Principles of Management of Hospitality Firms 2024/2025 PDF

PRINCIPLES OF MANAGEMENT OF HOSPITALITY FIRMS ANTHONY LA SALANDRA | ACADEMIC YEAR 2024/2025 GUEST LECTURE : GINO MARCHIONNA, FOUNDER, TOURISMORE in partnership with  17 HOTEL DISTRIBUTION LA SALANDRA | 2024-2025 a d...

PRINCIPLES OF MANAGEMENT OF HOSPITALITY FIRMS ANTHONY LA SALANDRA | ACADEMIC YEAR 2024/2025 GUEST LECTURE : GINO MARCHIONNA, FOUNDER, TOURISMORE in partnership with  17 HOTEL DISTRIBUTION LA SALANDRA | 2024-2025 a direct introduction to hospitality in keywords  30 KEYWORDS PART 1 19 When a guest is within 15 feet their presence should be acknowledged through some means whether a smile or head nod. 15/5 rule Similarly, when a guest is within 5 feet they should be greeted in an appropriate manner whether that be a “hello”, “good morning”, or “good evening.” LA SALANDRA | 2024-2025  30 KEYWORDS PART 1 20 CRM CRM Customer Relationship Management PMS PMS Property Management System RMS RMS Revenue Management System LA SALANDRA | 2024-2025  30 KEYWORDS PART 1 21 DOC DOC. Director of Catering DOSM DOSM. Director of Sales and Marketing FOH. Front of House (All guest-facing FOH staff and areas of a hotel) FOM FOM. Front Office Manager LA SALANDRA | 2024-2025  30 KEYWORDS PART 1 22 FIT Free and Independent Traveller LA SALANDRA | 2024-2025  30 KEYWORDS PART 1 23 MOM MOM. Month on Month MTD MTD. Month to Date YOY YOY. Year on Year YTD. Year to Date YTD LA SALANDRA | 2024-2025  PART 2 a direct introduction to hospitality in keywords  30 KEYWORDS PART 1 25 Average Room Rate (ARR) Average Daily Rate (ADR) ADR/ARR Formula to Calculate Total Room Revenue Total Rooms Sold LA SALANDRA | 2024-2025  30 KEYWORDS PART 1 26 RevPAR (revenue per available room) 2 formulas to calculate RevPAR Room Revenue Number of rooms available ADR Occupancy Rate LA SALANDRA | 2024-2025  30 KEYWORDS PART 1 27 THE IMPORTANCE ”…The ratio of a firm’s outputs to its inputs. It measures the efficiency with which a firm’s managers employ it resources. The higher the ratio, RevPAR the more efficient the firm”. James R. Brown, Chekitan Dev, Cornell University School of Hotel Administration, Looking Beyond RevPAR: Productivity Consequences of Hotel Strategies, April 1999 LA SALANDRA | 2024-2025  30 KEYWORDS PART 1 28 EXAMPLE HOTEL FOSCARI STATS Total Revenue > 3,150,000$ Consid. Period > 90 days Numb. Rooms > 500 RevPAR ADR > 100$ Avg. Occ. Rate > 70% LA SALANDRA | 2024-2025  30 KEYWORDS PART 1 29 RevPAR LA SALANDRA | 2024-2025  30 KEYWORDS PART 1 30 RevPAR THE LIMIT LA SALANDRA | 2024-2025  30 KEYWORDS PART 1 31 THE LIMIT “When they talk RevPAR, they talk only room revenue - my hotels are good enough that our customers spend a lot of money in our restaurants and our RevPAR shops, not just in our rooms. I like to maximize revenue and dollar profits, not just room-profit percentage.” Horst Schulze, former president of the Ritz-Carlton Hotel Company LA SALANDRA | 2024-2025  30 KEYWORDS PART 1 32 WHO’S GOT A BETTER REVPAR? Total Revenue > 150,000$ Consid. Period > 30 days RevPAR Total Revenue > 660,000$ Consid. Period > 30 days LA SALANDRA | 2024-2025  30 KEYWORDS PART 1 33 WHO’S GOT A BETTER REVPAR? Total Revenue > 150,000$ Consid. Period > 30 days Numb. Rooms > 50 RevPAR ADR > 200$ Avg. Occ. Rate > 50% Total Revenue > 660,000$ Consid. Period > 30 days Numb. Rooms > 200 ADR > 110$ Avg. Occ. Rate > 100% LA SALANDRA | 2024-2025  30 KEYWORDS PART 2 34 Fluctuations of demand and supply in the tourism industry, caused by temporary movement of people due to factors such as climate conditions, SEASONALITY public and school holidays. Generates low peak and high peak seasons Both a temporal and spatial issue, meaning that certain regions are facing an overuse of tourist’s facilities at a certain period of the year. LA SALANDRA | 2024-2025  30 KEYWORDS PART 2 35 Positive or negative effects generated/imposed from the economic exchanges between two parties to unrelated third parties. EXTERNALITY For example, pollution generated from the operations of a firm to meet customer demand for hospitality services is a negative externality. This is because the environment and the health of other community members are being adversely affected. LA SALANDRA | 2024-2025  30 KEYWORDS PART 2 36 DMC DMC Destinarion Management Company DMO DMO Destination Management Organisation LA SALANDRA | 2024-2025  30 KEYWORDS PART 2 37 PARITY RATE  Under certain conditions, a travel supplier, such as a hotel, keeps the same price across all different distribution channels. LA SALANDRA | 2024-2025  38  Price of a good or service is set so that total revenue simply covers total variable (operational) costs BREAK-EVEN at a certain level of output. In principle, firms use break-even pricing as an important PRICING  reference to determine the lowest price that they would charge.  For instance, when tourism business is slow in certain periods of time, or declining for a short period of time. Break-even pricing would allow operations to continue without additional loss from fixed business expenditures. LA SALANDRA | 2024-2025  30 KEYWORDS PART 2 39 “...something that functions in a supplementary or supporting role.”  Food - Room service, on-site restaurants, restaurant reservations.  Beverage- The hotel bar or minibar ANCILLARIES  Entertainment- Tickets to events including live sports, concerts, and theater  Tours and activities - Guided tours, day trips, and tickets to local attractions  Upgrades- Upgraded hotel rooms or access to special VIP lounges  Retail- Purchases made from on-site retail establishments like a gift shop  On-site services- Access to the hotel spa, golf, or fitness service LA SALANDRA | 2024-2025  30 KEYWORDS PART 2 40  EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AND AMORTIZATION EBIDTA  EBITDA, or earnings before interest, taxes, depreciation, and amortization, is an alternate measure of profitability to net income.  By stripping out the non-cash depreciation and amortization expense as well as taxes and debt costs dependent on the capital structure, EBITDA attempts to represent cash profit generated by the company’s operations.  NOTE >>> it omits capital costs LA SALANDRA | 2024-2025  30 KEYWORDS PART 2 41 CASH FLOW IS THE MOVEMENT OF MONEY IN AND OUT OF A COMPANY CASH FLOW Businesses take in money from sales as revenues and spend money on expenses. Typically categorized as cash flows from operations, investing, and financing. It is essential for assessing a company’s liquidity, flexibility, and overall financial performance. LA SALANDRA | 2024-2025  30 KEYWORDS PART 2 42 CApital EXpenditure Funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment. CapEx is often used to undertake new projects CAPEX or investments by a company. Making capital expenditures on fixed assets can include repairing the hotel roof (if the useful life of the roof is extended), purchasing a piece of equipment, or building a new gym. This type of financial outlay is made by companies to increase the scope of their operations or add some future economic benefit to the operation. NOTE > It is opposite to operating expenses (OpEx) shorter-term expenses used for the day-to-day operations of a business. LA SALANDRA | 2024-2025 PRINCIPLES OF MANAGEMENT OF HOSPITALITY FIRMS ANTHONY LA SALANDRA ACADEMIC YEAR 2024/2025 in partnership with  FIRST OPTIONAL ASSIGMENT  WHICH ARE THE MOST INTERESTING HOTEL BRANDS IN ITALY ? REVENUE ? NUMBER OF ROOMS ? SPECIALIZATION  HOW ? SEND ME BEFORE NEXT MONDAY VIA E-MAIL 1-2 SLIDE WITH A CASE BRAND. CASES SHOULD INCLUDE :  MAIN VARIABLES TO UNDERSTAND THEM.  RELEVANT HIGHLIGHTS / NEWS  WHY THE CASE IS INTERESTING  I’LL CHOSE 3 CASES AND THE AUTHORS WILL BE PRESENTING THEM AT THE BEGINNING OF CLASS ON TUESDAY LA SALANDRA | 2024-2025  SECOND OPTIONAL ASSIGMENT  SWOT ANALYSIS  HOW ? SEND ME WITHIN MONDAY 13 VIA E-MAIL 1 SLIDE IN JPG FORMAT  FRANCHISING /vs/ FAMILY OWNED HOTEL /vs/ CHAIN LA SALANDRA | 2023  PART 3 a direct introduction to hospitality in keywords  30 KEYWORDS PART 3 47 It refers to an accounting method used to allocate the cost of a tangible or physical asset over its useful life. Companies don't have to account for them entirely in the year the assets are purchased, the DEPRECIATION immediate cost of ownership is significantly reduced Depreciation represents how much of an asset's value has been used. It allows companies to earn revenue from the assets they own by paying for them over a certain period of time. NOTE > Similar to Amortization in terms of book value of loans or other intangible assets. LA SALANDRA | 2024-2025  30 KEYWORDS PART 3 48  Real estate is defined as the land and any permanent structures, like a home, or improvements attached to the land, whether natural or man-made.  Real estate is a form of real property.  It differs from personal property, which is not permanently REAL attached to the land, such as vehicles, boats, jewelry, furniture, and equipment ESTATE  There are 5 main categories of real estate which include residential, commercial, industrial, raw land, and special use (gov. buildinfs, parks, schools).  Once land is improved, the total capital and labor used to build the improvement represent a sizable fixed investment. though a building can be razed, improvements like drainage, electricity, water and sewer systems tend to be permanent.  Real property includes the land and additions to the land plus the rights inherent to its ownership and usage. LA SALANDRA | 2024-2025  30 KEYWORDS PART 3 49  Return on investment (ROI) is a performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of a number of different ROI investments. ROI tries to directly measure the amount of return on a particular investment, relative to the investment’s cost.  To calculate ROI, the benefit (or return) of an investment is divided by the cost of the investment.  The result is expressed as a percentage or a ratio. LA SALANDRA | 2024-2025  30 KEYWORDS PART 3 50  Elasticity is a measure of a variable's sensitivity to a change in another variable, most commonly this sensitivity is the change in quantity demanded relative to changes in other factors, such as price.  In business and economics, price elasticity refers to the degree to which individuals, consumers, or producers change their demand or the amount supplied in ELASTICITY response to price or income changes.  If demand for a good or service is relatively static even when the price changes, demand is said to be inelastic, and its coefficient of elasticity is less than 1.0  If elasticity = 0, then it is said to be 'perfectly' inelastic, meaning its demand will remain unchanged at any price.  Cross elasticity measures the change in demand for one good given price changes in a different, related good. LA SALANDRA | 2024-2025  30 KEYWORDS PART 3 51  Scarcity refers to a basic economics problem—the gap between limited resources and theoretically limitless wants.  This situation requires people to make decisions about how to allocate resources efficiently, in order to satisfy SCARCITY  basic needs and as many additional wants as possible. Any resource that has a non-zero cost to consume is scarce to some degree, but what matters in practice is relative scarcity. Scarcity is also referred to as "paucity.“ Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses. LA SALANDRA | 2024-2025