Glencoe Marketing Series: I II. Hospitality and Tourism ! 4. The Hotel Business I ©The McGraw-Hill Hospitality and Tourism Markets Companies, 2006 Chapter 4 The Hotel Business 81 meal plan a room rate that includes meals; some choices of meal plans are: European Plan, Continental Plan, Bermuda Plan, Modified American Plan, and American Plan CONNECT What type of meal plan do you think is most popular? Why? yield management a system of maximizing revenue through adjusting room rates according to demand average daily rate (ADR) a rate based on total sales for the day divided by the total number of sold rooms occupancy percentage (OCC%) a percentage calculated daily and based on the number of rooms sold as a percentage of the total number of available rooms revenue per available room (revPAR) a rate that reflects a hotel's revenue per available room · Meals—Room rates, particularly in the United States, do not traditionally include meals. However, some all-inclusive resorts do include meals in their prices. A meal plan is a room rate that includes meals; some choices of meal plans are: · European Plan (EP): no meals included, room only. · Continental Plan (CP): continental breakfast included. Breakfast most often includes coffee/tea, rolls/toast, and jams. · Bermuda Plan (BP): full breakfast, coffee/tea, juice, toast, eggs, and sometimes breakfast meats. · Modified American Plan (MAP): full breakfast and lunch or dinner. · American Plan (AP): also called full pension/full board, includes three meals per day. YIELD MANAGEMENT The goal of any hotel is to maintain a high occupancy rate. Occupancy is based on the supply (number of rooms available) and the demand (the number of guests needing sleeping rooms). Guests want to get the best value for the dollar. Hotels balance this against their goal of achieving a high daily rate. Most properties do this through yield management. Yield management is a system of maximizing revenue through adjusting room rates according to demand. Hotels use various formulas to calculate their rates: (See Figure 4.1.) · Average Daily Rate (ADR)—The ADR is a rate based on total sales for the day divided by the total number of rooms sold. · Occupancy Percentage (OCC%)—The OCC is a percentage calculated daily. It is based on the number of rooms sold as a percentage of the total number of available rooms. · Revenue Per Available Room (RevPAR)—RevPAR is a rate that reflects a hotel's revenue per available room. Room revenue is a good indicator of a hotel's performance. · Figure 4.1 Hospitality Yield Management MAXIMIZING REVENUE Hotels keep track of various rates, including occupancy rates and revenue collected, to know what rates should be charged. What is the definition of yield management? Total Available Rooms: Rooms Sold: Revenue: ADR: revenue + rooms sold = ADR 0CC% $56,250 450 = $125 0CC%: rooms sold + total available rooms: 50 + 500 = .90 or 90% RevPAR: revenue -5- total available rooms =.

1. Glencoe Marketing Series: I II. Hospitality and Tourism ! 4.
The Hotel Business I ©The McGraw-Hill
Hospitality and Tourism Markets Companies, 2006
Chapter 4 The Hotel Business 81
meal plan a room rate that includes meals; some choices of meal
plans are: European Plan, Continental Plan, Bermuda Plan,
Modified American Plan, and American Plan
CONNECT
What type of meal plan do you think is most popular? Why?
yield management a system of maximizing revenue through
adjusting room rates according to demand
average daily rate (ADR) a rate based on total sales for the day
divided by the total number of sold rooms
occupancy percentage (OCC%) a percentage calculated daily
and based on the number of rooms sold as a percentage of the
total number of available rooms
revenue per available room (revPAR) a rate that reflects a
hotel's revenue per available room
· Meals—Room rates, particularly in the United States, do not
traditionally include meals. However, some all-inclusive resorts
do include meals in their prices. A meal plan is a room rate that
includes meals; some choices of meal plans are:

2. · European Plan (EP): no meals included, room only.
· Continental Plan (CP): continental breakfast included.
Breakfast most often includes coffee/tea, rolls/toast, and jams.
· Bermuda Plan (BP): full breakfast, coffee/tea, juice, toast,
eggs, and sometimes breakfast meats.
· Modified American Plan (MAP): full breakfast and lunch or
dinner.
· American Plan (AP): also called full pension/full board,
includes three meals per day.
YIELD MANAGEMENT The goal of any hotel is to maintain a
high occupancy rate. Occupancy is based on the supply (number
of rooms available) and the demand (the number of guests
needing sleeping rooms). Guests want to get the best value for
the dollar. Hotels balance this against their goal of achieving a
high daily rate. Most properties do this through yield
management. Yield management is a system of maximizing
revenue through adjusting room rates according to demand.
Hotels use various formulas to calculate their rates: (See Figure
4.1.)
· Average Daily Rate (ADR)—The ADR is a rate based on total
sales for the day divided by the total number of rooms sold.
· Occupancy Percentage (OCC%)—The OCC is a percentage
calculated daily. It is based on the number of rooms sold as a
percentage of the total number of available rooms.
· Revenue Per Available Room (RevPAR)—RevPAR is a rate
that reflects a hotel's revenue per available room. Room revenue
is a good indicator of a hotel's performance.
·
Figure 4.1
Hospitality Yield Management
MAXIMIZING REVENUE Hotels keep track of various rates,
including occupancy rates and revenue collected, to know what
rates should be charged. What is the definition of yield
management?

3. Total Available Rooms: Rooms Sold: Revenue:
ADR: revenue + rooms sold = ADR
0CC%
$56,250 450 = $125 0CC%: rooms sold + total available
rooms:
50 + 500 = .90 or 90% RevPAR: revenue -5- total available
rooms = RevPAR
$56,250 ■*■ 500 = $112.50
500 450 $56,250
76 Unit 2 Hospitality & Tourism Markets
Glencos Marketing Series: II. Hospitality and Tourism [ 4.
The Hotel Business I I ©The McGraw-Hill
Hospitality and Tourism Markets Companies, 2006
Chapter 4 The Hotel Business 81
Location
It is said that you can change anything about a lodging property
except its location. Therefore, location is a critical factor
affecting the room rate that a property can charge its guests.
RESORTS Resort facilities are usually located in private or
secluded areas. They provide a variety of recreational offerings
to their guests, ranging from multiple pools, tennis courts, and
golf courses to less-structured offerings, such as walking trails,
beaches, and bike paths. Ski resorts specialize in winter sports,
including snowshoeing, tobogganing, snowmobiling, and cross-
country and downhill skiing. All resorts combine luxurious
amenities, well-appointed guest rooms, dining options, and
meeting or convention space with top-notch service. Resorts are
destinations where guests may choose to remain for weekends
or for more extended vacations.

4. AIRPORT Leisure travelers may use airport hotels the night
before taking an early flight for an extended vacation. Business
clients prefer airport properties as a central and convenient
place for meetings and conventions. Airlines contract with
airport properties for accommodations for their crews.
Passengers, who may be stranded due to weather and other
unforeseen circumstances, also use airport hotels.
HIGHWAY Roadside properties attract transient guests
traveling to a final destination. These travelers, who are often
families, seek accessible locations, convenient food-and-
beverage offerings, and limited recreational facilities, such as
pools, game rooms, and vending-machine services. The typical
length of stay for guests at a highway property is one night.
DOWNTOWN City properties located in downtown areas cater
to business, convention, and leisure travelers. Most of these
lodging facilities are in desirable locations near theater, office,
shopping, and fine-dining sites. Services range from food-and-
beverage, business, meeting, and concierge services.
· Business Services—Business centers or in-room facilities,
such as faxes, modems, computers, and printers
* Meeting Services—Audiovisual (A/V) equipment rentals,
modems, and special decor
· Concierge Services—Arrangements for transportation,
restaurant reservations, event reservations, entertainment
tickets, and activities in the area
CONFERENCE CENTERS Conference or convention-center
properties cater to guests attending large meetings or trade
shows. Many of these accommodations are attached to a
conference or civic center. These facilities specialize in
handling groups of 500 or more persons. They provide
assistance with audiovisual equipment and technical support, a
range of meeting-room space, and numerous food-service
outlets and recreational facilities.
ETHICS & ISSUES

5. Water Waste
In the summer of 2000, South Carolina experienced a terrible
drought that devastated farmers' crops. However, weeks of
sunny days boosted business for local golf courses. One golf
course in Charleston spent over $35,000 on irrigation to keep
the grass green. Hotels and resorts around the world use a great
deal of water to maintain elaborate landscaping that is not
always appropriate to the ecology of the locale. Is it ethical for
hotels to use water for fountains, swimming pools, and sprinkler
systems for golf courses in water conservation areas?
MARKETING m
SEBiES ChUmF^r
Remember to check out this book's Web site for lodging
classification information and more great resources at
marketingseries.glencoe.com.
Chapter 4 The Hotel Business 81
marketingseries.glencoe.com

6. Chapter 4 The Hotel Business 77
(
Glencoe Marketing Series: I II. Hospitality and Tourism
I
4. The Hotel Business !
I
©The McGraw-Hill
Hospitality and Tourism Markets
Compan
ies, 2006
) (
Section
)
Chapter 4 The Hotel Business 81
Hotel Operations
Hotel Organization
A
ll lodging accommodations, regardless of size, maintain a
delicate balance between generating profit and servicing the
public. Both of these functions are critical. A property that
makes a great deal of money but provides few comforts of home
for its guests will not be a long-term success.
Hotels have many revenue centers, all overseen by a general
manager (GM). Similar to the general manager of a restaurant,
the GM of a hotel is responsible for both front- and back-of-the-
house operations. Front of the house is the area in a lodging
facility that guests view, such as the lobby. Back of the house is
the area in a lodging facility where support services take place,
which guests usually do not view. The hotel operating staff
consists of three segments: food-and-beverage (see Chapter 3),
front-office, and support staff. (See Figure 4.2 on page 83 for a

7. complete staffing chart.)
The Rooms Division
T
he largest revenue center of a lodging facility is the rooms
division. This center would include the front office,
reservations, housekeeping, guest or uniformed services, and
communications.
The Front Office
F
rom a guest's perspective, the front office is considered the
heart and soul of any property. This is the first and last contact
area for a guest. As part of the front office, it is critical for
front-desk personnel to provide prompt, efficient, and friendly
service to every guest. The primary functions of the front-desk
staff are to sell rooms, maintain accounts, and provide guest
services.
Selling Rooms
Depending on the size of the property, the sales division or the
reservations staff sells rooms during the day. In the evening, the
front-desk staff assumes this responsibility.
Maintaining Accounts
Many lodging facilities have property management systems
(PMS). These automated systems help the front-desk staff to
store and access information about guest reservations, special
requests, and billing instructions. Sophisticated information
technology allows the front desk to provide better service while
also reducing costs for the property.
AS YOU READ ...
YOU WILL LEARN
· To identify the front-office positions in the rooms division of
a hotel.
· To describe guest services in the hotel industry.
· To identify the support-staff positions in the back of the house

8. of a hotel.
WHY IT'S IMPORTANT The lodging industry provides a
variety of entry-level and management positions. Career
opportunities are unlimited.
KEY TERMS
· front of the house (lodging) ' back of the house (lodging)
· night auditor
guest service agent (GSA) - guest or uniformed services
· concierge
front of the house (lodging) the area in a lodging facility that
guests view, such as the lobby
back of the house (lodging) the area in a lodging facility where
support services take place, which guests usually do not view
PREDICT
What might be the definition of uniformed services?
Glencoe Marketing Series: Hospitality and Tourism
II. Hospitality and Tourism Markets 4. The Hotel Business
©The McGraw-Hill Companies, 2006
Chapter 4 The Hotel Business 81
THE M Electronic^
CHANNEL
Hotels Online
Hotels.com books rooms at over 4,500 hotels throughout the
world. Similar hotel booking services have made it easier and
cheaper for travelers to find accommodations. These Web sites
feature photos and descriptions of rooms and amenities. Rating

9. systems help guests know the level of quality they can expect in
a particular destination. Online reservation services also save
travelers the hassle of calling and booking overseas rooms in
different languages and time zones.
•••Visit an online hotel booking service and look at three
different hotel options in the same city. Make a list of the
information through marketingseries.glencoe.com.
night auditor the hotel staff member who does the night audit
and balances the guests' accounts each evening
guest service agent (GSA) a hotel staff member who performs
all of the functions of a desk clerk/agent, concierge, and valet
CONNECT
What work shift would you prefer if you were a front-desk
clerk? Why?
Guest Services
Perhaps the most important task of the front-desk staff is
providing exemplary guest service. Particularly during check-in,
guests contact the front desk with questions, requests, and
special needs. Clerks, or agents, and managers need to be
familiar with the lodging property itself, the local attractions of
the destination, and other services available for guests.
Positions
The front desk is staffed by a front-desk manager who oversees
daily operations. Larger properties may also have an assistant
front-desk manager to assist with these responsibilities, which
include checking reports, reviewing occupancy and ADR,
preparing for daily arrivals and departures, and checking
staffing and scheduling requirements.
DAY-SHIFT POSITIONS Most properties have an a.m. and p.m.
shift for front-desk staff. The day shift is responsible for

10. handling guests during check-out. This includes notifying the
housekeeping staff that guests have departed and designating
which rooms are vacant. Clerks, or agents, on the day shift also
monitor special requests for arriving guests such as VIPs.
EVENING-SHIFT POSITIONS The evening-shift staff is
responsible for checking in guests as they arrive.
· Clerks, or agents—Like clerks working the day shift, these
staff members answer questions from walk-in guests relating to
the sale of rooms.
· Night auditor—The night auditor is the hotel staff member
who does the night audit and balances the guests' accounts each
evening. Night auditors post all charges, run reports, balance
guest accounts, and create a daily report for the front-desk
manager. Typically, the night auditor is part of the accounting
department, but the position is the only front-of-the-house
accounting position.
GUEST SERVICE AGENT Some properties may also employ a
guest service agent (GSA), a hotel staff member who performs
all of the functions of a desk clerk/agent, concierge, and valet.
A GSA greets the guest upon arrival, assigns a room, and
escorts the guest to a room.
Reservations
Depending on the size of the property and its possible chain
affiliation, guests can make room reservations directly with the
property or through a centralized reservation system (CRS). For
example, guests may telephone the property's reservation
department or make arrangements for special events, such as
conventions, through travel agents, meeting planners, or tour
operators using a CRS.
82 Unit 2 Hospitality & Tourism Markets
marketingseries.glencoe.com

11. Glencoe Marketing Series: ! II. Hospitality and Tourism I 4.
Ths Hotel Business I ©The McGraw-Hill
Hospitality and Tourism Markets Companies, 2006
Figure 4.2
Hotel Staffing
HOSPITALITY ORGANIZATION From resorts to B&Bs,
lodging establishments must have staff to perform all the
necessary tasks expected by guests. How
many employees might be needed for the front office of a beach
resort hotel?
r
Gei
lera
Mai
<age
■
Chapter 4 The Hotel Business 83
T
1
Chapter 4 The Hotel Business 83
Food & Beverage
Front Office
Support Staff
Chapter 4 The Hotel Business 83
Restaurant
Room

12. Service
Uniformed Staff
Reservations
Front Desk
Concierge
."i
Door Attendants
Bell Captain & Staff
L Security
Reservations Manager
- FD Manager
· Asst. FD Mgr.
FD Clerk
Guest Service Agent
· PBX Operator Night Auditor
Marketing
Accounting
Human Resources
Sales Marketing
Chapter 4 The Hotel Business 83
Chapter 4 The Hotel Business 83
Housekeeping
Executive Housekeeper
Security

13. Inspectors Laundry
Room
ants
Attend;
Chapter 4 The Hotel Business 83