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Ch. 3 The Lodging Industry

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  1. Ch. 3The Lodging Industry

  2. Understanding Lodging 3.1

  3. A Brief History of Lodging in the U.S.: Planes, Trains and Automobiles • Lodging industry in the U.S. has always been strongly influenced by changes in transportation. • As stagecoach routes were established in the mid-1600, coaching inns became popular • 1700s Americans started combining lodging with food • 1794 City Hotel in New York City, the first building in the U.S. designed specifically as a hotel. • From that point on, throughout the 1800s lodging properties began to flourish. • The Tremont House, the first of the grand hotels, was built in Boston in 1828. (First hotel to offer private rooms with locking doors)

  4. History Continued • 1825 invention of the railroad, inns, taverns, and foodservice facilities located near railway. • Near the turn of the century, Conrad Hilton, who was a banker in New Mexico, purchased is first hotel. • Other famous hotels were build during the early part of the twentieth century, including the Ritz Carlton in Boston, Plaza in New York City, and the Stevens Hotel in Chicago • During the Depression in the 1930s, several hotel properties closed • During World Was II in the 1940s, the lodging industry prospered. (Hotels experienced extremely high occupancy rates – usually at least 90%) • 1950s cross-country vacations became popular with the automobile and freeway system • 1958 –airlines became popular

  5. Lodging Operations Organization • Front-of-the-House vs. Back-of-the-House • Typical lodging operation can be divided between its administrative departments and service departments • Administrative departments = manage the business responsibilities such as accounting, human resources and training, and marketing and sales. • Service departments = are responsible for serving the guest directly.

  6. Administrative Departments • General Management (GM) – person in charge of lodging establishment (other managers report directly to the GM) • Accounting and Financial Management – keeps track of overall profits, records sales, and calculates costs • Human Resources – hiring labor and evaluate performance (resp. local labor laws) • Marketing and Sales – make sure their lodging facility suite their customers (sales, advertising)

  7. Service Departments • Front Office – have to give good first impression, good people skills, manage rooms • Housekeeping – maintaining property, responsible for keep guest ready and rooms prepared. • Engineering and Facility Maintenance – keep physical building in good running order and maintain the operation’s mechanical equipment • Security – protecting guest, employees and property, developing and following all emergency procedures • Food and Beverage – one of the most demanding arrears

  8. Questions • Historically, the lodging industry has been closely tied to the ________industry? • What mode of transportation was invented in the early 1800s? • During which decade in the U.S. did the lodging industry experience the closing of many hotels? • List the four arrears of administrative departments and what they do? • List the five areas of service departments and what they do?

  9. Organization of the Lodging Industry 3.2

  10. Two Types of Travelers • Guest fall under one of two categories: leisure travelers or business travelers • Leisure travelers = often want to “get away from it all” – lodging properties cater to specific leisure travelers by offering services of activities • Business travelers = stay at lodging for business-related reasons. They represent the majority of guests – they might need fax machines, copies personal computes etc. • Most important factor considered when selecting a lodging facility is room cleanliness

  11. At Your Service: Lodging Establishments for All • Lodging properties can be classified in many ways: by the level of service provided, rate charged, amenities offered • Amenity = service or facility within the lodging operation that guests may use or enjoy without having to leave the hotel • Full-service properties = cater to travelers in search of a wide range of conveniences. (offer larger rooms, well-trained staff, plenty of amenities) • Luxury properties = hotels that offer top-of-the-line comfort and elegance

  12. At Your Service: Lodging Establishments for All • Economy lodging = offers clean, low-priced accommodations primarily to traveling salespeople, senior citizens,, and families with moderate income (sm. staff, simple rooms) • Mid-price facilities = between full-service and economy sectors • All-Suite properties = fastest growing segment, offer apartment style facilities • Resorts = (spares no expense), feature extensive facilities for vacationers who are looking for recreational activates and entertainment • Bed and Breakfast = guest who enjoy quaint, quiet accommodations with simple amentias (private-owned) • Page 159, ex. Of hotels and what service bracket they fit into

  13. Location, Location, Location • Location is one of the most influential factors contributing to the success of lodging facility • Airport facilities • Downtown (primarily for business travelers, tend to charge higher rates) • Suburban properties (travelers who wanted to attend downtown events but didn’t want to spend the night in the city) • Roadside motes (meet the needs of vacation and business travelers) • Resorts (vacation arrears)

  14. Facility Rating Systems • Several organizations rate quality of lodging establishments (AAA – diamonds and Mobil Travel Guides rate with stars) • AAA – most widely recognized • One diamond – functional accommodations (minimum standards) • Two Diamonds – noticeable enhancements (décor and or quality of furnishing) • Three Diamonds – upgrade in services and comfort, with additional amenities • Four Diamonds – excellent properties offering high level of service and a wide variety of amenities • Five diamonds – exceptional establishment, providing the highest level of luxury and service

  15. Questions • Indicate which type of traveler – business (B) or leisure (L) would find the features listed below important. • 1. Meeting rooms 2. Programs for children • 3. Near shopping areas 4. Location close to airport • 5. Shuttle bus to theme park 6. Kiddie swimming pool • 7. Shuttle to convention center 8. Twenty-four hr. room service • What type of hotel is most likely to provide conference and meeting rooms. • Florist shop that operates in a hotel's lobby is known as a…? • __________facilities are often constructed far from cities and transportation routes. • Since hotels primarily relies on business travelers, which hotel typically experience low occupancy rates on the weekdays?

  16. Career Opportunities in the Lodging Industry 3.3

  17. Developing a Career in the Lodging Industry • Certificates and diploma programs are offered by high schools and business. • Work experience, associations and professional trade organizations offer programs and events that can help you further your career. • While most lodging establishments perform the same basic functions, the number and type of employees at each property will depend on property size and other factors

  18. Administrative • GM = responsible for overall lodging establishment, have a bachelor’s degree and at least 10 years work experience • Assistant General Manager = helps carry out the GM’s plans and serves as a liaison between management and staff. Reports to GM • Resident Manager = supervises front office operations and reservations and is responsible for emergencies twenty-four hours a day when the GM is not on duty. • Executive Assistant Manager = responsible for all room rentals.

  19. Accounting and Financial Management “Back Office” • Controller = manages the accounting department, participates in long-term financial planning, and provides daily financial reports to management. Smaller facilities often share the accounting responsibilities among the GM. • Management Information Systems (MIS supervisor = computer specialist responsible for solving computer-related problems and making sure computer systems are running as efficiently as possible.

  20. Human resources • HR = responsible for interviewing, selecting, recruiting, training, and evaluating performance of the operation’s staff. • Motivating staff • Providing pay increases • Establishing employment policies • Administration of labor laws

  21. Marketing and Sales(Sell rooms and facilities by creating contracts with guest, business and people involved in the travel industry) • Marketing director = responsible for generating new business, organizing special events and conducting market research. • Convention manager = plans meetings, determines rates, and sells the facility’s banquet service. • Convention sales manager = brings in the business by promoting the establishment as a site for conferences, seminars, and meetings. (larger properties also have positions such as tour and travel sales manager and corporate sales manager)

  22. Front OfficeFront office is the heart of all lodging properties. It has four main responsibilities. 1. check-in 2. reservations 3. information 4. checkout • Front desk manager = (heading the department) He or she prepares budgets, maintains cost-control systems, and forecast room sales. A good communicator and supervisor, oversees a team of people • Desk clerk = greets and registers guests, and performs all check-in functions (including blocking rooms, verifying information and providing details of room rates and availability) • Reservations manager = oversees the reservations function and managers a number of full-time reservations • Bell captain = managers an number of employees, including bellhops, door attendants and valet parking • Concierge = specializes in providing a wide range of information services (answer questions, books restaurant reservations, make arrangements for car rentals, obtains theater tickets and more) • Night auditor = works the evening shift, posting changes not reordered during earlier shifts and balancing daily financial transactions

  23. Housekeeping(One of the most important departments, often the largest, works closely with front office personnel and maintains public areas) • Executive housekeeper = oversees the department by hiring, training, scheduling, and directing staff; purchasing and maintaining an inventory of cleaning supplies and equipment and setting cleaning priorities • Room attendants = employees who actually clean guest rooms

  24. Engineering and Facility Maintenance(ensures that all mechanical systems are safe and in proper working order) • Chief engineer = plans and organizes the tasks to be carried out by the department (administrative duties include budgeting, coordinating and supervising repair and maintenance orders, and negotiating contracts – oversees the maintenance) • Often train other employees to conserve energy and save on utility costs • Provide advice about equipment maintenance and environmental control

  25. Security(Emphasis is on preventing problems, protect guests, large establishments, hire off-duty police officers) • Security chief = extensive law enforcement training, work with the director of human resources, goal is to minimize theft • Provides on-going training • Train security officers • Some security officers dress in plain-clothes other offices place guards in visible locations where they can see everyone who enters and leaves the facility.

  26. Food and Beverage • Food and beverage director = supervises the most labor-intensive department of a full-service lodging operation • Manages the formal dining room, coffee shop and lounge, manager also directs the hotel’s banquet, catering and room service • Executive chef works with a sous chef and other chefs to provide quality meals and refreshments for hotel's guests

  27. Questions • The following list, please tell me the job function of each lodging position. • assistant general manager chief engineer • chief engineer night auditor • room attendant human resources director • convention manager • Tell me what an executive housekeeper is in charge of? • Tell me the four main responsibilities of a front office operations. • Tell me what a concierge is?

  28. Property Management Systems and Room Rates 3.4

  29. General Management • Property management systems = are computer software programs that are designed to specifically for the lodging industry. • PMS computer program eliminates the need to perform the same tasks over and over. • For a manager a PMS provides fast and accurate information and allows for improved control over the operation • PMS can connect accounting systems, reservations and registration databases, housekeeping room status records and marketing research

  30. Guests Account Management • Customer service and satisfaction are the goals of every lodging establishment • Guest folio = record of guest charges and payments (chares added to account) • Lodging operations now feature electronic checkout systems that allow guests to use their in-room television remotes to review their folios, or slip a bill under the door

  31. Rooms Management • To lodging property departments • Front office operations • Housekeeping • Room Status • Reservations If a room is available it will read open,confirmed indicates room has been reserved, guaranteed rooms are usually prepaid, repair means the room is unavailable • Housekeepingoccupied, available, stay over, on charge (guest have been checked out, but room not cleaned), out of order

  32. Reservation Management • Central reservation system (CRS) – guest call with toll free #, sometimes hooked up with airlines • Room inventory (total number of rooms that a property has to sell) • Block rooms – room unavailable • Rooms forecast – order to anticipate room inventory levels, managers ask for a forecast • No-shows • Overbook rooms • Under stays – guests who leave before their anticipated date of departure

  33. Yield Management • Yield Management – allows managers to change room rates • High Demand – raise rates, limit cheaper rooms, block out rooms to ensure minimum stay • Low Demand – lower rates, seek business, promote

  34. Setting Room Rates • Room rates vary considerably depending on a variety of factors, including construction, real estate cost, level of luxury, type of bedding and time of year • Many methods for setting room rates, rule of thumb method suggest that room rates should be set at $1 for every $1,000 of construction cost • Ex. If a new hotel is built at $50,000 per room, rat should initially be $50.00

  35. Hubbart Formula(Setting Room Rates Formula) • Operating expenses – which are the costs of running the establishment • Desired return on investment (ROI)– which is the money a business hopes to make • Other income – which is earned in various department (food, catering) • Projected room sales – forecasting • (operating expense + desired (ROI)) – other income • Projected room sales = room rate • Ex. Operating expense are $3,000,000; desired ROI $2,00,00; additional income $300,00; projected room sales $100,00 what should the room rate be?? • ($3,000,000 + $2,000,000) - $300,000 • $100,000 = $47.00

  36. Different Room Rates • Complimentary • Government rates • Airline/agent • Day rates • Weekly rates • Family rates • Educational rates • Local business rates

  37. Questions • Use the hubbart formula to set a room rate given the following information • Projected room sales: $100,000 • .Desired return on investment: $3,000,000 • Operating expenses: $4,000,000 • Other income: $600,000 • Which rate category would most likely apply to vacation travelers reserving a hotel room during the high season? • A guest uses his in-room TV remote to check out. This convenient checkout procedure is made possible through the lodging property's what?