Chapter 1:
Hotel Industry
third largest retail industry following automotive & food stores nation’s largest service industry
one of the nation’s largest employers
Tourism Industry
Hospitality Retail (Shopping) Stores
Transportation Services
Destination (Activity) Sites
Lodging is Part of Tourism Industry:
Tourism Industry
Lodging Operation
F&B Operations
Tourism industry is
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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
Destination resorts
Full-service hotels
Limited-service hotels
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 hotels 750,000 to 850,000 rooms 10,000 U.S. hotels
One million rooms 300,000 employees
Average size: 60-75 rooms
1920
Occupancy: 85%
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1930 Occupancy: 65%AHA’s Hotel Red Booklists 20,000 hotels
Lodging is Part of Tourism Industry:
A Brief History of Hotels (continued
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.)
1940 Occupancy: 64%Average room rate: $3.21
1950
Occupancy: 80%
Typical hotel: 17 rooms Average room rate: $5.91
1960
Occupancy: 67% $3 billion in sales
Typical hotel rooms: 2,400,450
Typical hotel: 39 rooms, independent and locally owned Average room rate: $5.91
Lodging is Part of Tourism Industry:
A Brief History of Hotels (continued
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.)
1970
Occupancy: 65% $8 billion in sales
Total hotel rooms: 1,627,473 Average room rate: $19.83
1980
Occupancy: 70% $25.9 billion in sales
Total hotel rooms: 2,068,377 Average room rate: $45.44
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Lodging is Part of Tourism Industry:
A Brief History of Hotels (continued
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)
1990
2000 Occupancy: 63%
$97 billion in sales Occupancy: 64% $60.7 billion in sales
Total hotel rooms: 3,065,685 45,020 properties
Average room rate: $58.70
Close Look at Lodging Organizations
Figure 1.4: 2000 Property / Room Breakdown
22.5% Under 75 rooms
75–149 rooms 150–299 rooms 300–500 rooms Over 500 rooms
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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
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
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Close Look at Lodging Organizations:
Lodging Industry Overview
Largest hotel affiliations
333,110 5.HILTON HOTELS CORPORATION
1,846 3. MARRIOTT INTERNATIONAL
4,219 4. CHOICE HOTELS INTERNATIONAL
3,030 2. BASS HOTELS&RESORTS, INC.
6,540 1. CENDANT CORPOPRATION
Properties Brands
These five represent some 28 % (14,884 / 53,500 properties) of all
domestic properties, & 42 % (1,708,617 / 4,100,000 rooms) of all rooms. The majority of these brands do not “own” their hotels, but hotel owners elect to affiliate with the brand, for a fee.
Single-unit property not affiliated with any brand Single-unit properties affiliated with a brand
Multi-unit properties affiliated with the same brand Multi-unit properties affiliated with the same brand Multi-unit properties affiliated with different brands Multi-unit properties operated by the brand or others Multi-unit properties owned by the brand
Hotel ownership / management
Close Look at Lodging Organizations:
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Close Look at Lodging Organizations:
Lodging Industry Overview (continued
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.)
Figure 1.7: Hotel Ownership / Management Alternatives
Hotel property
Operation Management Independent
company
Management company
Franchise Non-Franchise
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
Custodial personnel
Housekeeping personnel
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Close Look at Lodging Organizations:
Hotel Organizational Structures (continued
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.)
Large Hotel (350 rooms)
Figure 1.9: Organizational Chart for Large (350 rooms), full-service hotel
G.M. Administrative
assistant Assistant G.M.
Controller F&B director
H.R. Manager
Line
department
Those directly involved in the “chain of command”. Directly responsible for revenues
- Front Office & Food / Beverage
Also responsible for property operations
- Housekeeping, Maintenance, & Engineering
Staff
department
Providing technical, supportive assistance to support line decision-makers
Making recommendations to (but not decisions for) line decision-makers
- Purchasing, human relations, and accounting
Close Look at Lodging Organizations:
Hotel Departments
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Revenue center
A hotel department that generates revenue - Front office & food / beverage departments - Also revenues from telephone services, space
rental and fees from parking garages, vending machines, and golf courses
Cost center
A hotel department which incurs costs in support of a revenue center
- Marketing, maintenance, accounting, human resources, & security departments
Revenue and cost centers
Close Look at Lodging Organizations:
Successful hotels greatly emphasize serving their guests to the best possible extent.
Lodging is a Service Business
The brand name a hotel uses is not the most important factor in a hotel’s success.
When hotels put guests’ needs first, those hotels will do well.
Facility Engineering & Maintenance
Consistent delivery of quality of products and services to guests must be addressed first, rather than considering tactics to
Hotel Operations Management, 1/e ©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458 How will we show our staff and tell them about the need for high quality guest service?
How exactly will we evaluate the level of service quality being provided to our guests?
What exactly are our service strategies and our service procedures?
How will we train our staff about service concerns and the tactics to deliver service?
How will we reinforce our service strategies?
What can we do to emphasize service as a philosophy rather than 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:
Overbuilt problem
Hoteliers should examine ways to reduce costs without impacting quality.
An excessive emphasis on cutting service or product quality will ultimately result in reduced hotel revenue. Managers should implement procedures to: a) reduce
turnover levels, b) increase productivity levels, c) recruit from non-traditional employee labor markets.
Labor shortages
Current Issues confronting Hoteliers:
Operating Issues
Cost containment
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Upper Saddle River, NJ 07458 Various amenities (e.g., business centers) increase costs for hotel owners yet sometimes appeal to only a small segment of the hotel’s market.
Results in a more competitive selling environment for hoteliers (e.g., online room booking)
The more the number of brands increase, the harder consumers find it to differentiate between them.
Efforts to focus on a highly defined, smaller group of travelers.
Market segmentation is increasing
Current Issues confronting Hoteliers: Marketing
Issues
Brands overlap
Increased sophistication of consumers
Interactive reservation system
- Allows potential guests to make reservations at preferred room rates in reduced time
Guestroom innovations
- Two (or more) telephone lines enabling Internet access /
interactive menu ordering for room service / electronic games and guestroom checkout
Data mining technology
- Analyzing guest- (and other) related data to make better marketing decisions
Yield management
- Matching guest demand with room rates
Recent technological innovations include:
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“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 within
the country and worldwide travel
Facility Engineering & Maintenance
Economies of the world, the country, the state and the community play on the financial success of a lodging organization & the
individual properties which comprise it.
G.M / Rooms division M. / Front office M. / Controller /
Executive housekeeper / Catering M. / Executive steward / F & B M. / Banquet M. / Chef / Executive chef / Food production M. / Pastry Chef / Sous chef / Room service M. / F & B
controller / Restaurant M. / Beverage M. / Purchasing Director / Human Resource M. / Credit M. / Executive assistant M. /
Convention M. / Marketing & sales M. / Auditor / Director of security / Convention services director / Resident M / Chief engineer
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:
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Upper Saddle River, NJ 07458 Enrolling in and graduating from hospitality-related programs of study
Working in a variety of lodging positions (including educational internships)
Developing a career ladder for professional development within the lodging industry
- Working with a mentor
Obtaining suggestions by talking with G.M.s at hotels nearby industry leaders and educators
How does one start to plan for a career in the lodging industry?
Chapter 2:
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Responsibilities
G.M.s
G.M.s’ tasks
Investor relations Community relations
Brand affiliation management
Executive Committee development
Property management
The single most important human variable affecting a hotel’s short-term profitability
G.M.s’ ability to effectively inform investors & owners about current 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 ability
Proficiency in written communication
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Communicate effectively with franchise brand officials about marketing & sales programs
Improve profitable operation of hotel by using activities & programs offered by the brand
Managing brand at the property level
Responsibilities: Brand Affiliation
Management
To successfully manage owner / investor relations:
G.M.s
’
talents
Well developed interpersonal skills Persuasive ability
Listening skills
Result of annual (or more frequent) inspections by franchise company
Used as measure of effectiveness of G.M., of hotel’s management team, and of owner’s financial commitment to the property.
Ensuring franchiser-mandated standards are met by franchisee Becoming an important example of how the G.M. interacts with franchisers and/or management companies
Quality Inspection (or Assurance) scores
Responsibilities: Brand Affiliation Management
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Expand tourism opportunities
Provide input regarding local business community needs Have 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 personality
Well-developed social skills
Responsibilities: Executive Committee Facilitation
Food & beverage production & service Food & Beverage Director
Guest, employee & property safety/security Security Director
Revenue production & promotions Sales & Marketing Director
Guest services and sales Front Office Manager
Property cleanliness Executive Housekeeper
Upkeep of hotel’s physical facility Chief Engineer
Accounting for hotel assets and liabilities Controller
Hotel staffing needs Human Resource Manager
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Responsibilities: Executive Committee
Facilitation (continued
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)
General Manager
That he/she works with EOC to improve skills & efficiencies of the departments these individuals manage
That he/she assists their professional development
That he/she must be an expert in specific day-to-day operations of each hotel’s department
Wrong expectations regarding the G.M.
Responsibilities: Executive Committee Facilitation
(continued
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)
Right expectations regarding the G.M.
To successfully manage the EOC facilitation
G.M.s’ talents
Good listening skills
Ability to evaluate / implement managerial training & development program
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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 physical resources, to achieve organizational goals.
Organizational & coaching skills Analytical & financial analysis skills Ability to anticipate guest needs
Responsibilities: Property Management
(continued
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)
To provide leadership Staffing / directing
To measure and evaluate results Controlling / evaluating
To maximize deployment of resources Organizing
To establish goals and objectives Planning
Purpose Functional area
Management process
Controlling & evaluating
Planning
Organizing
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Responsibilities: Property Management
(continued
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)
What is the goal of providing in-room, high-speed Internet 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 reputation value gained versus cost of providing in-room Internet service?
Controlling / Evaluating
How will the hotel allocate necessary dollars to achieve this goal?
Organizing
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-traditional working students
Wish to terminate their formal education after several years of study
Have a B.A. degree in another subject & wish to gain knowledge of the hospitality industry
Two-year degree
Highly practical & current
Practical professional instructors who may be well connected in the community (assisting job placement)
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Admission requirements Program designs
Advanced degrees
Skills Development: Formal Education
(continued
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)
For whom
Four-year degree
Have diverse faculty & quality facilities Offer an excellent learning environment
Benefits
Wish to complete a B.A. degree
Seek to learn from a larger number of quality faculty
Impact of advancing technology Impact 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 of current employees
Offered by management with intent to improve guest service & employee performance
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Business / skills enhancement programs Networking opportunities
Timely publications & seminars including local economic data & best management practices
In some cases, providing low- or no-cost training for entry-level workers
Lobbying for business interests & facilitating public-private employment initiatives
Updating on recent business thoughts & methods
Business associations
Current two major interests
Technology applications / human resource management Help staying updated on current info
Serve certification, educational, social and legislative needs of their members
Hold monthly and annual gatherings Offer educational seminars / workshops Have Trade Shows
Efficient way to see new products & service offerings of a large number of vendors in a short time
Example of the hotel industry
Educational Institute of the American Hotel & Lodging Association
Trade associations
Skills Development: Professional Development
(continued
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)
Chapter 3:
The G.M. Sets the Pace
G.M.s feelings & actions about issues will likely impact hotel staff attitudes about those issues.
G.M.s personally direct only the work of department heads and, perhaps, relatively few other staff.
G.M.s’ interaction with department heads directly impacts how they interact with their own staff.
Influence
Level of morale Desired product
& service quality Employee
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G.M.s Must Manage: Organizational Levels
Of resources available, people (human resources) are the most complex and important for success!
Entry-Level Employees
Top-Level Management (G.M.)
Middle-Level Management (Department Heads)
G.M.s Must Manage: G.M. Functions
Assess the extent to which long- and short-range plans were attained
Evaluating
Take corrective action(s) when budgeted financial plans are not attained
Controlling
Supervise the work of department heads Directing
Recruit, select, orient and train new department heads Staffing
Assign responsibilities for an upcoming banquet or conference event
Organizing
Develop an operating budget or a marketing plan Planning
Examples of activity: Working with department head (if applicable) to: Management
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management-specific aspects of the job
Forecasting guest demand for rooms and establishing room rates, etc.
Ability to understand and interact well with guests, employees, suppliers, etc.
Ability to organize and
direct required work efforts Ability to develop policies and operating procedures necessary for guest safety
Ability to collect, interpret, and use information logically
Learning about a new, competing hotel opening nearby and making future marketing decisions
accordingly
G.M.s Must Manage: G.M. Skills
Conceptual Interpersonal
Joining professional business and community service organizations Meeting with community
government representatives
Participating in
community social events Attending school & athletic events with their children Yesterday: dictatorial
leadership
Today: facilitators
Tomorrow: empowerment
“Manage by walking around”
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 and exceed guest expectations
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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
Evolution of Traditional Hotel H.R. Practices
Participative decision style Autocratic (dictatorial) decision style
Team behavior Individual behavior
Manager shares responsibility for results Manager personally responsible for results
Manager listens Manager tells and sells personal views
Pride, recognition, and growth are used to motivate staff
Fear and pressure used to motivate staff
Team problem-solving is employed Manager personally solves problems
Manager encourages change Manager seeks stability
Emphasis on employee facilitation skills Emphasis on technical skills
Manager is supportive Manager is dominant
Team-focused work unit Manager-focused work unit
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Evolution of Traditional Hotel H.R. Practices
(continued
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)
Long-term H.R. strategies Short-term H.R. strategies
Multi-directional communication Top down – one way communication
Flexible routines Bureaucratic “rituals”
Consensus Power
Empowerment Hierarchy of control
Proactive management/supervision style Reactive management/supervision style
Consistent “moments of truth” Inconsistent “moments of truth”
What one says is consistent with what one does
What one says is inconsistent with what one does
G.M. earns the team’s support G.M. forces compliance
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 successful and how this will be accomplished
Hotel’s goal for long-range (e.g., five year) time span
Hotel’s goal within a one-year time span
Anticipating revenues and expenses during short-range plan implementation
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Management Basics: Decision Making
Routine and repetitive decisions made after considering policies, procedures, or rules
Infrequent decisions requiring creative 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 to attaining 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?
Management Basics: Decision Making Approach
Manager makes decisions
unilaterally
Manager makes decisions after input from
others
Manager allows team to make decisions
Traditional Recent Contemporary
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Management Basics: Decision Making
(continued
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)
Advantages Disadvantages
Group decision
making process
Considering broad range of information
Generating more creative alternatives
Whole team keenly aware of issues and problems
Achieving higher morale
Easier implementation
Possible conflicts
May be forced to “take sides” if alternative
opinions are expressed Domination by staff
members with strongest personalities
Time-consuming
Limit to how many staff
members one supervisor can manage effectively
Each employee should report or be accountable to only one boss for a specific activity
Management Basics: Organizing Principles
Unity of command Span of control
Distribution of authority
Executive housekeeper establishes table linen laundry schedule with F&B dept.
Line managers (between departments)
Functional
Hiring and firing employees within a specific department
Line managers (within departments) Line
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Work that others can do as well as the G.M.
Work that is less
important than other work
Work that should be learned by more than one person
Management Basics: Delegation
What work might be delegated by the G.M.?
Allows the G.M. to do most important things first
Effective process to train employees
Allows more work to be accomplished
Improves controls
Management Basics: Delegation (continued
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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
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Management Basics: Flow of Communication
Multi-directional communication
Formal channel (example): coaching
Management Basics: Motivation
Poorly motivated staff
Inconsistent performance for required quality or quantity standards
Guest dissatisfaction
Increased operating costs
Hotel suffers
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Management Basics: Motivation (continued
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)
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
Management Basics: Leadership
Effective leaders will:
implement the property’s Mission Statement
have an objective & measurable “picture” of hotel’s desired future
help others develop the knowledge and skills needed to attain hotel’s vision (e.g., orientation, training, and
coaching)
utilize the empowerment process
develop team of staff committed to hotel’s success achieve a reputation for quality service consistently delivered to guests
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Management Basics: Discipline
Steps in a progressive discipline process
Discipline: activities reinforcing desired performance or correcting undesired performance.
Oral warning (no entry in employee’s record)
Discharge
Oral warning (entry in employee’s record)
Written reprimand
Have high standards and expectations
Support individual members and maintain trusting and respectful relationships Practice participative
management and solicit input from members
Demonstrate that own personal goals and individual team
member goals should not be placed before team goals
Share credit for team successes More control over work
responsibilities
Make work assignments within the team
Schedule themselves
Evaluate each other’s work Assign compensation
increases
Team Building Tactics
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Employee Selection, Orientation, and Training
Personnel 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
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
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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
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
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Receiving guest input about hospitable staff members
Providing accommodations to guests stranded by adverse travel conditions
Interacting with frequent guests
Receiving input from guests who genuinely want the hotel to be successful
Interacting with guests as peers at community / professional meetings Providing service / assistance to guests
Observing hotel guests celebrate significant family / professional occasions
Receiving spontaneous “Thank You Notes” from happy guests Interacting with frequent guests
Possible interactions with guests: positive examples
Discovering overt guest room damage
Calming irate guests stranded by adverse travel conditions
Interacting with police called to hotel for disturbances or illegal guest activities
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 guest activities
Possible interactions with guests: negative examples
Chapter 4:
H.R. Department Roles
H.R. is both line & staff
function
Helping line managers with H.R. related duties - employee selection - orientation
- training - evaluation - compensation H.R. specialists
G.M. must define authority boundaries between line- & staff managers. Making final employee
selection decision
Providing departmental-specific orientation
Initiating ongoing training
Supervision activities
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How H.R. personnel assist in hotel’s overall operation
H.R. Department Roles (continued
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)
Implementing policies to effectively recruit, select, motivate, and retain the most qualified management and non-management staff
Developing and delivering orientation, safety, security, supervisory, and some department-specific training programs
Developing and communicating H.R. policies that are equitable and fair to all employees while protecting the rights of the hotel
Interpreting, implementing, and enforcing the ever-increasing body of laws and regulations
Job descriptions Job specifications
Two staffing
tools
Staffing the H.R. Department
A list of tasks that an employee in a specific position must be able to perform effectively
Statements about duties, responsibilities, working conditions & specific job activities
Example: H.R. Director (recruitment, selection, evaluation, promotion)
A list of personal qualities necessary for successful
performance of the tasks required by the job description
Statements about knowledge, skills, education, physical & personal characteristics
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Legal Aspects of H.R.: Employee Selection
Bonified Occupational Qualifications (BOQs):
Qualifications to perform a job that are judged reasonably
necessary to safely or adequately perform all tasks within that job
Education or certification requirements Language skills
Previous experience
Minimum age (for jobs such as waitress or bartender)
Physical attributes (amounts able to be lifted, carried etc.)
Licensing
Employment applications
Tools to screen employee applicants
Legal Aspects of H.R.: Employee Selection
(continued
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)
Interviews
Only provide info directly relating to the job
Demographic info, employment history, educational
background, criminal history, employment status, references, drug testing
Testing
Other
Race, religion and physical traits should not be asked
Age may be asked only for the purpose of legal requirements Follow strict state guidelines and requirements for
pre-employment drug testing
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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 from
employment interfering with education or that is detrimental to health
Fair Labor Standards Act (1938)
Prohibits hiring illegal immigrants Immigration Reform &
Control Act (1987)
Protects individuals 40 yrs and older Age Discrimination in
Employment Act (1967)
Prohibits discrimination against job candidates with disabilities
Americans with
“At-will” employment Employment agreement
Legal Aspects of H.R.: Employment Relationships
Employees can elect to work for the employer or terminate the work relationship anytime Employers can hire or terminate any employees with or without cause at any time
Document specifying
the terms of the employer
– employee work relationship
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Legal Aspects of H.R.: Workplace Laws
One cannot ask favors of a subordinate in exchange for employment benefits; 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 of leave (unpaid) to an employee for a birth, adoption of a child or serious illness of immediate family members.
Sexual harassment
Unemployment insurance (allowing temporary financial benefits to employees who have lost jobs)
Unemployment claim (asserting the worker is eligible for unemployment benefits)
Employee evaluation (assuring work performance [nothing else] forms the basis for employee evaluations)
Discipline (effectively communicating and consistently enforcing workplace rules and policies)
Termination (preventing unacceptable termination of employee/s)
The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime work rates, and equal pay regardless of gender.
Compensation
Legal Aspects of H.R.:
Workplace Laws (continued
…
)
Employee performance
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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, wage
deductions 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.:
Internal recruiting External recruiting
H.R. Department at Work: Recruitment
Focusing on internal applicants for vacant positions
Focusing on internal applicants for vacant positions
“Promotion from within” Alerting friends and
relatives of current employees
Recruitment is not solely the job of H.R. department
Current staff can impact hotel’s turnover rate
Hiring from outside sources
Newspaper and other media advertisements / job fairs / executive
search firms / recruiting at schools / “help
wanted” signs
Attracting external candidates
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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 interviews Employment tests
Preliminary screening (reviewing application)
Orientation:
Providing basic information about the hotel which must be known by all its employees.
H.R. Department at Work: Orientation
Goals
Guest service / relations training Emphasis on teamwork
Policies and procedures including handbook
Compensation and benefits Guest safety & security
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Training is absolutely critical to the hotel’s success !
H.R. Department at Work: Training
Group training
Effective when several (or more) staff must learn the same thing Use of a role-play (e.g., upselling training for front desk agents)
Individualized training
One-to-one training method Mainly responsible for
individualized line departments Improve knowledge or skills of staff
New employees and experienced staff need training
Ongoing professional development can motivate staff and help employees’ advancement opportunities
H.R. Department at Work:
Performance Evaluation
Goals
Determine where staff can improve performance Assess eligibility for pay raises and promotions Improve morale
Assure legal compliance
H.R. Dept. Roles
Develop policies & procedures for property-wide system Communicate these policies & procedures to all staff
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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
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 & 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 / wages
Direct financial compensation
Benefits (health insurance, paid vacations, etc.)
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Work-related accidents & illnesses
H.R. Department at Work:
Employee Safety & Health
Working conditions
e.g., greasy floors in kitchen
Work to be done
e.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
H.R. Department at Work:
Workforce & Work Quality Improvement
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Hotel Operations Management, 1/e ©2004 Pearson Education Development of systems to collect and report financial information
Analyzing this same information
Making finance-related recommendations to assist management decision making
Record and summarize financial data
Purpose of bookkeeping
Accounting
Facility Engineering & Maintenance
Controller: individual responsible for recording, classifying, and summarizing the hotel’s business transaction.
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Upper Saddle River, NJ 07458 Financial management system that collects accounting data from an individual hotel site and combines and analyzes that data at the same site.
G.M. and controller have larger role in preparing financial documents
Financial management system that collects accounting data from an individual hotel(s), then combines and analyzes the data at a central site
Prevails in chain-operated or multiproperty hotel companies Company will likely employ C.P.A. for data analysis
Centralized accounting systems
Decentralized accounting systems
Hotel Operations Management, 1/e ©2004 Pearson Education Rooms available for forecasted period
Estimated rooms for the period
Estimated occupancy rate for period
Total rooms sold / total rooms available = Occupancy percent (%) Estimated ADR (average daily rate) for period
- Total room revenue / total number of rooms sold = ADR RevPar (revenue per available room) for forecasted period - Occupancy % X ADR = RevPar
Rooms revenue forecast should include at minimum:
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Revenue Forecasting: Food & Beverage Revenue
Controller will forecast sales generated from: - Room service
- Banquets
Hotel Operations Management, 1/e ©2004 Pearson Education Pay-per-view movies
Parking charges
Internet access charges
Gift shop sales of newspaper / cigarettes / candy / lotions / pop / etc Telephone (local / long distance calling)
Guest laundry Coat check fees Golf fees
Tennis fees
Health club usage fees Pool fees
Typical examples of other revenue sources include:
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Allowing management to anticipate / operate for future business conditions
Providing communication channel whereby hotel objectives are passed to various departments
Encouraging department managers who have participated in budget preparation to establish own operating objectives / evaluation techniques / tools
Providing G.M. with reasonable estimates of future expense levels and serving as tool for determining future room rates
Helping controller & G.M. to periodically evaluate hotel and its progress toward financial objectives
Important function of budget
Hotel Operations Management, 1/e ©2004 Pearson Education Long-range
budgets
Encompass relatively lengthy period, generally 2-5 years or more
Useful for long-term planning, considering wisdom of debt financing / refinancing and scheduling of capital expenditures
Budgeting (continued
…
.)
Annual budgets
Must be produced by individual hotels and submitted to central office for review in large, multiunit hotel companies
Developed to coincide with calendar year
Monthly budgets
Helps determine whether maintaining progress toward goals developed in annual budget
Great use for seasonal hotel
Refer to Figure 5.1 (Waldo hotel property operations & maintenance department
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Lists hotel’s revenues, expenses, GOP, & fixed charges for specific time (month, fiscal quarter, or year)
In no case should this period exceed middle of next reporting period
Income statement Balance sheet
Cash flow statement
Key financial documents
Income statement
Hotel Operations Management, 1/e ©2004 Pearson Education Figure 5.2: Income Statement Information
This period’s 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
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Figure 5.3: Tricolumned Income Statement
This
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?
Hotel Operations Management, 1/e ©2004 Pearson Education Of all assets, none consider relative value / worth of staff, including the G.M, actually operating hotel
Value of experienced, well-trained staff is not quantified. Provides a point-in-time statement of overall financial position of hotel
“Snapshot” of financial health of hotel
Capture the financial condition of hotel on day it is produced Not telling how profitable the hotel was in given accounting period
Functions of balance sheet
Financial Statements: Income Statement
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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
Hotel Operations Management, 1/e ©2004 Pearson Education
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
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Upper Saddle River, NJ 07458 How much cash was provided by hotel’s operation during accounting period?
What was hotel’s level of capital expenditure for that period? How much long-term debt did hotel commit to during that period?
Will cash be sufficient for next few weeks or will short-term financing be required?
It is critical that the hotel not only is profitable, but also that it maintains solvency.
Statement of cash flows can answer to the following:
Financial Statements: Statement of Cash Flows
Hotel Operations Management, 1/e ©2004 Pearson Education 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 a timely recap of prior day’s rooms, F&B & other revenues.
Prepared from data supplied nightly by PMS.
Daily Operating Statistics: Manager’s Daily Sales Report
Daily includes the following:
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Total rooms occupied
Rooms occupied by guest type Occupancy percent
Total ADR
ADR by guest type Total RevPar
Documentation & verification of night auditor’s report is an important function of controller’s office.
Detailed room revenue report include:
Night auditor report provides wealth of info on room sales.
Daily Operating Statistics:
Hotel Operations Management, 1/e ©2004 Pearson Education Allowance &
adjustments
Reduction in sales revenue credited to guests
because of errors in properly recording sales or to appease a guest for property shortcomings.
Daily Operating Statistics:
Adjustments & allowances
Figure 5.7: Adjustment Voucher
ADJUSTMENT NO 348685
(1)
DATE (2) 200xx
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- 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 %
Hotel Operations Management, 1/e ©2004 Pearson Education Changing guest’s credit cards for items not purchased, then keeping money from erroneous charge
Changing totals on credit card changes after guest has left or imprinting additional credit card charges and pocketing cash difference
Mis-adding legitimate charges to create higher-than-appropriate total, with intent to keep the overcharge.
Charging higher-than-authorized prices for products/services, recording proper price, and keeping the overcharge
Giving/selling/credit card numbers to unauthorized individuals outside hotel
Credit card-related techniques to defraud guests
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Sales revenue recording systems
Cash overage/shortage monitoring systems
Enforcement of employee disciplinary procedures for noncompliance
Methods of evaluating cash control systems
Hotel Operations Management, 1/e ©2004 Pearson Education Facility Engineering & Maintenance
Accounts 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 to purchase hotel services and products on credit
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Upper Saddle River, NJ 07458 which guests are allowed to purchase goods/services on credit.
how promptly those guests will receive bills.
what is total amount owed to hotel and how long have those monies have been owed.
Controllers’ jobs to establish:
Internal Control: Accounts Receivable
Facility Engineering & Maintenance
A controller together with a G.M. should establish credit policies that maximize number of guests doing business with hotel, yet minimize hotel’s risk of creating uncollectable accounts
Hotel Operations Management, 1/e ©2004 Pearson Education Figure 5.9: Accounts receivable aging report
Waldo 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%
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Payments made in a timely manner Payment records properly maintained
Payment totals assigned to appropriate departments Charge for goods / services used by hotel, invoiced by vendor, not yet paid
Sum total of all invoices owed by hotel to its vendors for credit purchases made by hotel
Account payable (A.P.)
Internal Control: Accounts Payable
Hotel Operations Management, 1/e ©2004 Pearson Education
Use a system of coding to assign actual costs to predetermined cost centers Implement 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 two people
Payment of proper amounts
Internal Control: Accounts Payable
(continued
…
.)
Payments made in a timely manner
Payment records properly maintained
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Internal Control: Purchasing & Receiving
Payment should be withheld if all services have not been performed.
Before A.P. invoice is paid, check terms of sale, product prices quoted by vendor, & list of products against actual vendor’s invoices.
Devising payment system ensuring members of property mgt. Team has:
- Preauthorized work - Confirmed cost of work