Recommended
Recommended
More Related Content
What's hot
What's hot (20)
Similar to Chapter 12 Managing Front Office Operations HOT 333
Similar to Chapter 12 Managing Front Office Operations HOT 333 (20)
More from Syed Qasim Anwar
More from Syed Qasim Anwar (20)
Recently uploaded
Recently uploaded (20)
Chapter 12 Managing Front Office Operations HOT 333
- 1. Managing Front Office SQA I HOT 333
- 2. Planning and Evaluating Operations Management Functions Establishing Room Rates Forecasting Room Availability Budgeting for Operations Evaluating Front Office Operations Planning for Disasters
- 3. Management Functions Planning Organizing Coordinating Staffing Leading Controlling Evaluating
- 4. Management Functions Planning •Process of thinking about & organizing activities required to achieve desired goal •Involves creation & maintenance of plan, such as psychological aspects require conceptual skills Organizing • Systematic process of structuring, integrating, coordinating task goals, & activities to resources in order to attain objectives
- 5. Management Functions Coordinating • Synchronization & integration of activities, responsibilities, & command & control structures to ensure resources of organization are used most efficiently in pursuit of objective Staffing • Process of hiring suitable candidates according to their knowledge & skills in an organization
- 6. Management Functions Leading • Act including how to inspire & motivate individuals, manage talent, influence without authority, & lead teams Controlling • Function of establishing benchmarks or standards, comparing actual performance against them, & taking corrective action, if required Evaluating • To judge or calculate quality, importance, amount, or value of something
- 7. Front Office Planning Function Establishing Room Rates Forecasting Room Availability Budgeting for Operations
- 8. Room Rate Categories Rack Corporate/commercial Group Promotional Incentive Family Package plan Internet rate Distressed-inventory rate Complimentary
- 10. Market Condition Approach How do our rates compare to those of our competition Are our rates much lower or higher than those of competition How are our rates affecting our revenue & our share of business What is our occupancy percentage What is occupancy percentage of competitive set Will our total revenue improve if we increase/decrease rates Have any trends emerged during past six months
- 11. Rule of Thumb • Approach$1 for each $1000, 70% Occupancy • Considerations • Inflation Rate • Old Value / Current Value • Extra Services Profitability
- 12. Hubbart Formula Approach Calculate hotel’s desired net income or return on investment Calculate pretax profits Calculate all operating costs Calculate all fixed expenses Calculate non room profit / loss Determine room revenue needed to cover costs & NI / ROI Forecast rooms to be sold based on estimated occupancy Calculate hotel’s required ADR
- 13. Planned Rate Changes Rates are likely to change during calendar year depending on factors such as location, seasonality or major event Hotels may publish Rack Rate Range Factors reflecting rates • Peak, high demand • Off-Peak, low demand
- 14. Forecasting Room Availability Thorough knowledge of hotel & surrounding Market profiles of constituencies served Reservation trend & history lead times List of special events scheduled Business & historical profiles of groups Room availability of competing hotels Plans for hotel renovations impact no of rooms Plans of competitive hotels
- 15. Forecasting Room Availability Sample Forecast Forms Forecast Formula Forecasting Data
- 16. Forecasting Data Based on Historical Trends & Records Based on Existing Reservations • Number of Expected Arrivals • Number of Walk-ins • Number of Stay overs • Number of No Shows • Number of Under stays • Number of Expected Check outs • Number of Overstays
- 17. Rooms Available Formula Total number of guestrooms – Out-of-order rooms – Stay overs – Reservations + Reservations no-show percentage + Under stays – Overstays ________________________________ Number of rooms available for sale
- 18. Sample Forecast Forms 10 Day Forecast Developed jointly by FOM & Resv. Manager, perhaps in conjunction with a room availability forecast committee Consists of: daily forecasted occupancy, groups commitments & comparison of previous period’s forecasted & actual room counts & occupancy % Prepared for F&B, banquet, & catering operations Help departmental managers plan their staffing & payroll levels for upcoming period, should be completed & distributed in advance of coming period Automated systems have programs to help managers accurately forecast business
- 19. Sample Forecast Forms 3 Day Forecast Updated report that reflects more current estimate availability Details significant changes or events not highlighted on ten-day forecast Guide management in fine-tuning labor schedules & adjusting availability Daily revenue meeting is held to focus on occupancy & rate changes for next several days; results of this often reflect in forecast
- 20. Sample Forecast Forms Room Count Considerations Control books, charts, software applications, projections, ratios, & formulas can be essential in short & long-range room availability planning Each day in some hotels, front office management performs several physical counts of rooms occupied, vacant, reserved, & expected to check out, to complete occupancy statistics for that day Automated system may reduce need for most physical counts, since system can be programmed to continually update room availability information Important for front desk agents to know exactly how many rooms are available, especially if hotel is expected to operate at nearly 100% occupancy
- 21. Budgeting for Operations Forecasting Room Revenues • Important long-term planning that FOM performs • Annual operations budget is profit plan that addresses all revenue sources & expenses • Annual budgets are commonly divided into monthly plans that, in turn, are divided into weekly & daily • Budget are standards against which management can evaluate actual results of operations • Room revenues & profits are usually greater than for other hotel revenue areas, accurate rooms division budget is vital to creating hotel’s overall budget • Budget planning process requires close cooperation of all managers
- 22. Budgeting for Operations Forecasting Room Revenues • FOM’s primary responsibilities in budget planning are forecasting rooms revenue & estimating related expenses • Historical financial information often serves as foundation on which FOM build revenue forecasts • Method of rooms revenue forecasting involves analysis of rooms revenue from past • Approach to forecasting revenue bases revenue projection on trends of past room sales & average rates • Detailed approaches to forecasting rooms revenue consider variety of different rates corresponding to room types, guest profiles, days of week, seasonality of business, & other factors
- 23. Budgeting for Operations Estimate Expenses • Expenses are variable, they vary in direct proportion to rooms • Historical data can be used to calculate approximate % of rooms revenue that each expense item may represent • These % figures can then be applied to amount of forecasted rooms revenue, resulting in $ estimates for each expense category for budget year • Rooms division expenses are payroll & related expenses, guestroom laundry, guest supplies, hotel merchandising, travel agent commissions & direct reservation expenses, & other • When rooms division expenses are totaled & divided by number of occupied rooms, cost per occupied room is determined • Cost per occupied room is often expressed in dollars & as % • Method of estimating expenses is to estimate variable costs per room sold & multiply these costs by number of rooms expected to be sold
- 24. Budgeting for Operations Refining Budget Plans • Budget plans commonly supported by detailed information gathered in budget preparation process & recorded on worksheets & summary • Support documents should be saved to provide explanation of reasoning behind budget; may help resolve issues that arise during budget review & may assist in preparation of future budgets • Many hotels refine their budgets as they progress through the year: reforecasting is normally suggested when actual operating results start to vary significantly from budget • Significant variations may indicate that conditions have changed since budget was first prepared
- 25. Evaluating Front Office Operations Evaluating results is management function; without evaluation, managers will not know attainment of planned goals FOM should evaluate results of department activities daily, monthly, quarterly, & yearly basis Tools use to evaluate success of operations include: daily report of operations, occupancy ratios, rooms revenue analysis, income statement, rooms schedule, rooms division budget reports, operating ratios, & ratio standards
- 26. Evaluating Front Office Operations The Daily Operations Report Occupancy Ratios Room Revenue Analysis The Hotel Income Statement The Rooms Schedule Rooms Division Budget Report Operating Ratios Ratio Standards
- 27. Evaluating Front Office Operations Daily Operations Report • Report of operations is also known as manager’s report, daily report, daily revenue report • Summarizes hotel’s financial activities during 24 hours • Provides means of reconciling cash, bank accounts, revenue, & accounts receivable • Serves as posting reference for accounting journals & provides data that must be input to link front & back office automated functions • Structured to meet needs of individual properties • Copies are usually distributed to GM & department/ division managers
- 28. Evaluating Front Office Operations Occupancy Ratios • Measure effectiveness of front office & reservations sales staffs in selling guestrooms • Include occupancy percentage, multiple occupancy, average daily rate, revenue per available room, revenue per available customer, & average rate per guest • Front office system typically generates occupied rooms data & calculates occupancy ratios for FOM to review
- 29. Evaluating Front Office Operations Occupancy Percentage • Commonly used operating ratio in front office is occupancy % • Occupancy % relates number of rooms sold to number of rooms available during specific period of time • Hotels use number of rooms sold to calculate occupancy percentage, while others use number of rooms occupied Multiple occupancy • Forecast F&B revenue, indicate clean linen requirements, & analyze average daily room rates • This ratio is also referred to as double occupancy ratio • Multiple occupancy can be calculated by determining multiple occupancy percentage or by determining average number of guests per room sold
- 30. Evaluating Front Office Operations Average Daily Rate • FOM calculate average daily rate even though rates within property can vary significantly depending on type of room, type of guest, day of week, & season • Hotels include complimentary rooms when calculating average daily rate, to show their effect on rate Revenue per Available Room • Important hotel statistics, provides statistical benchmark for comparison with similar hotels • Divides total room revenue of hotel by number of available rooms
- 31. Evaluating Front Office Operations Revenue per Available Customer • RevPAC divides total revenue of hotel by number of guests staying overnight • Hotels with high volumes of multiple occupancy, RevPAC is especially important, since it provides average room rate spending figure per guest Average Rate per Guest • Average rate per guest is of special interest to resort hotels • All guests are included in this calculation; some hotels include children
- 32. Evaluating Front Office Operations Room Revenue Analysis • Room variance report lists rooms that have been sold at other than their rack rates • Managers use room variance report to review use of special rates to determine whether staff has followed policies & procedures • FOM evaluates sales effectiveness of front office staff is to generate yield statistic, which is actual rooms revenue as % of potential rooms revenue Yield Statistic • Potential rooms revenue is amount of rooms revenue that can be generated is all rooms in hotel are sold at their rack rate on given day, week, month, or year
- 33. Evaluating Front Office Operations Hotel Income Statement • Provides important financial information about results of hotel operations for given period of time • Reveals amount of net income for given period, so it is important financial statements management uses to evaluate hotel’s success • Rooms division information appears on first line, under category of operated departments • Amount of income generated by rooms division is determined by subtracting “payroll & related expenses” & other expenses from amount of net revenue produced by rooms division • Payroll expenses charged to rooms division may include those associated with FOM, front desk agents, reservations agents, housekeepers, & uniformed service staff • Rooms division is not merchandising facility, there is no “cost of sales” to subtract from net revenue amount • Revenue generated by rooms division is usually largest single amount produced by revenue centers within hotel
- 34. Evaluating Front Office Operations Rooms Schedule • Income statement contains summary; separate departmental income statements prepared by revenue center, called “schedules,” provide details • Accounting division, not front office accounting staff, usually prepares rooms schedule • By carefully reviewing rooms schedule, FOM may be able to develop action plans to improve division’s financial condition & services
- 35. Evaluating Front Office Operations Rooms Division Budget Report • Hotel’s accounting division prepares monthly budget reports that compare actual revenue & expense figures with budgeted amounts • Budget reports can provide timely information for evaluating front office • Budget report should include both monthly & year-to-date variances for all • % variances are determined by dividing dollar variance by budgeted amount • Dollar & % variances are shown because either type of variance alone may not indicate significance of variances reported • It should be expected that actual results will differ somewhat from budgeted amounts, since budgeting is not perfect science • Significant variances from budget should be investigated by management
- 36. Evaluating Front Office Operations Operating Ratio • Assist managers in evaluating success of front office operations • Dividing payroll & related expenses by division’s net room revenue yields one of most frequently analyzed areas of front office operations: labor cost • Operating ratios should be compared against standards such as budgeted percentages; any significant differences should be investigated
- 37. Evaluating Front Office Operations Operating Standards • Operating ratios are meaningful when compared against useful criteria such as planned ratio goals, historical ratios, & industry averages • Ratios are best compared against planned ratio goals • Industry averages can be found in publications prepared by national accounting firms & trade associations serving hospitality industry • Operating ratios are only indicators; they do not solve or reveal source of problem(s) • At best, when ratios vary significantly from planned goals, previous results, or industry averages, they are indicating that problems may exist • More analysis & more investigation are usually necessary
- 38. Planning for Disaster Power Failures Automated System Failure Criminal Activities Severe Weather Flood, Rain Fire Terrorism
- 39. Planning for Disaster Disaster planning is often overlooked by managers; nevertheless, it is important for managers to have disaster plan in place & make sure that staff is familiar Types of disasters to consider, from power failures to acts of terrorism It is impossible to plan for every conceivable disaster, but plans should be in place for deal with those that can be foreseen Given today’s level of hotel automation, it is important for disaster plans to state what corrective actions front office need to take if essential technology applications fail FOM should prepare for possible criminal activity
- 40. Planning for Disaster Severe weather, floods, & other natural disasters require special planning to deal with Natural disaster plans should be coordinated with local & regional disaster planning agencies Fire, terrorism attack, or others may require complete hotel evacuation & shutdown of operations Staff must know how to conduct themselves in situations & what their responsibilities are in assisting guests & securing hotel Managers should periodically review & update disaster plans for its effectiveness, disaster training regularly scheduled & ongoing activity
- 41. ? Any Questions