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Hospitality Management:
Hospitality management is both a field of work and a field of study. In the work sense, it refer...
 Apply strategic management principles to hospitality business operations in maximizing the
accomplishment of organizat...
 Instilling authenticity of local culture into brand standards remains a challenge.
4. Financial Viability
There is a s...
9. Safety and Security
The threat of terrorist attack remains a major concern for the industry. Hotel operators must mak...
in luring and retaining staff.
c. Cost of maintaining brand standards: Many brands are changing brand standards, and "ra...
There is broad concern among travelers about protecting their own safety. These concerns range from the
healthfulness of...
toward the brands that may impact deal structures. Major brand companies continue to isolate consumer
segments and stren...
Boutique Hotels
Hotels like the Ritz Carlton and Four Seasons are known as traditional players in the hospitality sector...
would stand to benefit extended patronage in 2009. Take the example of domestic Chardonnay which traded
over 6% across 5...
products. They may be used to run other software applications such as travel policy software, and fare auditing
Industry database for the period 1996 though estimates for 2006.
Variable Equals Controllable
A large portion of rooms ...
Due to the popularity of the “value-add” represented by free food and beverage, we have observed an
increasing number o...
Health and safety
 Occupational safety and health, including compliance with local, state, and national laws and agenc...
 Emergency lighting
 Fire protection systems
 Help desk
 Disabled Access
 Cleaning
 Waste management
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Hospitality management is both a field of work and a field of study


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Hospitality management is both a field of work and a field of study

  1. 1. 1 Hospitality Management: Hospitality management is both a field of work and a field of study. In the work sense, it refers to management of hotels, restaurants, travel agencies, and other institutions in the hospitality industry. As a field of study, it refers to the study of the hospitality industry and its management needs. People who are interested in careers in hospitality management may opt to pursue it as a field of study so that they can start their careers on solid footing. The hospitality industry is vast and very diverse. Any time people travel, stay in a hotel, eat out, go to the movies, and engage in similar activities, they are patronizing establishments in the hospitality industry. The management of such establishments is very challenging, as managers need to be flexible enough to anticipate and meet a wide variety of needs. They must also handle tasks such as training employees, handling staff, setting standards, and so forth. Objectives: 1. To provide an educational foundation for a range of administrative and management careers in the hospitality industry. 2. To develop in the student, the ability to think logically, communicate clearly develop an eye for detail, cost consciousness and optimum utilization of time energy and materials 3. To equip the student with a thorough understanding of the administrative production skills required. Maintenance of discipline, neat & pleasant appearance, and high level of personal and job hygiene. 4. To provide skills to manage in a computerized environment and a rapidly changing IT Environment and its effect in the hospitality environment. Also to provide work ethics and adequate work habits essential for working in a team. 5. To develop in the students skills and personal qualities of general importance and applicability in all aspects of working life. 6. To acquire skill for future management roles of various types of hospitality units and being aware & conscious of social responsibilities that an organization owes to its employees & clients. LEARNING OBJECTIVES School of Hospitality graduates will have, as a foundation, business-based knowledge that is fundamental for management-level industry positions. With this foundation, students will be able to:  Explain the different hospitality segments and functional areas and how these components work together for the benefit of internal and external guests and customers in providing quality service.  Define and explain food production terms and principles, including food safety and sanitations practices, apply key principles in operating foodservice establishments, and evaluate and critique the effectiveness of such applications.  Evaluate, analyze and determine the application of human resource theories and principles in maximizing employee performance, employee retention and customer (internal and external) service.  Evaluate, analyze and determine the application of service marketing theories and principles in promoting hospitality businesses.  Demonstrate knowledge of various facets of hospitality law aimed at minimizing hospitality business liabilities.  Apply knowledge of budgeting, cost control and financial analysis in analyzing and making recommendations for maximizing hospitality business profits.
  2. 2. 2  Apply strategic management principles to hospitality business operations in maximizing the accomplishment of organizational goals and objectives.  Explain the application of technology in various hospitality industry segments and in different organizational functional areas.  Discuss ethical principles and describe the application in hospitality working environments.  Evaluate the functioning of work teams and analyze the effectiveness of team performance.  Apply problem-solving and critical thinking skills and evaluate the effectiveness of business outcomes in hospitality businesses.  It is also acknowledged that interpersonal, communication and professional skills are vitally important in the hospitality industry. The development of such skills is incorporated into the program through course content, hospitality business visitations, real-life team projects in a culturally diverse learning environment, contact with industry leaders as guest lecturers and industry work experience. The third category of programmatic learning objectives includes students selecting an industry segment to gain specialized knowledge. These segments, based on the curriculum, include hotel management, restaurant/foodservice management, meeting and tradeshow management, event planning, private club management and soon to be added venue management and aviation management. Students take their elective courses in the areas of specialization and are urged to combine courses for an "industry area of focus." The required work experience should further support the student's area of focus. Top Ten Issues & Challenges 1. Global Uncertainty While the global hospitality industry continues to recover following the effects of the terrorist attacks of September 11, 2001, SARS, the war on terrorism in Afghanistan, and the war in Iraq, Global Uncertainty remains a major concern. Terror attacks are the most direct example of global uncertainty, however, there are other areas of concern such as geopolitical relations, governmental travel restrictions and currency exchange rates. The industry needs to take a proactive approach in addressing these issues and their potential impact. 2. Human Resources Issues Human Resources is an area that is growing in importance. As the industry continues to recover, it needs to focus on its employees and their roles as service providers. Increasing demand requires increased staffing levels at a time when the labor pool is shrinking. To address this issue, the industry must attempt to work with the unions as allies, devote more time and money to recruitment and training and educate politicians as to the impact of governmental economic and immigration policy on the industry. 3. Branding Issues The society notes the following Brand Issues facing the industry in 2005:  A proliferation of brands and branded hotels worldwide that is leading to the commoditization of the hotel product.  Increased competition between the brands is leading to amenity creep, and diverging interests between owners and brands.
  3. 3. 3  Instilling authenticity of local culture into brand standards remains a challenge. 4. Financial Viability There is a significant amount of capital currently flowing into the hospitality industry. Not only are investors betting on a strong recovery, but also in some cases they are not performing realistic projections and investment analyses. Should expectations not materialize, then sub-par returns could damage the overall financial credibility of the lodging industry. 5. Technology The hospitality industry must do a better job of managing technology and addressing the challenges posed by new and changing technology. Specifically, the industry must align technology investment with business objectives, address aging and inadequate infrastructure (at both the corporate and the property levels); and learn to better utilize technology in marketing to guests, training employees, yield management, and meeting customer requirements. 6. Customer Issues Customer issues present a challenge to the industry in several ways:  Increasing loss of control over the customer - The use of the Internet, homogenization of the hotel product and increased corporate oversight has reduced the amount of control that operators have over the customer.  Changes in the customer - Hotel customers are changing due to demographics (the aging of the baby boomer generation) and due to lower transportation costs that promote travel.  Changes in customer expectations - Customer expectations are changing as consumers become more sophisticated and better educated. 7. Operating Cost Creep While the industry has experienced strong revenue growth this past year, with revenues expected to approach 2000 levels, bottom line performance has eroded dramatically (i.e. over 30%) since 2000, due to escalating expenses. In recent years “non-controllable” costs such as utilities, insurance and government regulation have increased significantly. These costs along with interest rates are expected to increase in 2005. In addition, there is the potential for increases in controllable costs such as payroll, staffing, brand requirements, and amenity creep. The industry must be cognizant of these increases, and take steps to address them. 8. Supply Issues There are three supply related issues facing the industry:  Increasing alternative forms of supply such as time-share, fractional ownership, second homes, camping, cruising and water parks.  “Under demolished” (functionally obsolete) supply is, and will remain a challenge for owners and operators, particularly in Europe where new construction is expensive and difficult.  In the United States, the use of public funds to develop hotels and resorts presents a challenge for existing private owners and operators.
  4. 4. 4 9. Safety and Security The threat of terrorist attack remains a major concern for the industry. Hotel operators must make every effort to protect their guests while encouraging tourism. 10. (Tie) Distribution Channel Management In 2005, Distribution Channel Management as an issue must be viewed in a much broader context than in the past. Whereas most hospitality organizations have devoted extraordinary efforts to managing electronic channels, a broad-based distribution management strategy now must consider the following challenges. In 2005 it is expected that price sensitivity will continue to drive consumer buying behavior in virtually every segment. Pricing structures will need to demonstrate price integrity across all distribution channels—not just electronic ones. The potential challenges are formidable: lead times to booking continue to shrink; the move toward real time inventory becomes paramount, impacting technology, product categories, segments and channels; and the desire to track and manage every revenue stream in every channel means that distribution channel management transitions to a focus on the most profitable customer. Top Ten Global Issues & Challenges in the Hospitality Industry The International Society of Hospitality Consultants (ISHC) announces the Top Ten Global Issues & Challenges in the Hospitality Industry for 2006. At the recent ISHC Annual Conference held in San Diego, California, ISHC Members participated in a series of roundtable discussions to identify the ISHC Top Ten Global Issues and Challenges in the Hospitality Industry. While there were many issues discussed, in the final voting the membership identified the following top ten issues as the ones that can be expected to potentially have the greatest impact on the industry: 1. Changing Labor Conditions: The hospitality industry faces labour and human resource challenges including the compression or shrinking of the labor force, union issues and escalating health care and benefit costs among others. Compression of Labor force - the traditional labor force is shrinking as a result of changing demographics. Slowing population growth rates, an aging population, and fewer persons in the working-age group, have all contributed to the shrinking labor supply. 2. Escalating Operating Costs: There is concern that operating expenses will escalate at a greater rate than income, potentially eroding the bottom line. Operators need to monitor the following: a. Energy Costs: Global increases in demand and the natural disasters in the Gulf States have stretched energy supplies. Prices increased in 2005 and the forecast is for higher prices in 2006. Energy management/conservation programs and employee awareness are essential to mitigate exposure to dramatically escalating energy costs. Higher insurance costs are a concern, particularly due to escalating premium on account of natural disasters and terrorism. b. Labour Costs: These are rising globally due to shortages of good skilled manpower and competitive forces
  5. 5. 5 in luring and retaining staff. c. Cost of maintaining brand standards: Many brands are changing brand standards, and "raising the bar" via increased services and/or amenities in an attempt to gain a competitive edge in the marketplace which has resulted in increases in operating costs for many hotels. 3. Impact of Rising Energy Costs on Consumer Travel & Hotel Demand: A decline in all types of consumer travel may be possible as higher energy costs take a bigger bite out of personal and corporate budgets, with travel expenditures typically one of the first discretionary items to be reduced or eliminated. On a positive note, energy's continuing threat to the industry will undoubtedly force industry execs to be more creative, or at least more conservative, in its use and consumption. Participants at all industry levels will need to be more efficient with limited/dwindling supplies, and/or find alternative ways of delivering similar service to their guests without impacting their quality of stay. "Greening" of hotel operations may actually become the norm as opposed to a discretionary program as both consumers and hotels of necessity become more focused on energy conservation. 4. Escalating Renovation and Construction Costs: Increases in renovation and construction costs are resulting in escalating capital reinvestment exposure for many existing hotels and increased capital requirements for new construction. Many branded companies are increasingly demanding improvements and upgrades in the physical condition of hotels and more stringent adherence to brand standards to remain competitive, resulting in escalating capital reinvestment exposure for their hotels. With improved market conditions, developers continue to look for additional opportunities to build hotels. Yet higher costs for construction will be one mitigating factor to new development. There are several factors that will impact the financial feasibility of new construction including: 1) rapid escalation in the price of building materials; 2) higher energy costs and 3) rising interest costs. Most major hotel brands are taking a hard line on improving brand standards and are requiring more costly hotel furnishings and materials. As a result, the cost to build hotels is expected to increase at a pace that is greater then anticipated revenue increases. (In India the escalating cost of land for hotels in some cities will be a major factor in 2006). The good news is that as higher costs hamper new development, the existing inventory of hotels can benefit by increasing their tariffs. 5. Havoc from Recent Natural Disasters: Whether a long-term trend from global warming or part of a long-term cycle, natural disasters appear to have become more frequent in recent years. The implications are profound, especially since many affected areas are heavily reliant on tourism for economic vitality. The potential threat of avian flu could have much broader impact than SARS had. New virus strains and other diseases resistant to antibiotics may be on the horizon. Travelers are increasingly choosing destinations in part on the perceived level of risk. Some locations will be winners, while others may need to diversify their economies to supplement tourism. A secondary effect is the post-event consequences of natural disasters. Some destinations will not be able to accommodate travelers for years to come. Resources that go into rebuilding local infrastructure drain funds that might otherwise go toward economic growth. 6. Growing Global Uncertainly About Safety and Security:
  6. 6. 6 There is broad concern among travelers about protecting their own safety. These concerns range from the healthfulness of airplane ventilation to vulnerability to terrorism. Governments are increasingly trying to manage risks, sometimes impacting a country's tourism infrastructure, such as when restrictive visitation policies are enacted. The ongoing turmoil in the Middle East, the coordinated bus bombings in London, and various other events around the world has caused travelers to rethink traditional assumptions regarding leisure travel. Some remote and non-traditional destinations may find tourism increasing as a result of those places having the right mix of attributes currently in demand by tourists. 7. Evolving Customer Expectations: The ability to satisfy and anticipate evolving customer needs continues to be a significant priority. Specifically, customers are increasingly sophisticated in their use of technology to research, select and purchase lodging. Furthermore, customers are resisting a "chain mentality" and there is true opportunity in creating unique and customized experiences, while minding the "bottom line". As a result, marketing approaches will need to be adapted and updated to effectively reach the customer. In addition, true differentiation is increasingly difficult to achieve in the luxury market as it has become "mainstream". 8. Condo-hotels growing rapidly: The recent surge in condo-hotels and alternative ownership has brought on a whole new set of risks and challenges for developers, lenders, unit owners and management. Alternative ownership has presented opportunities for developers, in particular by substantially reducing their financial exposure in developing projects. There are, however, looming issues from developer representations in connection with the sale of units to product/unit warranties and/or latent defects that represent potential liability and exposure for developers down the road. From the customer perspective it remains to be seen whether individual unit owner expectations will be met over time. 9. Accelerating Change and Merging of Technologies: Hospitality systems and their interfaces are rapidly moving to Internet-based technology, which allows dramatically easier and more flexible integration and hence more complete guest/operational data. Many hotel operators are moving to take full advantage of this opportunity to streamline their operations, but adoption is frequently hampered by older systems and outdated infrastructure. The investment required to upgrade is significant, but the full benefits of this change cannot be realized without it. This highlights the industry's continuing need for education, both of management companies in how to recognize and quantify the business benefits of properly integrated technology, and of the end users in using their systems most efficiently. Most current systems are under-utilized, a situation not helped by the industry's reluctance to invest in regular refresher training for the users. Full optimization of the operation requires effective systems integration and adoption of the new technology. 10. Increasing Consolidation of Hotel Brands / Companies: As brands consolidate and proliferate in their market reach owners are finding it more difficult to select a brand that is not already represented in their marketplace or one that is not influenced by territorial encroachment issues. As this trend evolves owners and management companies are finding a shift in the negotiation power
  7. 7. 7 toward the brands that may impact deal structures. Major brand companies continue to isolate consumer segments and strengthen and/or create specific brand niches to address micro-markets while at the same time making it more difficult for the consumer to truly understand the 'inter' and 'intra' brand difference. What makes sense to the hotel developer or the brand becomes confusing to the customer thus impacting both consumer pricing and commoditizing hotel products. Public hotel companies in search of shareholder value are poised to create conditions for additional consolidation, not unlike the online world where 90% of online hotel inventory is managed by only a handful of companies. Coping with global issues and trends: With consumer confidence at historical lows and weak economic fundamentals, the global lodging industry in 2009 suffered its most severe demand and rate contraction since the Great Depression. Now that we have entered a new decade and the first signs of recovery are showing, companies are finding new and creative ways to enhance revenues, cut costs and position themselves for future growth. As hospitality executives continue to face a wave of challenges, we offer fundamental insights into today’s ever-changing environment and reveal key trends that will be top-of-mind this year. Discover more about:  The outlook for commercial real estate and the new face of commercial lending  The ways in which companies can differentiate themselves in today’s market  Measures companies can take to free up cash and position themselves for success  The reasons for the decline in global tourism and the future outlook on business and leisure travel  The challenges of financial reporting, including the debate around the merits of US Generally Accepted Accounting Principles (GAAP) standards, which embody specificity and “bright lines,” versus International Financial Reporting Standards (IFRS), which are principles-based and inherently more judgmental  The current transaction market, the appetite for hotel acquisitions and the outlook for distressed properties  The paradigm shift of real estate companies using IPOs to address capital requirements, reduce debt and take advantage of distressed investment opportunities  The outlook for the luxury hotel sector, upscale hotel REITS and investor sentiment  Mounting concerns that depleted reserves and the trajectory of economic recovery may require a significant number of restructurings to take place  Speculation over when the next new lodging cycle will take place and forecasts on the industry for the remainder of 2010  The New Year 2009 has begun amidst a lot of worries about global recession. For the hotel industry, this has been the worst of times, as most hotels around the world are struggling to tackle the problem of lowest occupancy rates. This is a first, since 1971. However, hoteliers are sure to devise creative and innovative ways to attract their guests and earn their trust once again. Inevitably, most luxury facilities in the hospitality sector would have to work doubly hard to demonstrate how unique and satisfying their offers would be so as to justify the greater expense. That’s why there is so much debate about innovative trends in the global hospitality sector. So, here’s a mixed bag of global trends that is sure to interest those who are keen to understand what’s in store for the global hospitality segment:
  8. 8. 8 Boutique Hotels Hotels like the Ritz Carlton and Four Seasons are known as traditional players in the hospitality sector but there is going to be a sure shift as late night disco clubs and techno grooves replace the boring Bach concerts that were a part of its lobby. Can you imagine these top hotels replacing their traditional uniformed staff? Well, ‘change with times’ is the buzzword in the hospitality industry right now. Energy Spa Terms such as ‘pranas’, ‘chakras’ and ‘grey cell boosters’ are widely searched. This indicates the growing preference for the growth of ‘energy medicine’ industry as part of the hospitality sector. This means that cleaning up the body’s energy will become a primary area of focus for spas that promote body-mind-spirit balance. Practitioners of such energy based healing traditions are going to be in great demand. Spa Finder statistics indicate that there are 2,300 Indian spas which actually generate $384 million as annual income. Spa trends across the globe are worth analyzing. Mini-treatments such as five minute chair massages are growing in popularity as guests are increasingly aware about stress reduction. So, hoteliers are keen to help their guests relax by offering spas that focus on transforming their tired energy into vibrant, dynamic energy by using the right techniques. Eco-friendly Hospitality Initiatives Going green is not just fashionable but necessary in today’s world of hospitality. Eco-friendly offerings are being ramped up top optimize waste reduction, water and energy conservation and environment friendly practices. Another hotel, Fairmont San Jose recycled over 8,000 points of telephone books and tons of cardboard. Another global giant in hospitality, Apex Hotels have a greater range of environment friendly initiatives such as follows: o Dual flush system to save water in toilets. o Recycling paper, cardboard, obsolete IT equipments, glass, and plastic. o Use local produce and organic materials. o Installation of windows that are energy efficient and improves overall thermal performance. o Replace old lifts with energy efficient lifts. o Building management can control temperatures across the building. o Installation of lighting arrangements that can save energy and comes with automatic dimmers as well as motion detectors. No Pet friendly Initiatives It is predicted that pet-friendly hotels will either abandon their friendly initiatives or be phased out. as hotels realize that dogs are not hotel-friendly. Rolling out the red carpet for guests and their pets is no longer the ‘in’ thing. Resurgence of Traditional Wines Traditional wine varieties are predicted to emerge as winners in pleasing guests’ who are not willing to compromise on taste or quality of wines. Therefore, makers of Chardonnay, Cabernet Sauvignon and Merlot
  9. 9. 9 would stand to benefit extended patronage in 2009. Take the example of domestic Chardonnay which traded over 6% across 52 weeks in food stores while Cabernet Sauvignon saw nearly 10% of growth in the same period. Pinot Noir showed up with 11% as growth rate while Gallo emerged as a clear leader with the Mirassou brand. Hospitality information system Hospitality information systems are mechanisms that deliver processed data to management to facilitate the decision-making process. Much of the information needed by management exists within the enterprise. Some is required to be maintained by law, and other data exists as a result of business transactions entered into by the enterprise. Some information exists within individuals and is not available without involving that person in the decision-making process. As the operation grows, hospitality information systems become more structured, requiring additional data production, sorting and processing. With the increased speed and capabilities of microcomputers, and the reduced cost of hardware and software, hospitality information systems are available to assist management in many ways. Centralised purchasing management systems are available to create purchase orders that can be immediately communicated to vendors. This system works best for multi-unit organisations. There are also products available to track inventory and to compute theoretical sales. These systems can automatically route requisitions and delivery worksheets. Systems for recording food and beverage sales continue to improve, offering not only sales tracking data but internal control features, such as remote printers at production stations giving authorisation to release inventory. Orders can be taken tableside by hand-held wands or touch screens, eliminating the need for servers to write down guest selections. In the area of telecommunications, hospitality information systems have proven to help enterprises generate additional revenue through facsimile machines, modem connections, conference calling and videoconferencing. As technology increases, this continues to be a growth area for the industry. Hospitality information systems provide entertainment to guestrooms through on demand movies, video game and videotape rentals, and premium channel selections. Security, a major concern in tourism, is another area where the systems have improved delivery of guest service through key cards, security cameras and motion detectors. Energy costs are also better managed with hospitality information systems by controlling heating and air conditioning. Front office and back office accounting procedures have been greatly enhanced by hospitality information systems. The most visible to the guest is the property management system which helps the check-in and check- out process and stores data on each guest. This, coupled with other sales software packages, allows management to maximise revenue through yield management. As the industry continues to increase its Internet participation through the development of home pages and web sites, there is an increasing worldwide exposure for global distribution of products and services. Although a problem in the past, secure electronic transactions are becoming more reliable given sophisticated encryption schemes for encoding and decoding proprietary data. Together, higher transmission speeds and increased reliability will create a much more feasible environment for cyber-tourism and virtual commerce. The most important information technology applications used by travel agencies are terminals to one or more of the global distribution systems. The terminals allow agents to research and book all types of tourism
  10. 10. 10 products. They may be used to run other software applications such as travel policy software, and fare auditing software. Travel agents also use back office software to process their accounting, commission tracking, customer information for marketing purposes and to produce reports. Government tourist offices are also using information technology to manage and market their destinations. Common applications include destination information systems, which are databases used to store comprehensive, updated information on facilities which are online to travel counsellors and major marketing offices in the destination's originating markets. Various software applications are also used to assist government offices in the collections and analysis of tourism statistics. Information is beginning to incorporate higher levels of intelligence and functioning. Expert systems and robotics are two applications of artificial intelligence that are being used in the tourism industry. For example, the airlines are operating expert systems for crew management, maintenance of aircraft and network design. Robotic technology is being experimented with in the foodservice sector. Virtual reality, which uses a variety of computer technologies to give an experience of a different reality, are being considered as a way of giving tourists a 'taste' of a vacation before they purchase it. Future computer systems in tourism are likely to incorporate more intelligence and be able to assist with higher level functions. Hotel and Rooms division Operation:  Outline the duties and responsibilities of key executives and department heads.  Draw an organizational chart of the rooms division of a hotel and identify the executive committee members.  Describe the main functions of the rooms division, front desk, and night auditor.  Describe property management systems and discuss yield management.  Calculate occupancy percentages, average daily rates, and actual percentages of potential rooms revenue.  Outline the importance of the reservations and guest services functions.  List the complexities and challenges of the concierge, housekeeping, and security/loss prevention departments. Rooms Division Operations: Controllable and Profitable A hot restaurant or trendy bar may provide some panache for a hotel - Golf courses and spas are fun to operate and certainly popular with guests; however when all is said and done, it is renting and servicing guests rooms that drives the revenues and profits of hotels. In 2006, guest room rental revenue averaged 68.0 percent of the total revenue earned by the typical U.S. hotel. This ratio ranged from 97.1 percent at limited-service properties to 52.6 percent at resorts. As for contribution to the bottom-line, the rooms department profit equaled 84 percent of the average hotel’s departmental income and 187 percent of the net operating income. Profitability is driven by revenue management and expense control. An abundant quantity of information is available for hotel owners and operators to study regarding rooms revenue. Daily, weekly, and monthly analysis is conducted by most every hotel in the country regarding the property’s share of occupancy, ADR, and RevPAR within its competitive market. In an effort to provide a better understanding of the expense side of the profit equation, we have examined rooms department expense data from our Trends in the Hotel
  11. 11. 11 Industry database for the period 1996 though estimates for 2006. Variable Equals Controllable A large portion of rooms department expenses can be classified as variable expenses. Variable expenses fluctuate in proportion to the volume of business. In the rooms department the variable measures of business are the number of rooms occupied, as well as the revenue received for renting the rooms. From 1996 through 2006, rooms department expenses averaged 25.8 percent of rooms revenue. This expense ratio ranged from a low of 24.9 percent in 1998 to a high of 27.9 percent in 2003. The tight range of this expense ratio is illustrative of the high degree to which expenses vary within this department. A look at the components of the rooms department expenses also indicates the degree to which costs will vary with the number of rooms rented, as well as the revenue earned. In 2006, salaries, wages, and employee benefits averaged 61.7 percent of the total department expenses. A minimum number of personnel need to be on hand every day. However, management can certainly adjust the staffing of desk clerks, bellman, room attendants, and laundry workers to be consistent with the volume of check-in/check-out activity, as well as the occupancy rate. Laundry, linen, and guest supplies add up to an average of 10.3 percent of departmental expense. These items are consumed and expensed in direct proportion to the number of rooms occupied. Other major costs within the rooms department are travel agent commissions and reservations expenses (13.7%). These expenses are highly variable since they are typically charged to the hotel as a percent of revenue. Limited Expense Growth The ability to control expenses has helped rooms department managers limit expense growth over the years. From 1996 to 2006, labor related costs within the rooms department grew at a compound annual rate of 2.9 percent. This is less than the 3.4 percent overall growth rate for total hotel labor costs during the same period. Concurrently, laundry, linen, and guest supplies increased just 2.7 percent. Further analysis of the labor data reveals that costs during this period have increased greater when measured on a per-available-room (PAR) basis versus a per-occupied-room (POR). This is especially true during the past three years when rooms department labor costs have increased an annual average of 6.5 percent on a PAR basis, as opposed to just 3.3 percent on a POR basis. We attribute this disparity to the high threshold of occupancy at most hotels that covers the fixed component of rooms labor, as well productivity enhancements in the procedures used to clean rooms and launder sheets, towels, and pillow cases. The two rooms department expense items exhibiting the greatest percentage growth during the past 10 years were travel agent commissions and reservations expense (5.3%), and the cost of offering complimentary food and beverage (7.9%). The growth in commissions and reservation expenses can be attributed to the increased use of “” wholesalers and reservation agents to sell rooms since 2001. As hotel companies continue to re-examine their distribution strategies and renegotiate contracts with the internet intermediaries, look for this expense to moderate.
  12. 12. 12 Due to the popularity of the “value-add” represented by free food and beverage, we have observed an increasing number of hotels beyond the limited-service and all-suite segments begin to offer complimentary breakfasts and cocktail receptions. For those properties that have historically provided these gratis offerings, national chain mandates have required an upgrade in the quality and quantity of the food and beverages served at their complimentary breakfasts, concierge floors, and cocktail receptions. Making money in the rooms department may be relatively easy compared to the other revenue generating departments of a hotel. However, while the day-to-day operations in this department may require less management attention, the profitability of the rooms department is critical to the overall financial success of the entire property. Application of Facility Management in Hospitality Industry: Facility management is an interdisciplinary field primarily devoted to the maintenance and care of commercial or institutional buildings, such as hospitals, hotels, office complexes, arenas, schools or convention centers. According to the International Facility Management Association (IFMA), it is "a profession that encompasses multiple disciplines to ensure functionality of the built environment by integrating people, place, processes and technology." The European facility management association, EuroFM, uses the EN15221 definition. The term facilities management is preferred in Australia, Canada, New Zealand, the United Kingdom and English-speaking businesses in several European countries. While in the United States, both facility management and facilities management are widely used. The definition of facility management, EN15221-1, provided by the European Committee for Standardisation (CEN) and ratified by BSI British Standards is, "(the) integration of processes within an organisation to maintain and develop the agreed services which support and improve the effectiveness of its primary activities." According to this European standard the scope of FM is 'Space & Infrastructure' (planning, design, workplace, construction, lease, occupancy, maintenance, furniture, cleaning, etc.) and 'People & Organisation'(catering, ICT, HRM, HS&S, accounting, marketing, hospitality, etc.). According to British standard BS 8536:2010 facility management is performed during the operational phase of a facility or building’s life cycle, which normally extends over many decades. It represents a continuous process of service provision to support the owner’s core business and one where improvement is sought on a continuous basis. The support of administrative facility management through information technology is identified as computer-aided facility management(CAFM). Role The discipline of facility management and the role of facility managers in particular are evolving to the extent that many managers have to operate at two levels: strategic-tactical and operational. In the former case, owners need to be informed about the potential impact of their decisions on the provision of space and services. In the latter, it is the role of a facility manager to ensure proper operation of all aspects of a building to create an optimal, safe and cost effective environment for the occupants to function. This is accomplished by managing some of the following activities.
  13. 13. 13 Health and safety  Occupational safety and health, including compliance with local, state, and national laws and agencies, such as the Occupational Safety and Health Administration (OSHA), the Environmental Protection Agency (EPA), and EN 54  Industrial hygiene, including indoor air quality  Display Screen Regulations  Safety Rules for Contractors  Risk Assessments  Control of Substances Hazardous to Health Fire safety  Fire protection and safety  Smoke/heat detectors  Fire alarm systems  Sprinkler systems  Fire extinguishers  Dry risers  Fire stopping  Fire Risk Assessments Security  Security  Access control  Security guarding  Intruder alert  CCTV Maintenance systems  Heating, ventilating, air conditioning and refrigeration  preventive and predictive maintenance  Corrective maintenance/Reactive repairs  Building automation systems  Building fabric and decorative  Grounds maintenance and horticulture  Computerized maintenance management system Periodic statutory testing and inspections  Lifting equipment  Work equipment  Legionella  Pressure systems  Asbestos  Mansafe systems (window cleaning, roof access, etc.)  Electrical portable appliances and fixed wiring  Lightning conductors
  14. 14. 14  Emergency lighting  Fire protection systems Operational  Help desk  Disabled Access  Cleaning  Waste management  Environmental Issues  Reception  Meeting room management  Mail Room  Photocopying  Vending  Office space planning, layout, and furniture placement  Car Parking  Specifying, tendering and contracts' negotiation  Pest control  Daily inspection of escape routes and fire exits Commercial property management  Lease Negotiations Business continuity planning  Business continuity planning  Disaster recovery  Emergency procedures