issuance of keys Control issue of guestroom keys for guestsafety
Confirming theinfo on reg card
Securing a formof payment
Roomassignment
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Without a guest’s permission, never reveal his or her room number toany third party.
Never perform registration tasks in ways allowing guest room info to beoverheard by others’.
Never write room numbers directly onto keys.
Never issue a duplicate room key to anyone except a registered guests.
Without a guest’s permission, never confirm or deny that he or she is infact registered.
Without a guest’s permission, never release info related to his or her stay.
Always be vigilant in informing guests of any third-party info requestsregarding their stay.
Managing Guest Service:Front Desk- Guest Privacy
Guest information
Room information
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Apologize to guest for any inconvenience.
Clearly explain hotel’s walk policy to guest.
Offer any reasonable assistance to minimize guest difficulties.
When guests’issues are handled professionally and theirlegitimate complaints are treated courteously, theirexperience is enhanced.
Managing Guest Service:Front Desk - Stay & Departure
Guest satisfaction issues
The walked guests
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The detailed list of a guest’s room charges as well as othercharges authorized by the guest or legally imposed by the hotel.Appropriate guest charges incurred are posted to the appropriateguest’s folio.All independent supporting documentation should be thoroughlyreviewed prior to posting.
Accurately collect and post charges to the guest “folios”Maintain an accurate list, by room number, of guestroom occupantsVerify accuracy of the room rates charged to guestsConfirm the check-out dates
Accounting For Guests
Front office’s accounting related tasks
Billing to Folio
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verify and document identification of guest to whom room is rented.
assign guests, whenever possible, to requested room type.
assure that assigned room status is “clean & vacant”.
confirm rate guest pays, prior to issuing room keys.confirm guest’s departure date, prior to issuing room keys.secure acceptable form of payment from guest.
Guests present themselves to begin registration process
Special check-in areas may be available, depending on level of service andpriority of guests.
Front Desk Agent confirms status of selected room prior to roomassignment
At front desk check-in
At shelf check-in, system should allow staff to:
Accounting For Guests:Room Management / Assignment
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Industry term for location of actual registration cards signed byguests at check-in
Bucket
Guest’s actual room assignment / rate to be paid / departure date /form of payment /any other accounting-related information
Manual procedure for assuring accuracy of:
Accounting For Guests: Bucket Check
Physically verifies that info. on a guest’s registration card iscomplete and matches that in the PMS
Cross referencing method
Bucket check helps reduce errors related to billing guest’s folio.
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Night audit function: eight keys item
Accounting For Guests: Night Audit
Posting appropriate room tax and tax rates to guest folioVerification of accurate room status (in PMS) of all roomsPosting any necessary adjustments or allowances to guest foliosVerification that all legitimate, non-room charges have beenposted, throughout the day, to proper guest folioMonitoring guest account balances (e.g., guest’s credit limit)Balancing and reconciling Front Desk’s cash bankUpdating and backing up electronic data maintained by FrontOfficeProducing, duplicating and distributing all managementmandated reports (e.g., ADR, occupancy %, business source,in-house guest lists)
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Accounting For Guests: Check Out
Two essential tasks accomplished by desk agent
Confirmation of guest’s identityChecking for late faxes / messages not yet delivered to guestInquiring about and returning guest belongings in hotel’ssafety deposit boxesPosting any final chargesProducing copy of folio for guest’s inspectionProcessing guest’s paymentRevising room’s status in PMS to designate room as vacant
Settlement of guest’s bill
Re-booking of guest for a future stay (selling opportunity)
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Confirmation that name on card matches that of individual presenting thecard for paymentExamination of card for any signs of alterationConfirmation that card has not expiredComparison of signature on card with signature by guest paying with thatcardDocumentation (usually initialing) by employee processing the chargeBalancing and reconciling credit card charges at conclusion of each FrontOffice shift
Credit card acceptance & processing guidelines
Data Management: Credit Cards
Accuracy
Commitment to securityProcessing guest credit cards
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Recodablelockingsystem
Data Management: Locking / Security Systems
Increasingly utilized to ensure guest safetyInstalled cost is about $300 - $500 per guestroomIndependent & stand-alone (no wiring back toPMS is necessary)
Managing arecodable
lock system
Be trained to issue duplicate keys only toconfirmed registered guestsMaintain an accurate data system that actuallyidentifies registered guests and their assigned roomnumbers
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Private Branch Exchange (PBX)
Hotel internal system to process incoming, internal, andoutgoing telephone calls
Data Management: Telephones
Call accounting systemRecords time, length, and number called, of eachtelephone call made within each guestroomPosts phone charges directly to guest’s folio wheninterfaced with PMS
Wake-up calls
Voicemail
Message on hold
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Any sales recording system not located at Front Desk (alocation, excluding Front Desk, at which hotel goods &services are purchased)Mostly interfaced with the PMS
Data Management: Point of Sale (POS)
Point of Sale (POS)
restaurants / room service / lounges / laundry / valet / shops/ fitness centers / business centers
Multiple POS systems in large hotel operations
Ensure all legitimate purchases & charged purchases areposted to the correct guest or non-guest folio
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In-roomservice
Movies
Pay-per-viewmovie system
In-room mini-barsInterfaced with thePMS(automaticallyposted to guest’s folio)
Data Management: In-Room Services
Games
“video”games ontelevision screen
in guest room
Safes
In-room safesfor guest use
Internetconnections
Pay-to-connectbasis in guest room
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Data Management: Back Office SystemBack officeaccounting
system
System used by the controller to prepare hotel’sfinancial documents such as Balance Sheet, IncomeStatement, etc.
good underlying technologystrong company behind the product, including good leadershipcompatibility with popular hardware productssizable customer basegood customization capabilitiesexpandabilityease of use by non-technological staffexcellent support via telephoneexcellent online supportpotential for PMS interface
Back office accounting system should offer:
Chapter 7:Housekeeping
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Decisions about required number of cleaning employeesFrequency of cleaning
Roles of Housekeeping Dept.: Guestrooms
Publicspaces
lobby areas / public restrooms / front desk areas /management offices / game rooms / exercise areas /pool & spa areas / employee break rooms & lockerrooms / selected meeting & food service areas
Major Executive Housekeeper responsibilities:
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Guestroomareas
Properly cleaned by HousekeepingVerified as clean by second member of HousekeepingRoom’s status has been reported to Front Desk
Roles of Housekeeping Dept.: Guestrooms
Elevators/ corridors/ stairwells/ guestrooms
Room will be assigned, when:
Communication role to Front Desk staff (room status info) &Engineering / Maintenance Department ( room maintenanceissues)
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Roles of Housekeeping Dept.: Guestrooms(continued…)
Room is occupied but not yet cleaned, due toguest request not to be disturbedDo not disturb
Room reported as occupied, but room was notused, and guest may have leftSleep-out
Guest will stay in room at least one more nightStay-over
Room vacant but not yet cleanedOn-Change
Room registered to a current guestOccupied
Room vacant, has been cleaned and can beassigned to guestClean & Vacant
Room status terminology
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Roles of Housekeeping Dept.: Guestrooms(continued…)
Guest’s items still in room, but guest will be deniedaccess until management approval of re-entryLock-out
Guest has requested and has been allowed anextension of regular check out time
Late check-out
Room is not rentable, thus not assignableOut-of-order
Guest has departedCheck-out
Guest has indicated that is last day he/she will useroomDue-out
Room status terminology (continued…)
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Laundryareas
laundry preparation areas/ laundry supply closets/guest linen, terry and supplies storage areas
Managing “On Premise Laundry (OPL)”and its effectiveoperation
Housekeeping Dept. & Executive Housekeeper’s role
Laundry often represents one of the hotel’s largest expenses.
Roles of Housekeeping Dept: Laundry
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Assess quality of room cleanlinessPoint out deficiencies to room attendants, get those deficienciescorrected, & report revision of room status to ExecutiveHousekeeper or Front Desk
have management skills (planning, organizing, directing andcontrolling departmental activities).have commitment to cleanliness and impeccable cleaning standard.create an appropriate inspection checklist and revise it as necessary.know about personal administration, budgeting, laundry sanitation,fabrics & uniforms, room cleaning chemicals and routines.be guest oriented.
Executive Housekeeper should:
Room Inspector’s major responsibilities:
Staffing the Department
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Treat them at all times with respectEnsure they are supervised by excellent supervisorsHave room cleaning assignment policies perceived by them as fairProvide excellent, ongoing trainingProvide a realistic career ladder for room attendantsEnforce Housekeeping Department policies consistently andwithout favoritismEnsure room attendant safety through training and appropriate hotelpoliciesProvide benefit packages that are competitive for the areaPay fair wages
Approaches to build highly motivated, dedicatedRoom Attendants:
Staffing the Department (Continued…)
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Housekeeping employees areone of the hotel’s largest groups
Physical nature of jobs
Managing Housekeeping: Safety
this group’s accidentrates generally thehighest in the hotel.
thus
Equipment & supplies
RuleHousekeeping employees should handle only thosemachinery items and supplies they are properlytrained to handle.
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Chemical handlingCleaning proceduresCorrect lifting techniquesProperly entering guestroomsContending with guestrooms containing:
firearms/ uncaged animals/ individuals perceived asthreatening/ ill or unconscious guests/ drugs and drugparaphernalia / blood and potential bloodborne pathogens
Guest serviceGuestroom securityLost & Found procedures
Areas of training concern
Managing Housekeeping: Safety
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Inexperienced Executive Housekeeper relies exclusively onminutes per room
Total # of minutes worked by room attendants / total # of guestroomscleaned = Minutes per room
Experienced Executive Housekeeper relies on both minutes perroom and knowledge of guests and sales patterns
size of guestrooms / amenities in rooms / actual number of roomsto be cleaned / amount, if any, of deep cleaning
Scheduling the number of room attendants depends on:
How to establish room attendant schedules
Managing Housekeeping: Employee Scheduling
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Check how much of each item is in use, in storage, on orderExecutive Housekeeper to compute monthly “product usage
reports”
sheets (all sizes)/ pillowcases/ bedspreads/ bath towels/ handtowels/ washcloths/ soaps/ shampoos/ conditioners/ sewing kits/glass cleansers/ furniture polish/ acid-based cleansers/ glassware/cups/ coffee & filters/ in-room literature/ telephone books/ pens/paper pads
Inventory items maintained by Executive Housekeeper:
Values of monthly inventories
Managing Housekeeping: Inventory Management
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Managing Housekeeping: Inventory Management(continued…)
Waldo hotel product usage report
117Total Monthly usage
877 unitisCount on: __________________
850 unitsCount on: __________________
Plus
144 unitisPurchased in month
994 unitisTotal in service
Less
______________________________
Date: __________________________
Item:__________________________
For Period: ______________________
Prepared by: ____________________
Department:_____________________
January 1
February 1
Housekeeping King-sized Sheets
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Hotel must safeguard mislaid property until rightful owner returnsHotel must hold lost property until rightful owner claims itHotel not required to find abandoned property’s ownerProperty left behind in room or found in lobby to be treated as mislaid or lostEstablish how long any mislaid/lost property to be held before disposing it
Three types of unclaimed property
Managing Housekeeping: Lost & Found
Law and/or policy requirements:
Owner intentionally has left item(s) behindAbandoned property
Owner unintentionally has left item(s)behind, then forgotten it/themLost property
Owner unintentionally has left item(s)behindMislaid property
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Date item is returnedOwner’s name/ address/phoneHousekeeping Managerreturning itemMethod of returnDate property is declaredas abandonedName of hotel employeereceiving abandonedproperty
Date item is foundDescription of itemLocation where item isfound (room #, ifapplicable)Name of finderSupervisor who receivesitem
Managing Housekeeping: Lost & Found(continued…)
When item is found
Writtenreport
When returned to rightfulowner, or disposed of
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Effective guestroom cleaning is heart of HousekeepingDepartmentDetermines long-term success or failure of property
Sleeping area: the first part seen by guest when enteringroomBathroom area: closely inspected by guests for cleanliness
Forms basis for a guest’s initial impression of property
Public space cleaning
Guestroom cleaning
Facility Care & Cleansing
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G.M.s should know what to look for when inspecting the hotelG.M.s must inspect public space, guestroom and laundryoperation areas regularlyG.M.s should not evaluate effectiveness of theirhousekeeping departments based only on lower costs peroccupied room or fewer minutes per room cleaning(these factors are not always better!)
G.M.s’roles in facility care and cleaning
Facility Care & Cleansing (continued…)
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Collecting
Operating an effective “on-premises laundry”is a multi-step process
Laundry
Delivering
Sorting
Watching
Drying
Finishing / Folding
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Collecting
Laundry: Operating an Effective OPL(continued…)
Dirty linen and terry should never be used as guestroomcleaning rags.Bloodstained linen or terry must be placed separately in abiohazard waste bag (pre-sort in guestroom).Biohazard waste bag should be on every housekeeping cart.
Sorting Once in OPL, laundry is sorted both in terms of fabric type& degree of staining.
WashingThis step is the most complex part.Monitor a: washing times, b: wash temperatures, c:chemicals, d: agitation length and strength
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Drying
Laundry: Operating an Effective OPL(continued…)
Drying is simply a process of moving hot air (140-145degrees F.) through fabrics to vaporize & remove moisture.Fabrics that are dried must have cool-down period in thedryer before they are removed from it
Finishing/Folding
Space for finishing laundry must be adequate
StoringMany fabrics must “rest”after washing & drying24-hr rest time for cleaned laundryHousekeeping Dept. should maintain laundry par levels ofthree times normal usage
Delivering Storage areas containing these items should be locked
Chapter 8:Food and Beverage
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Plan by focus on menu
Menu impacts operational factors
Menu focus on guests’wants,needs & preferences
- layout / equipment- labor for production, service &
clean-up- F&B products for purchase
Marketing concernsRepeat business important tofinancial success
Planning issues
Similarities: Hotel & Restaurant Foodservices
All foodservice operations mustassess financial status
- Operating budget- income statement / balance
sheet / cash flow statement
Necessity for standardoperating procedures
- Purchasing / receiving / storing/ issuing / pre-preparation /preparation / serving / service
Emphasis on consumers
Financial concerns
Cost control procedures
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Standard Operating Procedures: Cycle of F&B ProductControl
Step 1: Purchasing
Step 2: Receiving
Step 3: Storing
Step 4: Issuing
Step 5: Pre-Preparation
Step 6: Preparation
Step 7: Serving
Step 8: Service
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Cycle of F&B Product Control (continued…)
Effective use of perpetual & physical inventory systemsControl of product qualitySecuring products from theftLocation of products within storage areas
Step 4:Issuing
Product rotation concernsMatching issues (issue & usage)Purchasing as inventory is depleted
Development of receiving proceduresCompletion of necessary receiving reports (e.g.,addressing financial and security concerns)
Develop purchase specificationSupplier selectionPurchasing correct quantitiesNo collusion between property and supplierEvaluation of purchasing process
Step 1:Purchasing
Step 2:Receiving
Step 3:Storing
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Step 8:Service
Cycle of F&B Product Control (continued…)
Mise-en-placeMinimizing food waste / maximizing nutrient retention
Use of standardized recipesUse of portion controlRequirements for food and employee safety
Timing of incoming F&B ordersPortion controlRevenue management concerns
Revenue control concernsServing alcoholic beverage responsiblySanitation and cleanlinessF&B server productivity
Step 5:Pre-Preparation
Step 6:Preparation
Step 7:Serving
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Transferring some decision-makingresponsibility and power to front-lineemployees
Enhancing service to guests andincreasing profits for the organization
Personnel Requirement Similarities:Hotel & Restaurant Foodservices
Practice of empowerment
Staff must be trained in standardized procedures.
Managers must provide clear direction to employees.
Managers must provide necessary resources.
To meet unanticipated guest needs effectively
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Profitability = Revenue - Expenses
Profitability Differences:Hotel & Restaurant Foodservices
Hotel’s “bottom line”profit from F & B sales is likely to belower than a restaurant’s.
Profit amounts generated by restaurant F & B is relativelyeasy to calculate.
The process of allocating revenues and expensesapplicable to F & B services in a hotel is more difficult.
Costs of F & B sales is generally higher in a restaurantthan in hotel.
Payroll costs (or fixed labor costs) are higher than in arestaurant.
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Marketing-related Differences:Hotel & Restaurant Foodservices
Restaurants: locations easily accessibleto potential guestsHotels: locations most accessible to guestsdesiring lodging accommodations
Restaurants: locations easily accessibleto potential guestsHotels: locations most accessible to guestsdesiring lodging accommodations
For hotels, F& B service is viewed as anamenity or secondary(sale of guestrooms is primary objective)
Location withinthe community
Location withina hotel
Menu
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Room Service Operations:Profitability Concerns
Why losemoney?
Relatively few properties generate profits from room serviceVery high labor costsHigh expenses incurred for capital costs- delivery carts / warming devices
Whyoffered?
How tooffset losses?
High expenses incurred for capital costs- Delivery carts / warming devicesOffer hospitality suite business
Provide hosted events
Service to guests
Impacts hotel rating- some guests select hotels based on room service availability
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Room Service Operations:Menu Planning Factors
QualityConcerns
Cross-Selling
MenuLanguage
Advertising availability of other hotel services- dinner menu providing info about Sunday brunch
Less likely to oversee room service food qualityMust offer products maintaining quality duringholding and transportation to guest room(example: problems with omelet & French fries)
Language barriers for international guests- uses of pictures and multi-lingual menu descriptions
Clearly state ordering-requirements- minimum order charges / mandatory tipping policies
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Room Service Operations: Operating Issues
An inaccurate room service order cannot be corrected quickly.
A minor problem in room service may impact guest’s perceptions about theentire lodging experience.
Communication
Guest placing order / order taker / room service production-service staff / room service staffAbbreviations should be clearly understood by order takerand food production staff
TechnologyImproving the accuracy of room service orders- electronic cash register (ECR) / point-of-sale terminal /
remote printer
UpsellingTechnique
Opportunities for upselling are overlookedUpselling increases guest check average
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Training issues for room service attendants
Room Service Operations: Within-Room Service
Presenting guest check and securing payment
Opening wine bottles (where applicable)
Providing an attitude of genuine hospitality
Explaining procedures to retrieve room service items
Asking guests where room service meal should be set up
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Well-planned banquets can be profitable!
Banquet Operations: Profit Opportunities
Banquet menu has higher contribution margin.- banquets frequently celebrate special events
Forecasting & planning production, service and labor arerelatively easy.- formal guarantee is made- less likelihood of overproduction of food with subsequent waste
Beverage sales from hosted or cash bars increase profit.- capable of increasing alcoholic beverage sales
Increasing market share of thecommunity’s banquet business
Increasing property’sprofitability
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Factors / concerns for planning banquet menusBanquet Operations: Menu Planning
Guest preferences
Ability to deliver desired quality products
Availability of ingredients required to produce the menu
Production / service staff with appropriate skills
Equipment / layout / facility design issues
Nutrition issues
Sanitation issues
Peak volume production / operating concerns
Ability to generate required profit levels
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Butler service Appetizers and pre-poured champagnes can be served byservice staff at a reception while guests stand.
Banquet Operations: Service Styles
Buffet service Quantities of food are pre-arranged on a self-service line;guests pass along the line and help themselves
Family style(English style)
Platters and bowls of food are filled in the kitchen andbrought to guests’tables
French service Meals are prepared or finished at tableside by service staff:(e.g., tossing Caesar salad / flambéing entrée)
Platter service Production staff plate food in the kitchen; service staff bring itto the table to place individual portions on guests’plates
Plated service(American service)
Production staff pre-portion food on plates in kitchen; servicestaff serve to guests
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Individualdrink price
Collecting cash or a ticket when each drink is sold
Banquet Operations: Beverage Functions
Bottle charge Charging on a by-bottle basis for each bottle consumed /opened
Per-personcharge
Charging a specific price for beverages based on attendanceat the event
Charging the host a specific price for each hour of beverageservice
Using hours of beverage service;charging number of drinks / hour X number of guests
Various ways to charge for beverage
Hourly charge
Specific per-event charge
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Size Timing
Twocritical
concerns
Banquet Operations: Banquet Room Set-Up
Determined by :
number of expected guests
local fire safety codes /ordinances
types and sizes of tables,chairs, other equipment
number of seats per table
required space for aisles, dancefloors, band stands, otherentertainment, head tables, etc.
reception / buffet tables
Becomes critical when:
the same room to be usedsame day for differentfunctions
when large evening eventprecedes following day’slarge breakfast event insame room
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Last date that banquet space will be held without signed contract
Banquet Operations:Banquet Contracts & Billing Policies
Topics in banquet contract
Time by when a guarantee of attendance must be received
Cancellation policies
Guarantee reduction policy
Billing: amount & schedule for guest payment
Information about service of alcoholic beverages
Other information applicable to specific event
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Responsible service & consumption of alcoholic beverage is anintegral part of the responsibility of all F & B managers in alltypes of operations.
Alcoholic Beverage Service in Hotels
Train for all staff in the hotel (i.e. including non-F&B positions,e.g. front desk, housekeeping, maintenance and/or securitystaff ) to recognize and respond to visible signs of guests’(non-guests’) intoxication.
Develop and implement ongoing training for responsible serviceof alcoholic beverages.
Good training protects guests, public and hotelfrom tragedies and lawsuits
Chapter 9:Safety and Property Security
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Hotels are not required to ensure guest safety.
However, must exercise reasonable care for guest andemployee safety.
Hotel may be held wholly or partially liable for resultingloss or injury if it is found that a hotel has exhibited anabsence of reasonable care for guest safety.
Personal Safety:Legal Liability & Guest Safety
Protection of an individual’s physical well-being and healthSafety
Protection of an individual or of business’property or assetsSecurity
Hotels are not required to ensure guest safety.
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Facility Engineering & MaintenanceLocal law enforcement officials can provide no-cost safetyand security training for employees.
Training employees to 1) ensure guest safety, 2) worksafely, and 3) assist hotel’s security efforts.Employee safety training is an ongoing process
Reinforcesthat:
Guest safety and hotel security is the responsibility of everymanager, supervisor, & employee of the hotel.
Personal Safety: Staffing for SecurityOperation of Safety & Security Committee
Employee safety training
Local law enforcement
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Reduce chance for guests to be victimized in their roomsby someone who had rented the same room on a prior nightHelp reduce the incident of employee theft from rooms
Personal Safety: Safety ResourcesRecodable locks
Surveillance systems
Use of VCR- Recording activity at front desk, in parking areas, and near cashiers
Use of CCTV (Closed-Circuit Television)-In a multiple-entry property where management desires to monitoractivity outside each entrance
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Internalalarms
Alarm systems
Notify (contact) an external entity such as fireor police departments if alarm is activated
Contactalarms
Personal Safety: Safety Resources
Serve to deter criminal or mischief activityNotify an area within the hotel if alarm is activatedProtect storage areas, hotel facilities (pools, spa, andexercise areas), and hotel and perimeter
Both federal law and local building codes mandate hotel fire alarms
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Fire / power outages / severely inclement weather / robbery/ death or injury to a guest or employee / bomb threat /intense negative publicity by the media
Personal Safety: Safety ResourcesEmergency Plans: the identification of a threat to the safety andsecurity of the hotel & hotel’s planned response to the threat
Response to events in most hotels’emergency plans
An emergency plan must be a written document, including:Type of crisisWho should be told when the crisis occursWhat should be done and who should do it in the crisisWho should be informed of the results or impact of the crisiswhen it is over
Where practical, hotels should practice implementation of their plan !
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Figure 9.3 lists ten key practices for parking lot safety
Figure 9.2 lists ten key practices for spa safety
Figure 9.1 lists ten key practices for swimming pool safety
Swimming pools
Personal Safety: Special Safety Issues
Spas
Parking lots
Always remember how to improve guest safety and minimize thelegal liability of the hotel!
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All hotels should document their safety and security relatedefforts!
Personal Safety: Documenting Safety Efforts
Prepare & complete MOD checklists for each critical areaof hotel- Appropriate frequency, content and number of checklistshould be determined
Incident reports listing the “who, what, where, and how”should be filed and maintained
Document minutes from safety and security committeemeetings, general staff meeting’s notes relevant to safetyissues, records of employee training related to safety andsecurity, and safety seminars attended by employees
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Provide a safe workplace for employees by complying withOSHA safety and health standards
Personal Safety:Occupational Safety & Health Administration
OSHA regulations ensure businesses:
Provide workers with only tools and equipment that meet OSHAspecifications for health and safety
Establish training programs for employees who operatedangerous equipmentReport to OSHA within 48 hrs of any worksite accident thatresults in fatality or requires hospitalization of five or moreemployees
Maintain the “OSHA Log 200”(an on-site record of work-related injuries or illness) and submit it to OSHA once per year
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Display OSHA notices regarding employee rights and safety inprominent places within the hotel
OSHA regulations ensure businesses (continued…)
Provide all employees access to the Material Safety Data Sheetsthat provide information about the dangerous chemicals they maybe handling during work
Personal Safety:The Occupational Safety & Health Administration
Offer no-cost hepatitis B vaccinations for employees who mayhave come into contact with blood or body fluids
Compliance with OSHA standards
Results in
Fewer accidents lower insurance costs healthier workforce
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Hotels bond those employees in a position to embezzle funds
Property Security: Threats to Asset Security- Internal Threats
Methods of fraud related to cashiering
Charging guests for items not purchased, then keeping theovercharge
Changing totals on credit card charges after the guest has left orimprinting additional credit card charges and pocketing the cashdifference
Misadding legitimate charges to create a higher-than-appropriatetotal with the intent of keeping the overchargeVoiding legitimate sales as “mistakes”and keeping the cashamount of the legitimate sale
Facility Engineering & Maintenance 9
Charging higher-than-appropriate prices for hotel goods orservices, recording the proper price, then keeping the overcharge
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Property Security: Threats to Asset Security- Internal Threats (continued….)
Time Should have strong controls in place regarding timecards.
Three noncash assets most subject to employee theft:
Companyproperty
Carefully screen employees prior to hiringReduce theft opportunities by using effective securityTreat all proven cases of similar theft in a similarmanner
ServicesMonitor long-distance telephone bills generated byeach administrative telephone extension number
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Property Security: Threats to Asset Security- External Threats
Cash
Robbery is not the occasion to attempt the protection ofcash assets.Robbery is the time to protect staff !During a robbery, complying with robber’s demands andobserving the robber should be the employee’s soleconcern.If no contact alarm is installed in the cashier’s cash drawer,an employee who is robbed should, at the earliest safeopportunity, contact local law enforcement officials as wellas others indicated in the robbery section of the hotel’semergency plan.
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Other assets: security-conscious manager:
Property Security: Threats to Asset SecurityExternal Threats (continued….)
Hang all artwork in lobbies & guest rooms with lock-downstyle hangersAvoid placing valuable decorations & décor pieces in areaswhere they can be easily taken by guestsTrain room attendants to alert management if excessiveamounts of in-room items go missing from stay-over roomsBolt televisions securely to guestroom furnitureTrain all employees to be alert regarding loss of hotelproperty & to report any suspicious activity
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Guest-theft of housekeeping suppliesTheft from guest rooms by room attendants or otheremployees- best policy is to report the incident to local law enforcement
Largest area of security concern is fraudulent selling ofroomsUse housekeeping discrepancy report to detect room revenuefraud
Front Office
Property Security: Threats to Asset SecurityDepartment-Specific Threats to Asset Security
Housekeeping
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Employee theft of hand tools and suppliesImplementing a sign-in/sign-out program for tools
Misstating mileage traveled, clients entertained, or sales tripstaken
Hotel suppliers such as silverware and glassware taken by guestsEmployees accepting kickbacks from vendors or by purchasing,then stealing, food and beverage items intended for the hotel
Food & Beverage
Property Security: Threats to Asset SecurityDepartment-Specific Threats to Asset Security
Sales & Marketing
Maintenance & Engineering
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Chapter 10:Sales & Marketing
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
The Front Office
Identify and cultivate clients
Manage hotel’s marketing efforts
Set rates to maximize RevParNegotiate sales contracts on behalf of hotelServe as a leader to hotel’s sales & marketing team
Roles of Sales & Marketing
Sales Activities related directly to servicing consumerdemand & booking clients
Roles of Director of Sales & Marketing
MarketingActivities designed to increase consumer awareness& demand by promoting & advertising hotel
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Planning hotel’s sales and marketing strategyPreparing and issuing sales contracts in timely mannerMaintaining accurate sales records, forecast and historiesCoordinating and communicating special client requestswith affected hotel departments
Hosting clients during their stayConducting site tours
Front office
Sales & Marketing
Roles of Sales & Marketing: In the HotelTransient roomsInfluence
Group saleInfluence
Tasks of Sales & Marketing staff with their group sales focus
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Roles of Sales & Marketing: In the Community
Two sales opportunities
Promotionopportunities
When DOSM and Sales team are active membersof the business community (e.g., local Chamber ofCommerce), disseminating info about hotel’sproducts and services is allowed.
Networkingopportunities
Development of personal relationships forbusiness-related purposes will result in increasednumbers of sales calls.- Convention and Visitors Bureau
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Segmentation of the Sales & Marketing Dept.
product designations becomingsales specialty areas
Segmentation based on:
By product(s)sold
By market(market segment)
By distributionnetwork
type of guests (clients) who buythe product
“how”the hotel’s sales (products)are made (distributed)
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Byproduct sold
Segmentation of the Sales & Marketing Dept.
Group guestrooms Conferences
Catered event
MeetingsConventions
Weddings andspecial events
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Guaranteed occupancy,ease of cleaning theirrooms, relativelyuncomplicated billingRooms often sold at verylow daily rates
Vacations, weddings, visitsby friends and family, ornon-work related reasonsHeavy reliance on travelagents’advice
Social, military,educational, religious, orfraternal organizations
Business travelers (whopay highest room rates)
Corporate
SMERF & Others
By market(market
segmentation)Long-term stay
Leisure
Segmentation of the Sales & Marketing Dept.
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Potential guest who arrives at hotelwithout an appointment
Fastest growing distributionchannelCreating homepages andlinking them to other sites
Largest customers of manyhotelsNegotiated rate / blackoutdates / pick-up
Retailers, wholesalers or bothUsing Global Distribution
SystemReceiving commission
(5 –20 %) from hotel
Representative of corporations,groups and organizationsUsing comparison-shopping
techniquesInfluence on hotel’s
reputation
Meeting planners
Internet
BydistributionnetworkingConsortia
Travel agents
Segmentation of the Sales & Marketing Dept.
Drop-ins
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Maintain record (e.g.,demographic data) ofhotel’s past, current andprospective clients
Help department maintainits sales records, meetdeadlines, and plan futureactivities
Harmonizes efforts acrossdepartment lines
Engages in long-termplanning
Ensures cooperation of allin sales and marketingprocess
Sales & Marketing Activities: Sales Efforts
Sales & marketingcommittee
Tracesystems
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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The sales cycle
Pre-sale phase
Sales & Marketing Activities: Sales Efforts
Invite client to a site tourSubmit a bid
Post sale phase
Complete “Request for Proposal”and submit on timeEstablish room ratesPrepare group contract (attrition and cancellation policy)Forward Direct Bill application to GroupEstablish group blockDetail client’s contracted requirementsMonitor client’s blockAttend pre-event sales meeting of hotel staff
Write thank you note to each groupReview the final billInclude that group in the hotel’s preferred client databaseFile all written reports
Sales phase
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Make a sales visit / presentation to potential client withouthaving previously set an appointment to do soVisit / call quality prospective clients for hotel’s rooms / services
New leads uncovered since last meeting
Realistic sales potential of these leads
Who in the department is following up on leads
How leads will be pursued
What, if anything, G.M. can do to help cultivate prospect
Any sales resulting from leads discussed previously
Sales & Marketing Activities: Sales EffortsSales lead –effective DOSM should discuss the followings:
Reserve adequate time for cold calling!
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Gala client appreciationevent
Golfing, sporting events,concerts, theater tickets
Gift giving
Solidify business relationshipwith current clients (allowhotel to express gratitude toclients for current business)
Communicate to potentialclients the seriousness withwhich the hotel views thehotel / client relationship
Sales & Marketing Activities: Sales Efforts
Goals Examples
Client appreciation activities
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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A review of market competitionOccupancy trends /ADR trends / performance of own hotel
Marketing plan development: format of marketing planSales & Marketing Activities: Sales Efforts
Competitive analysis of your competitorStrengths / weaknesses / price structure
Competitive analysis of your own hotelStrengths / weaknesses / price structure
Forecast of future market conditionsEstimated market growth or contraction / performance goals and objectives for
own hotel / timeline for achieving these goals and objectives
Determination of specific marketing strategies & activitiesAdvertising / public relations / promotions
Preparation of a marketing budget
Development of measurement & evaluation tools
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Eye or ear catchingMemorableSell the hotel’s featuresCost effectiveDoes not become quickly outdatedReflect positively on hotel’s imageCan be easily directed to the hotel’score client groups
Exterior signageIn-hotel and in-room signage andmaterialsRadio or television commercialsDirect mailingInternet bannersE-mail messageYellow pagesFranchiser-supplied advertisingvehicles (directories, co-ops, etc.)BillboardsPersonal contact
Sales & Marketing Activities: Sales Efforts
Types of advertising Effective advertising
Advertising
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Promotion
Sales & Marketing Activities: Sales Efforts
“Special”packaging of products or servicesPromoted and disseminated by advertising andpublicity
Publicity
Information about hotel, media-distributed free ofchargeCosts the hotel nothingMay be either good or bad
PublicRelations
(PR)
Activities ensuring hotel has a positive public image(good citizen of the community)Hosting charity events, contributing cash or in-kindservices, donation of hotel staff time for worthy cause
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Teaming of GDS with Internet
Internet Sales & Marketing
Online reservation system
Impact
Travel agents: check availability, compare prices andbook hotel on-line
Online booking sites are fastest growing source ofreservations in hotel industry
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Effective hotel websites should:
Sales & Marketing Activities: Websites
be easy to navigate.have some level of interactivity.be linked to appropriate companion sites (demand generator).allow for online booking.balance guest privacy needs with hotel’s desire to build acustomer base.update and revise room rates easily on the website.include a virtual tour of the property.complement other marketing efforts.be in language(s) of potential clients.have website address easy to remember.
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
The Front Office
Inexpensive to send to many current and potential clients.Has attachment feature function to move documents quickly.Automatically updates user databaseCan disseminate special rate, promotion, new hotel feature toits client list
Internet Sales & Marketing : E-mail Systems
Traditionalcommunication methods
Direct mailing, telephone, fax
Emergingcommunication methods
E-mail system
Advantages of e-mail systems
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Pace report
Evaluating Sales & Marketing Department:Pace Report
Is a document summarizing confirmed (group) sales made bySales and Marketing dept.Can be prepared based on number of rooms sold, value (indollars) of sales made, or bothCan also include any period of time in the futureTells hotel’s owner and management the potential sales volumegenerated by Sales and Marketing departmentHowever, does not indicate what actual sales volume should be(STAR report does!)
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Evaluating Sales & Marketing Department:Sample Pace Report
Sold this month Total sold YTD Sold same monthlast year
Total sold lastYTD
Jan 25 150Feb 450 750 250 550Mar 550 1,550 330 1,250Apr 650 1,550 550 1,350May 875 1,175 650 1,050June 1,100 1,400 800 1,700July 1,350 2,250 1,100 2,150Aug 1,700 2,900 1,500 1,900Sept 500 700 750 1,750Oct 300 800 550 1,050Nov 850 1,150 300 600Dec 200 550 125 225
Total 8,550 14,775 7,055 13,575
Waldo Hotel Group Rooms Pace Report for January, 200x
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Hotel voluntarily submits financial data to SmithSmith maintains confidentiality of all individual hotel dataCombine operating data submitted by selected competitorsAn individual hotel’s operating performance is compared to thatof its competitive set (understanding the competitive set is keycomponent of understanding STAR!)
STAR working process and preparation
Evaluating Sales & Marketing Department:The Smith Travel Accommodations Report (STAR)
Hotel owners, management companies, property management,franchisers, appraisers, financial community
Who are the STAR interest groups?
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Operatingcomparison criteria
Evaluating Sales & Marketing Department:The Smith Travel Accommodations Report (STAR)
Goals
Occupancy, ADR, RevPar, market share,historical trends, to-date performance, stateor region
Assess performance of Sales &Marketing department as well as theentire propertyKnow the strength of hotel and Sales andMarketing staff’s sales results, incomparison with selected competitors.
Chapter 11Facility Engineering & Maintenance
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Protecting and enhancing financial value of building and grounds forhotel’s ownersSupporting efforts of all other hotel departments through timelyattention to their E&M needsControlling maintenance and repair costsControlling energy usageIncreasing pride & morale of hotel staffEnsuring safety of those working and visiting the hotel
Goals of E&M department
Role of E&M Department
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Underpowered (or overpowered) equipmentIncreased building deteriorationExcessive energy usageHigher-than-necessary operating costs
Engineering: Designing and operating the building to ensuresafe and comfortable atmosphere
Role of E&M Department: Engineering
Goals of E&M department
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Maintenance: activities required to keep a building(physical property) & its contents in good repair.
Effective hotel maintenance must be:
Role of E&M Department: Maintenance
Planned
Implemented
Recorded
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Building’soriginal design,
size and facilities
Role of E&M Department:Design & Renovation
Quality ofconstruction used
in building
Finishes andequipment specified
for installation
Affect
Property Operation & Maintenance (POM) related costs
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Major renovation as well as refurbishment required15-22 years
Restoration required; high-maintenance costs incurred22+ years
Refurbishment required; average maintenance costs incurred6-8 years
Minor renovation and refurbishment required8-15 years
Maintenance costs increase3-6 years
Low maintenance costs incurred1-3 years
Building characteristics and requirementsBuilding age
Role of E&M Department:Design & Renovation (continued….)
Facility Engineering & Maintenance
Renovation and refurbishment normally one via establishment ofan FF&E reserve
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Refurbishment and minor renovation is ongoing process inmost hotelsMajor renovation should occur every six to ten yearsRestoration every 25 to 50 years, typicallyIf restoration is not undertaken when needed, the hotel’srevenue-producing potential will likely decline
Restoration: returning a hotel to its original (or better than original) condition
Facts:
Role of E&M Department:Design & Renovation (continued….)
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Individuals with varying degrees of skills in:engineering / mechanics / plumbing / electricity / carpentry/ water treatment / landscaping / grounds maintenance
Head of E&MIn smaller hotels, hands-on role in the maintenance effortIn larger hotels, more administrative role
Chief engineer
Staffing the Department
Maintenance Assistants
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Exterior
Lawn care, landscaping, leaf and snow removal,window cleaning, and paintingMaintaining hotel’s exterior impacts curb appeal,operating costs, & ultimately the building’s value
Day-to-day upkeep of both exterior and interior of buildings
Indoor plants, interior window washing, floorand carpet cleaningGuestroom and public space related items
Interior
Managing Maintenance:Routine Maintenance
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“Replace asneeded”
Replacement plan that delays until the original partfails or is near failuree.g., maintenance of refrigeration compressors
Two ways for implementation
Replacement is based on a predeterminedschedulee.g., maintenance of light bulbs in high-riseexterior highway signs
Systematictotal
replacement
Managing Maintenance:Routine Maintenance (continued….)
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any staff seeing an area of concern can initiate a work orderchief engineer keeps a room-by-room record of replacementsor repairs made
Managing Maintenance:Routine Maintenance (continued….)
In a well-managed hotel,
Date Corrected: ___________________ Time Spent: ___________________E&M Employee Comments: _______________________________________Chief Engineer Comments: ________________________________________
Received On: ____________________ Assigned To: ___________________
Problem Observed: ______________________________________________
Date: ______________Time: ____________ Room or Location: __________
Work Order Number: ____(Preassigned)___ Initiated By: _______________
Waldo Hotel Work Order
Work order
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Long-term repair costs by prolonging equipment lifeReplacement parts costs because purchases of these can beplannedLabor costs by allowing PM to be performed in otherwise slowperiodsDollar amount of refunds and charge-backs due to guestdissatisfactionCosts of emergency repairs by minimizing their occurrence
Effective preventative maintenance can reduce:
Managing Maintenance:Preventative Maintenance
PM is not a repair program!
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Managing Maintenance:Preventative Maintenance (continued….)
Sample PM task list for laundry area dryer
Daily
Monthly
DailyCheck pulley alignmentAdjust rotating basket if neededLubricate motor bearingsLubricate drum bearings if needed
Clean lint trapWipe down inside chamber with mild detergentClean and wipe dry the outside dryer shell
Vacuum the inside of dryer (upper and lower chambers)Tighten, if needed, the bolts holding dryer to floorCheck all electrical connectionsCheck fan belt for wear, replace if neededLubricate moving parts
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Most important and most extensive areas for PMCritical to sales effort, to retain guests, and to maintain theasset’s monetary value
Windows, HVAC units, furniture, lights, elevators, carpetsCarpet care is one of the most challenging PM areas
Public space
Guest room
Managing Maintenance:Preventative Maintenance (continued….)
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Washers, dryers, folding equipment, water supply lines, drains, lightingfixtures, temperature control unitsChemical dispenser maintenance should be an important part of thelaundry PM program.
Pools and spas, front desk equipment, electronic locks, exterior doorlocks, motor vehicles, and in-hotel transportation equipment
Back-of-house equipment- ovens, ranges, griddles, fryers, other production equipmentDining space used by guests- chairs and booths, self-serve salad or buffet areas, lighting fixtures,guest check processing equipmentMeeting and conference rooms and equipment
Food Service
Landry
Managing Maintenance:Preventative Maintenance (continued….)
Other equipment
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is unexpectedthreaten to negatively impact hotel revenuerequire immediate attention to minimize damagerequire labor and parts that may need to bepurchased at a premium
The stronger the routine and PM programs, the fewerdollars spent on emergency repairs!
Emergency maintenance
Managing Maintenance:Emergency Maintenance
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Energy management: specific policies and engineering,maintenance, and facility design activities intended tocontrol and reduce energy usage.
Managing Utilities
80% of total utility costs for hotel are actually fixed
Energy costs present 3 - 10% of total operational costs,depending on hotel’s location
E&M department should be concerned with conservingenergy and controlling utility costs
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Electricity is most common and usually most expensiveform of energy used in hotels.
Lighting
Light levels measured in foot-candle-The more foot-candles, the greater the illumination
Managing Utilities: Electricity
In candescent lights-Inefficient, short-life, but easy to replace
Electric discharge lights-Longer lives, higher efficiency and low operating costs
Lighting maintenance (lamp repair, bulb change, andfixture cleansing) must be an integral part in PM program.
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Heating, ventilation, & air conditioning (HVAC)
Heating components-Electricity is not cost-effective in cold climates-Use natural gas, LPG, steam, or fuel oil
Managing Utilities: Electricity (continued….)
Cooling components•Effectiveness of cooling system dependent on•Original air temperature & humidity of room to be
cooled•Temperature & humidity of chilled air entering room from
HVAC•Quantity of chilled air entering room•Operational efficiency of air-conditioning equipment
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Usages of natural gas
Managing Utilities:Natural Gas
Heating water for guest roomsPowering laundry area clothes dryersPowering plants to provide heat to guest rooms and publicspaceCooking (rapid heat production and great degree oftemperature control)
Managed properly, natural gas is an extremely safe source ofenergy!
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Hotels encourage manufacturers to practice source reduction& to implement creative programs to reduce solid wasteReduce waste disposal costs by: recycling minimizing wastegeneration & wise purchasing
Reduces the number of gallon of water purchasedReduces the amount the hotel will pay for sewageIn the case of hot water, reduces water-heating costsbecause less hot water must be produced
Conserving water:
Waste
Managing Utilities: Water / Waste
Chapter 12Franchise Agreements and
Management Contracts
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A business strategy allowing one party (the brand) to usethe logo, trademarks and operating systems of anotherbusiness entity in exchange for a fee
The Hotel Franchise Relationship
A network of interdependent business relationshipsallowing a number of people 1) to share brandidentification, 2) to develop a successful method of doingbusiness, and 3) to establish a strong marketing anddistribution system.
For the franchisee, franchising helps reduce risk-Proven operational methods are usedFranchisees and their financial capital expand the brandfaster than franchiser could do solo
Franchise benefits
What is franchising?
Hotel Operations Management, 1/e ©2004 Pearson EducationHayes/Ninemeier Pearson Prentice Hall
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History of hotel franchising is relatively short- First significant hotel franchising arrangement began in 1950s with
Kemmons Wilson and his Holiday Inn chain
Today hotel owners increasingly affiliate their hotels withother hotels under a common brand name.
Hotel Franchising: Origin & Structure
Company administering and directing the brand itself isnot an owner of hotels, but rather a franchise company.
Majority of franchise companies do not actually own thehotels operating under their brand names.-Those companies have right to sell brand name & determine brand
standards
Conflict can arise between hotel owners and brandmanagers- G.M. should balance legitimate interests of hotel and brand
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120,5891,1759. Hampton Inn / Hampton Inn and Suites
159,6192,0655. Comfort Inns and Comfort Suites
133,2003996. Sheraton Hotels & Resorts
127,5332,0927. Super 8 Motels
118,1149718. Ramada Franchise Systems
1,351
433
1,947
1,576
4,008
Properties
109,18610.Holiday Inn Express
164,0233. Days Inn Worldwide
160,5404. Marriott Hotels, Resorts & Suites
295,2522. Holiday Inn
304,6641. Best Western International
RoomsBrand
Figure 12.1: Ten Largest Brands
Hotel Franchising:Origin & Structure (continued….)
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Supply potential franchisees with disclosure document at either thefirst face-to-face meeting or ten business days before any money ispaid by franchisee to franchiser
Federal Trade Commission (1979):Franchise Rule requires that franchisers:
Hotel Franchising:Governmental Regulations Related to Franchises
Provide evidence, in writing, of any earning claims or profit forecastsmade by franchiser
Disclose number and % of franchisees achieving earnings rates advertisedin any promotional ads that include earnings claims
Provide potential franchisees with copies of basic franchise agreementused by franchiserRefund promptly any deposit monies legally due to potential franchiseeswho elected not to sign a franchise agreement with franchiser
Do not make claims orally or in writing that conflict with writtendisclosure documents provided to franchisee
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Name of franchiser and type of franchise it offers for saleBusiness experience of franchise company’s officersFees & royalties that must be paidInitial investment requirementsRights & obligations of franchiser & franchiseeTerritorial protection offered by franchiserRequired operating policiesRenewal, transfer, and termination proceduresEarnings claimsA sample franchise agreementSpecific info required by each state in which FOC is to be filedName and address of legal representative of franchiser
Franchise Offering Circular (FOC) include
Hotel Franchising:Governmental Regulations Related to Franchises
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Franchise agreement: legal contract between hotel owners(franchisee) and brand managers (franchiser), whichdescribes duties & responsibilities of each in the franchiserelationship
The Franchise Agreement
A hotel franchise relationship exists with a franchise agreement.
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Names of parties signing agreement-Name of legal entity representing the brand as well as corporation,partnership, or sole proprietor owning hotel
Franchise agreement includes:
The Franchise Agreement: Major Elements
Detailed definitions- Any definitions subject to misinterpretation by parties to the
agreement are defined.
License grant- Description of how the owner is allowed to use the brand’s logo,
signage, and name in operating the hotel.
Term (length of agreement)- The most common franchise agreements are written for 20 years.- Also include windows at fifth, tenth, & fifteenth years with early outs.
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Fees- Affiliation fees / royalty fees / marketing fees / reservation fees
Franchise agreement includes: (continued….)
The Franchise Agreement: Major Elements
Reports- Room revenue generated, occupancy levels, & occupancy taxes & ADRResponsibilities of franchiser- Inspection schedules, marketing efforts, & brand standards enforcement
Responsibilities of the franchisee- Signage requirements, operational standards & payment schedules
Assignment of agreement- Ownership transfer & its affect upon the agreement
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Termination or default- Events that permit a termination, or define a default, by either party
Franchise agreement includes: (continued….)
The Franchise Agreement: Major Elements
Insurance requirements- Owner should provide types & amounts of required insurance- Proof of general indemnification policies, automobile insurance, &
mandatory workers’compensation insurance
Requirements for alteration- Rights of the franchiser to change the agreement
Arbitration and legal fees- Responsibilities of each party related to legal disputes
Signature pages-Authorized representative of the brand & owners of the hotel will
sign the franchise agreement
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Advantagesto franchisee
The Franchise Agreement:Advantages to the Franchisee / Franchiser
Allowing hotel owners to acquire a brand name withregional or national recognitionConnecting the hotel to the GDSIncreasing hotel’s sales, thus its profitabilityAffecting ability of hotel’s owner to secure financingAssistance with on-site training, advice onpurchasing furnishings & fixtures, reduced operatingcosts, & free interior design assistance
Advantagesto franchiser
Increasing fee payments to the brandGrowing the business (brand spread)Helping pay for fixed overhead of operating thatbrand
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Quality and experience of the brand managers- Hotel owners, not brand managers, bear financial risk of poor brand
management
Basic considerations for a selecting a franchise brand:
The Franchise Agreement:Selecting a franchiser
Perceived quality / service level of the brand-Travelers associate some brands with higher quality, service levels,and costs, than other brands.-Franchisers offer brands at a range of quality and guest services
The amount of fees paid to franchiser- Fees paid to a franchiser are a negotiable part of franchise agreement
Direction of the brand
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Number of hotels currently operating under the brand namePercent of hotels, on an annual basis, that elected to leave the brandin the past five yearsNumber of new properties currently being built under the brand’snameThe number of existing hotels converting to the brand (ifconversions are allowed)ADR trend for the last five years in comparison to ADR trend for theindustry segment in which the brand competesOccupancy rate trend for the last five years in comparison to theoccupancy rate trend for the industry segment in which the brandcompetesPercent of total hotel room revenue contributed by the brand’sreservation system and percent of hotels within the brand that achievethat average rate of contribution
Clues to future success of the brand
The Franchise Agreement:Selecting a franchiser (continued….)
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1. Application fees2. Area of protection3. Recurring fees4. Standards5. Mandatory service programs6. Operating performance7. FOC8. Fair franchising9. Financing assistance10. Termination
Contents in franchiser questionnaire
Selecting a Franchiser: Franchiser QuestionnaireFigure 12.2: Franchiser Survey
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Conversion will always require some facility modification.When a potential franchiser inspects a hotel property whoseowners are interested in a conversion, a PIP (productimprovement plan) will be prepared.Estimating expenses to implement PIP is the hotel owners’job.
A brand conversion = reflagging
Process of changing a hotel’s flag from one franchiser to another
Selecting a Franchiser:The Product Improvement Plan (PIP)
PIP: document detailing property upgrades and replacementsrequired if a hotel is to be accepted as one of a specificbrand’s franchised properties.
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Franchise agreement is negotiable.Franchise agreement tends to be written in franchiser's favor.Owners should evaluate all components of proposed franchiseagreements.Hotel owners have demanded that impact studies, prepared byan independent party, be undertaken and paid for, whenappropriate, by franchiser.G.M.s must become adept at operating hotels in best interests oftheir owners, as well as in compliance with their owners’franchise agreement.
Selecting a Franchiser:Negotiating the Franchise Agreement
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Management contract: agreement between hotel owners and hotelmanagement company under which, for a fee, the managementcompany operates the hotel.
Management companies will:
Hotel Management Company Relationship:Management Companies
Secure, and if it has closed, reopen the hotelImplement sales and marketing plans to maximize hotel’sshort- & long-term profitabilityGenerate reliable financial statementsEstablish suitable staffing to maximize customer andemployee satisfactionShow hotel to prospective buyersReport regularly to owners about hotel’s condition
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Hotel Management Company Relationship:Management Companies (continued….)
Figure 12.3: Ten largest management companies
339.0939. Ocean Hospitalities
448.01065. Lodgian
436.7566. John Q. Hammonds
400.0347. Kimpton Hotels & Restaurant Group
400.0398. Outrigger Enterprise
52
198
17
29
357
Properties
293.010.Sunstone Hotel Investors
521.83. Tishman Hotel Corp.
485.04. Prime Hospitality Corp.
545.02. Destination Hotels & Resorts
2,800.01. Interstate Hotels and Resorts(with 2002 MeriStar merger)
Get annual revenues (inmillions of $)Brand
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Reflag hotel from lower quality brand to higher oneReflag hotel from higher quality brand to lower oneManage / directing major renovation of hotelOperate hotel in a severely depressed marketHandle bankruptcy / repossession of hotelManage hotel that is slated for permanent closingManage hotel when G.M. unexpectedly resignsManage hotel extendedly time for owners who elect not tobecome directly involved in day-to-day operations
Management companies will :
Management Companies: Origin & Purpose
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Are they first tier or second tier
How to examine the management company
Participation in actual risk and ownership of the hotelsthey manage- The management company is neither a partner in nor owner of hotels
it manages-The management company is a partner (with others) in the ownership
of hotels it manages-The management company only manages hotels it owns-The management company owns, by itself, some of hotels it manages,
and owns a part, or none, of others it manages
Management Companies:Hotel Management Company Structures
By number of hotels they operate
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Length of the agreementProcedures for early termination by either partyProcedures for extending contractContract terms in the event of hotel’s saleBase fee to be chargedIncentives fees earned or penalties assessed related to operatingperformanceManagement company investment required or ownershipattainedExclusivity (Is the management contract company allowed tooperate competing hotels?)Reporting relationships and requirementsInsurance requirements of the management companyStatus of employees
Major elements of management agreement include:Management Operating Agreement
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Advantages
Management quality can be improvedTargeted expertise can be obtainedDocumented managerial effectiveness is availablePayment for services can be tied to performancePartnership opportunities are enhanced
Disadvantages
Management Operating Agreement:Advantages / Disadvantages to Hotel Owners
The owner cannot control selection of the on-siteG.M. & other high-level managers
Talented managers leave frequentlyThe interests of hotel owners and the managementcompanies they employee sometimes conflict
The costs of management company errors are borneby the owner
Transfer of ownership may be complicated- High cost of buyout limits the number of potential buyers
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Hotel ownerFranchise agreement will affect G.M.’s relationship with:
Issues Affecting G.M.s:Managing the Franchise Relationship
Hotel’s franchise service director (FSD)- Responsible for day-to-day relationship between franchiser & franchisee- Assisting hotel’s sales effort- Monitoring and advising about hotel’s use of reservation system- Advising franchise on availability and use of franchiser resources
Brand (managers)
Staff- Brand standards will affect every department in hotel.
Guests
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G.M.s’challengesCareer management challenges- Long-term career advancement with management company conflicts
with desires of the hotel owners
Issues Affecting G.M.s:Managing for a Management Company
Dual loyalty issues (owners vs. management company)- Hotel owner’s best course of action works against the best interests of own
company.
Strained EOC relationships
Affected and concerned employees- A new management company implements its benefit, pay, seniority,
and related employment policies in place of those of a previousmanagement company
Conflicts with brand managers