UNDERSTANDING HOTEL ORGANIZATIONS. Organizational Chart Line and Staff Functions Business Forms Revenue Sources Profit and Costs. Contents. Like most service related organizations, hotels are divided between LINE functions and STAFF functions.
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Like most service related organizations, hotels are divided between LINE functions and STAFF functions
Line functions are the tasks assigned to employees that bring them in regular contact with guests.
Staff functions are those behind the scenes activities that support the line functions and have little contact with guests.
Human Resources Department
Engineering and Security
The owner has hired additional (non-family) personnel to help with the running of the property
You can expect to pay in the range of $90,000 to $150,000 in initial fees for a first-class hotel franchise like Hilton‘s Homewood Suites.
Additional costs typically include royalty fees, reservation fees, marketing fees, frequent traveler fees, and miscellaneous charges for items like training or commissions. These numbers are calculated assuming a 300-room hotel with 60% occupancy for the first year, so actual costs can vary. Total costs over ten years can run as high as $10 million or more.Franchise Costs/Benefits
Those with the best relationships with their franchisors reported gross operating profits per room (GOPAR) of $12,400, which translates to over $3.2 million per year in a 300 room hotel.
A revenue source is the result of a product or service a hotel makes available to guests for a price.
The sleeping room is the most profitable of all of the hotel’s products
e.g. 75 rooms sold of 100 rooms available
= 75% occupancy rateSleeping Rooms
1. Selling space for a specified period
2. Providing food and beverage service in these roomsMeeting/Function Space
The hotel sleeping room is the most profitable portion of all hotel products because of profit margin.
Room cost analysis looks at what it costs the hotel to keep a room running in relation to what it is sold for to the guest.Room Cost
ABC Hotel sells a room for an average of $150 per night. The cost incurred in preparing each room for sale are:
Debt service of owners $0.50
Management costs $2.75
Corporate obligations $2.00
Taxes, etc $2.50
Roomcost = Actual CostRoom Rate
= $ 31.00
Room Rate – Room Cost = ProfitRoom Cost Example
A common misconception in the hospitality industry is to consider food sales as profitable as room sales. This is not the case
Each night when a room goes unsold the hotel loses that opportunity to ever sell it again
Consider the following example:
Room Cost Room Rate Profit Margin
Sleeping Room $30.00 $150.00 $120.00
The daily maximum room profit potential is: $48,000 ($120x400)
$17,520,000 is the maximum potential room profit that ABC Hotel could make in a year. Each unoccupied room subtracts from that number. It is easy to understand why hotel operators focus so much attention on occupancy.Opportunity Cost Example
A captive audience are guests who are staying at the hotel who will utilise the outlet in the hotel.