Hotel and Lodging Operations PDF

HOTEL AND LODGING OPERATIONS Organizational Structure in the Hotel & Lodging Industry, within the lodging industry, standard functions are handled by various departments in the hotel. The organizational structure of the hotel helps to organize activities and tasks in a logical and effective manner....

HOTEL AND LODGING OPERATIONS Organizational Structure in the Hotel & Lodging Industry, within the lodging industry, standard functions are handled by various departments in the hotel. The organizational structure of the hotel helps to organize activities and tasks in a logical and effective manner. Every hotel, whether it’s big or small, needs an organizational structure to carry out its daily operations. It is used to help divide tasks, specify the job for each department, and delegate authority within and among departments. Effective job specifications will increase work productivity and efficiency. Each hotel organizes workforce in different ways. Here shows a medium size hotel organizational structure. It was basically segmented into six divisions: finance, front office, human resources, food and beverage, sales and logistics. Financial The financial department’s role is to record financial transactions, prepare and interpret financial statements, and deal with cost accounting and cost control. Front Office The front office (room management) department handles customer service including front desk service, reservation, laundry, concierge, telephone, and housekeeping service. A hotel’s front office is where guests are greeted when they arrive, where they get registered and assigned to a room, and where they check out. It’s almost the most important department as it often offers contact with customers. Human Resources The human resources department is given the responsibility to handle employee recruitment, arrange staff training, make promotion and disciplinary decisions, and check staff attendance. Food & Beverage The food and beverage department is responsible for all of the dining rooms, restaurants, bars, kitchen, clean up services, etc. Here we basically divide F/B department into two parts: kitchen and restaurant. Kitchen department is responsible for food preparation including main food, dessert, side food, and beverage. Restaurant department role is to provide dining room operation, waiter service, food runner, and clean up service. Sales The responsibility for sales department is to sell the hotel facilities and services to individuals and groups. They sell rooms, food, beverage or special services such as massage and laundry to potential customers through advertising or direct contacts. Housekeeping An essential requirement, for both business and leisure travelers staying in limited-service or luxury properties, is that the guest room be clean. The essential department of housekeeping is as much a production department of a hotel as the front desk and bell staff is service departments. FORCES SHAPING THE HOTEL BUSINESS How Hotels get built? According to Michael Forrest Jones “Money Of course”. You have capital, or access to adequate (although not unlimited) capital and financing won't be a problem. Location- we want to make sure you're in the right town. But before we do even that, let's make sure you have the right kind of hotel in mind. Where the money comes from? Hotels are capital-intensive. Because most of the capital used in building a hotel—or buying one—is borrowed, it is not surprising that interest rates, availability of capital, taxation, and, in the international environment, exchange rates are all important considerations. The Hotel Business Cycle 1. Expansion – The early part of this phase is led by an upswing in the demand momentum while the new supply comparatively remains constrained. 2. Recession –This phase is characterized by declining capacity utilization and subsequently declining ARR. During the latter part of this phase many planned under construction projects are deferred temporarily and at times permanently. 3. Recovery – In this phase, the industry starts consolidating, this is marked by stabilization in ARR and capacity utilization, which see a gradual uptrend. Both demand growth and new supply remains subdued during this phase. COMPETITION IN A LODGING BUSINESS Fragmented Market The facts of the marketplace are that the ownership of hotel properties is spread among a wide number of individuals and corporations. The presence of national and regional hotel brands gives the appearance of a few dominant chains. Ownership in the hotel business, however, is not highly concentrated; rather, it is a highly fragmented market. A hotel brand or franchise has come to be called a “flag.” Although it is not as easy for a hotel to drop a franchise as it is to take down a flag, the analogy is compelling. Sometimes converting from a chain affiliation to becoming an independent is a voluntary move on the part of the hotel’s ownership. Sometimes, however, the chain drops its affiliation with the hotel for a number of reasons. It could be that the hotel’s owners did not pay the required fees to the chain. It may have involved the hotel not maintaining the chain’s standards of service or cleanliness. Franchise agreements between franchisors and franchisees stipulate in detail reasons for terminating the relationship on both the part of the chain and the ownership of the hotel. In a fragmented market, with many small firms seeking their own interests and survival, competition is much less predictable. When survival is at stake, as it often is in lodging, desperate measures taken by one or a few players can destabilize an entire market. Cyclical Market A second condition that shapes competition in lodging, is that lodging is a cyclical industry, one that has been characterized by periods of demand outpacing supply as well as supply surpassing demand. The immediate outlook for the industry depends, in large part, on where the industry is in the cycle. Generally, when overcapacity threatens an industry, pricing stability is undermined. Cost Structure A third critical competitive characteristic of the lodging business is that it has a low variable cost in relation to sales and a correspondingly high fixed cost. A low variable cost means that there is very little cost associated with the sale of one more room. The variable cost can be as low as $5 per rented room, ranging up to $15 or $20, while the corresponding room rate might range from $30 to $120. This large margin over costs makes it easy to cut prices and still show a profit—in the short run. The temptation to cut prices is particularly strong in periods where supply exceeds demand, occupancies and revenues fall, and the need to meet the burden of high fixed costs becomes more pressing. Securitization The growth in securitization in the industry by making capital is more readily available to developers, securitization makes overbuilding more of a threat. New sources of financing clearly increase the total financing available for purchase of hotels and bring an increased number of firms with deep pockets (i.e., well-financed firms) to the hotel business in all of its segments. Technological Revolution A final factor is the impact of technology on the hotel business. Technology and the change it brings cuts across all areas of the hotel business: improving service, facilitating control of costs, and heightening security, for example. As a condition of competition, however, we need to note that in the area of marketing, the technological revolution has fundamentally altered the way hotel rooms are offered for sale. The Internet has had a tremendous impact on the way hotels do business. THE MARKETING MIX IN LODGING Product For instance, includes both physical goods and services. It also involves characteristics that are present in the individual property, such as the guest rooms, the lobby, and the amenities, package, and services offered by a hotel. Price It refers not to some fixed rate but a price that varies with levels of demand and with customer groups served. Place It is referring to the location of an individual property, is a very important aspect of the lodging marketing mix, but the places where the hotel room is sold—for instance, travel agents and other travel intermediaries—is also extremely important. This latter aspect, we will find, is also a system characteristic in chains and other lodging groups. Promotion It refers to marketing communication, generally taken to include persuasive activities, such as advertising, sales promotion, and public relations. We also include here persuasive activities such as frequent-traveler programs and other individualized means to reward customers