Hotel Management

Globsyn Business School
HOTEL OPERATIONS MANAGEMENT
PRESENTED BY:
Learnin Grou! " #PGPM$%%B&
$ 'asun(hara )e(ia $ Sourabh Soni $ Su(eshna *ho+(hary $ Niloy Bis+as $ Saurya(i!,a Basu
$ Man(ee! Pra(han
A*)NO-LEDGMENT
The time spent in the making of this project, as a part of our curriculum requirement of PGPM course, is invaluable in terms of learning. The application of concepts to the project added more depth and meaning to the knowledge gained in the classroom. We wish to e tend our gratitude to our facult! guide Prof. " #hatterjee, for guiding us through the project with ample patience and understanding. We would also like to thank him for reminding us of the core objectives of the project ever! time we diverted from it.
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TABLE O. *ONTENTS
Abs,rac,
PAGE NO/
%/ In,ro(uc,ion 1/ Li,era,ure Re2ie+ 4/ Sco!e o5 ,he Ho,el In(us,ry 8/ Nee(s o5 cus,o9ers : Ho,el Ser2ice Desi n 0/ The *on2ersion Sys,e9 "/ The ho,el o!era,ions # Process layou,< 5lo+ char, an( blue!rin,& 3/ The Loca,ion Plannin 5or Ho,el 6/ .acili,ies lay!u, 5or ,he Ho,el ;/ S,ra,e ic an( O!era,ional Plannin %7/ *ri,ical =uali,y Para9e,ers %%/ Su!!ly *hain< Lo is,ics an( Procure9en, %1/ *onclusion
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Biblio ra!hy
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ABSTRA*T
$ hotel is rather like apple pie % it is ver! familiar, ever!one has e perienced one and ever!one knows which he or she likes best. &otels are therefore eas! to relate to and, as an almost perfect archet!pe of service operations' the! would seem to offer a rich conte t for the e ploration of e amples of P(M theor!. )t is perhaps surprising then that hotels are under%represented and sorel! misunderstood in the production and operations management literature. Waller *+,,,- in his book on operations management gives $ccor as an e ample of a service firm and never refers to it again. (ut of the ./ firms referred to in this te t, one paragraph on $ccor is the onl! reference to a hotel compan!. There is &ein0, &ershe! and &oover, but no &ilton' Mc1onalds and Mc1onnell%1ouglas but no Marriott. The same is true of man! other P(M te tbooks. There is no inde ed reference to hotels at all in 2rajewski and 3it0man *+,,4-, nor "chonberger and 2nod *+,,/-. 3ender and &ei0er *+,,5- have three paragraphs on 6how hotel chains select sites7 and "lack, #hambers and 8ohnston *9::+- have a one%page case stud! on $ccor;s <ormule + concept. Perhaps operations management te tbooks dedicated to services ma! have more references to this industr!= Gl!nn and >arnes *+,,?- brought together some of the world;s e perts on services. &otels are referred to in little depth onl! twice. 8ohnston and #lark *9::+- reflect the overall trend and largel! ignore hotels e cept for &olida! )nn. &ope and Muhlemann *+,,5-, based on ideas developed b! @ovelock *+,.4-, identif! hotel as providing high customisation and low judgement of contact personnel. >ut a budget hotel clearl! has ver! little customisation, if an! and there are circumstances where contact personnel ma! require a high degree of judgement, such as dealing with customer complaints or emergencies. "pace does not allow for a full review of all seminal journal articles on operations management and the e tent to which hotels are used to e emplif! principles or concepts. Aonetheless we propose there is a prima facie case for suggesting that hotels have some characteristics that make them difficult to anal!se. $nd, in our view, when such anal!sis is attempted it is not alwa!s accurate. Wh! is this=
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%/ INTROD>*TION
(ur starting point for this e ploration of hotels in the conte t of operations management theor! is to ask the questionB are all operations the same= )f the! are then hotels will have policies and procedures similar to all industries in all conte ts. )t would not be significant that hotels are ignored in the (M literature. >ut even a cursor! consideration of operations theor! demonstrates that operations var! quite widel!. (ne wa! a discipline copes with diversit! is to develop some kind of ta onom! or t!polog!. )n the operations management field, &a!es and Wheelwright *+,5,- *although there are others- proposed a seminal ta onom!. )t identifies five operational t!pesB project, job shop, batch process, assembl! line, and continuous flow. Most (M academics and practitioners would regard this anal!sis as a significant contribution to the field of knowledge *"ower et al., +,,5-. The ta onom! derives mainl! from an anal!sis based on two criteria % productCprocess mi and process life c!cle. )n the service literature, a similar ta onom! has been proposed b! "chmenner *+,.D- who identified that services could be categorised according to their degree of labour intensit! and level of customisation into four t!pes, which he called service shop, service factor!, mass service, and professional service. )n toda!;s changing business environment, there is an increased focus on delivering value to the customer at the cheapest possible costs. &otel companies, both big and small, must focus on how to offer products and services while keeping costs low. The current recession has affected businesses from all over the world, including the hotel industr! *>rodsk!, 9::,-. "tarting from the sharp decrease in corporate, group and leisure travel demand due to the global financial crisis, hotel occupanc! rates have fallen in properties around the countr!. MGM 3esort )nternational, which owns a do0en properties in @as Eegas and emplo!ee workforce of ?:, :::, represents +9F as the state;s biggest source of revenue *Mason, 9:+9-. )n spring 9:++, MGM 3esort )nternational *MGM- barel! escaped from declaring bankruptc! due to its longterm debt *Garrahan, 9::,-. Toda!, with fifteen of the largest hotels in @as Eegas located on the "trip with room availabilit! of D9,:::, each hotel compan! is looking to be more attractive than their competitors *Tse, 9::,-. )n an industr! which is labor intensive man! hotels are forced to make bolder and more visible moves in costs reduction to their operations. )t comes as no surprise that much of these costs cutting efforts have been focused on pa!roll and other emplo!ee associated costs, like hiring free0es, cuts in emplo!ee perks, reduction of bonuses, and reductions in base salaries *8ones, 9::,-.
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1/ LITERAT>RE RE'IEThe main function a hospitalit! organi0ation;s members must perform is the deliver! of qualit! service to its customers. "ervice qualit! has been defined as how well a customer;s needs are met, and how well the service delivered meets the customer;s e pectations *@ewis and >ooms, +,.4-. Gronoos *+,./- indicated that the perceived qualit! of service is dependent on a comparison between e pected and perceived service, and is thus the outcome of a comparative evaluation process. Parasuraman et al. *+,.?- defined GGservice qualit!;; as the degree and direction of discrepanc! between a customer;s perceptions and e pectations, whereas GGperceived service qualit!;; is the gap between a customer;s e pectations and perceptions as a measurement of service qualit!. The smaller the gap, the better the qualit! of service and greater the customer satisfaction. >arsk! *+,,D- suggests that the customers ma! be e cellent sources of information for management on how the organi0ation can provide qualit! service. Through surve!s and focus groups, customers can help management to determine which service areas are most in need of improvement. Gunderson et al. *+,,D- defines customer satisfaction as, GGa guest;s postconsumption judgment of a product or service that can, in turn, be measured b! assessing guest;s evaluation of a performance on specific attributes.;; The authors; research revealed that the business travelers were most concerned with the tangible aspects of housekeeping *e.g. room amenities- and the intangible aspects of the front desk *e.g. receptionists; willingness to provide service-. Providing services which customers prefer is obviousl! a starting point for providing customer satisfaction. $ relativel! eas! wa! to determine what services customers prefer is simpl! to ask them. Greathouse et al. *+,,Dconducted research investigating the factors that travelers considered important in hotel accommodations. )n this stud!, travellers questioned at visitor information centers rated cleanliness of room, value for price, friendliness of staff, and securit! of propert! as some of the most important attributes of a hotel. $ number of studies on customer satisfaction in the hospitalit! industr! have focused on identif!ing service attributes' that is, a customer;s needs and wants. <rom a marketing perspective, customer satisfaction is achieved when the customer;s needs and wants are fulfilled *@am and Hhang, +,,,-. @am and Hhang *+,,,- conducted a stud! to assess customers; e pectations and perceptions of service qualit!, and identified a gap between the two. The! also e plored the impact of service qualit! factors on overall customer satisfaction. Their findings revealed that GGreliabilit!;; and GGresponsiveness and assurance;; are the most significant factors in predicting customer satisfaction. )n addition, these two factors had the largest differential scores, indicating that the customers; perceptions fell well short of their e pectations. The purpose of measuring customer satisfaction is to assess the qualit! of the e isting management practices and identif! directions for improvement. The aim of managing satisfaction is to obtain a higher rate of customer retention and improve a compan!;s market share and profits *Gilbert and &orsnell, +,,.-. Man! researchers propose that customer satisfaction influences customer lo!alt!, which in turn affects profitabilit! *$nderson and <ornell, +,,/' Gummesson, +,,4' &eskett et al., +,,:, +,,/' 3eicheld and "asser, +,,:' 3ust et al.,+,,?' "chneider and >owen, +,,?' "torbacka et al., +,,/' Heithaml et al.,+,,:-. >arsk! *+,,9- discussed a theoretical model of customer satisfaction and then tested the model using a surve!
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instrument. Ising his surve! instrument, he was able to support his h!pothesis that intent to return is positivel! related to customer satisfaction. O!era,ional Prac,ices in Ho,el &otels should evaluate all potential JM" opportunities at the operational practices and prepare action programs addressing the costs incurred and the risks involved. The adoption of environmental operational practices has been shown to benefit companies through lower operating costs, increased revenue, and the more effective use of monetar! and human capital K4:L. (perational practices taking the form of pollution prevention and emission reduction being related to reduction, and efforts to turn t!pical wastes into raw material related to reuse and rec!cling. <urthermore, economic wa!s to abate pollution b! detecting waste in operating conditions, establishing material, energ!, and water balances, following legislative trends, and predicting future waste treatment costs in the light of present e penses. The hotel;s use of these operations management procedures constitutes a strategic capabilit! that ma! provide a sustainable competitive advantage b! reducing cost or differentiating the hotel;s services K99L. 1eveloping this capabilit! usuall! takes a long time, since it is based on the hotel emplo!ees; acquisition of certain abilities, such as knowledge, e perience, co% ordination and skills with respect to both operations management techniques, and the hotel operations and deliver! s!stem K+DL. "ome aspects of environmental protection become increasingl! important for operations management, and are perceived as a core component of operations strateg! K+L, K+.L. 2lassen *+,,4- found that operational practices are central to a firm;s environmental management K94L. <ew studies relating to operational practices and firm;s environmental strateg! have been mainl! concentrated on the more highl! regulated manufacturing sectors *e.g. the chemical and furniture industries- K+?L. )n summar!, the e isting JMP literature has a lack of empirical emphasis, most studies are conceptual in nature, and there is a dearth of comprehensive research e ploring simultaneous operational practices. $ number of conceptual and anecdotal studies have uncovered JMPs in specific industries with some studies focusing on waste reduction, some on manufacturing and remanufacturing issues, and !et others on design, or strateg!.
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4/ THE S*OPE O. THE HOTEL IND>STRY

%/ Acco99o(a,ion Throughout this section MaccommodationM is interpreted in a wide conte t to include an! premises where an! of the housekeeping, reception, maintenance and cleaning services have to be provided on a larger scale than in a domestic dwelling. The establishment need not necessaril! include sleeping accommodation. )n its simplest sense, accommodation is taken to be the provision of shelter, that is, four walls and a roof. Thus accommodation management is taken to includeB *a- The provision of accommodation to suit the purpose and the needs of the users. *b- The selling, marketing and promoting of accommodation. *c- The care, maintenance and securit! of the accommodation. *d- The care, well%being, satisfaction and comfort of the accommodation user. The accommodation industr! ma! classif! establishments into two groups according to whether the aim is to make a profit, or purel! work with the constraints of a budget and maintain a break%even situation. *a- Profit making establishments % such as hotels, restaurants, contract cleaning companies. *b- Aon%profit making establishments % such as provincial hospitals, senior citi0enNs homes, student residences. *LASSI.I*ATION AND RATING S*HEMES To assist guests and tourism professionals, various classification schemes have been developed. Though there are e ceptions, the more important schemes are roughl! a comparable standard around the world. "ome facilities though that ma! be considered three star in one countr! might not be in another *eg. tea and coffee making facilities are far more common in $ustralia and Aew Healand than some other countries-. E?a9!les o5 S,ar Ra,in s For Motels, Hotels & Resorts: O (ffer basic standard accommodation. "impl! furnished, adequate lighting. Motel units have private facilities, but hotels and resorts ma! have shared bathrooms. OO Well maintained with an average standard of furnishings and fittings. OOO Well appointed' comfortable standard of accommodation, furnishings, lighting, cooling and heating.
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3ooms contain telephone, clock radio, tea P coffee facilities with light breakfast available. OOOO J ceptional standard with high qualit! furnishings and fittings. &igh standards in presentation and guest services' restaurant on site, air conditioned rooms, comfortable lounge, hair drier, etc. OOOOO )nternational st!le and superior standard, e tensive range of first%class services including 9/%hour room service, and additional shopping and recreation facilities. For Serviced Apartments O >asic accommodation with moderate comfort. OO $verage accommodation with higher degree of comfort. OOO Good accommodation with better furnishings. OOOO Eer! good accommodation, with ver! high standard of comfort and at least one separate bedroom. OOOOO Eer! good with ver! high standard of comfort P furnishings, must have at least one separate bed room. OOOOO J cellent, lu uriousl! appointed, all sleeping areas and bed rooms are separate to the lounge. OOOOO )nternational qualit! with an e tensive range of first class guest facilities and services. 1/ The Role o5 ,he Acco99o(a,ion Mana er The responsibilities of the accommodation manager will include some, or all of the followingB *a- $ssessing manpower requirements *b- 3ecruitment and selection of manpower *c- )nduction and training of manpower *d- 1eplo!ment and scheduling of manpower *e- "upervision of manpower *f- Qualit! control *g- )nspection of premises *h- 1eveloping standard methods for performing tasks *i- )ncreasing productivit! *j- Welfare of personnel *k- &!giene control *l- Pest control *m- Waste control *n- "election and purchasing of supplies *cleaning agents, equipment, etc.*o- "election and purchasing of MlinensM and soft furnishings *p- "election and purchasing of all surfaces *floor coverings, wall coverings, furniture, etcPage | 9
*q- "tores control *r- @inen control and laundering *s- #leaning and maintenance of the premises and plant *t- 3edecoration and up%grading schemes *u- #apital building projects *v- )nterior design *w- &ealth, safet!, fire and securit! arrangements * - #are and welfare of the building user that is the client or personnel. )n certain t!pes of establishments, such as hotels or conference centres, the accommodation manager ma! also be responsible for front office operations and conferences. $ccommodation management is a well established activit! in certain t!pes of operations *eg. hotels, hospitals and halls of residence. These all tend to have a well%defined organisation structure-. A**OMMODATION PROD>*TS Accommodation Clubs Guests can appl! and join this t!pe of club and obtain discounts on tariffs, and perhaps other services as well *such as discounts from certain car hire firms-, eg. >est Western;s Gold #rown #lub, <lag )nn #lub. Frequent Guest Programs Jach guest visit is recorded, and when a certain number of visits within a chain or group is reached, a benefit *eg. a free night- can be claimed. Accommodation Passes $ certain quantit! of accommodation *eg. nights sta!ed- can be purchased in advance, usuall! at a discount. These passes are usuall! onl! valid for a particular period of time' frequentl! +9 months. Gift Certificates "ome accommodation groups *eg. Marriott and &!att hotels- sell certificates which can be used at an! properties within their group. Ise of the certificate ma! be subject to availabilit! at the time of the claim, and ma! not be valid during bus! periods. 4/ The *lien, )t must be remembered that the client, whether identified as a customer, guest, patient, student or visitor, is of the utmost importance because the premises and services are provided for his or her benefit. )n some operations, where the management of the accommodation is not the main purpose of the operation, for instance, in a hospital or a school, it is eas! to lose sight of the fact that a service, which is secondar! to the main purpose, is being provided for the benefit of the building user, for e ample, the patient, with whom the manager of that service does not
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usuall! have direct contact. The health, safet!, welfare and comfort of the client are of the greatest importance.
8/ *>STOMER NEEDS AND HOTEL SER'I*E DESIGN

Nee( o5 ,he *onsu9ers : +. Guests will be able to tailor ever! aspect of their hotel e perience Traditional customer segmentation is likel! to die and will instead be replaced b! personali0ed service spectrums and a Gtotal service model;. This will mean that guests of the future will be able to tailor ever! aspect of their e perience including technolog!, hotel services, the bedroom, the journe!, pricing and communications. (ver two thirds of surve! respondents agreed that b! 9:9: traveler motivations will become increasingl! fragmented and diverse and harder to segment into clearl! definable customer groupings. 9. The hotel of the future will be more personal, connected and responsive With changing guest requirements it is likel! we will start to see hotels that cater for multiple needs and demands. We will start to see innovations such as intelligent furniture, personali0ed nutrition and responsive technologies that understand cognitive functions. More than nine out of ten people questioned felt that b! 9:9: hotel guests will e pect their sta! to be personali0ed around a set of choices the! make at the time of booking or prior to arrival. 4. &ori0on scanning, anticipation and rapid implementation will become some of the hallmarks of successful hotel groups 3ohit Talwar, #hief J ecutive of <ast <uture 3esearch saidB 6What we see is a shift from neatl! defined customer segments to a more fragmented set of service spectrums that will demand hotels act in a wa! that is guest%focused personal, connected and informed. The right technolog! will be an increasingl! important weapon in delivering on guest e pectations and securing brand differentiation.7 *onsu9er choice 9o(el 5or ho,els There are t!picall! a number of alternatives available with var!ing attributes such as price, qualit!, and facilities which all impact the consumers end goal of getting a comfortable night sleep and enjo!ing the facilities for which the! have chosen to pa!. )t is reasonable, therefore, to consider all five stages in the decision making modelB problem recognition, search for information, evaluation of alternatives, purchase choice and evaluation of outcome. Problem recognition is normall! quite straight forward. (rganised travellers embarking on a predefined journe! ma! decide to arrange their accommodation prior to travel. (thers, perhaps on a less predictable trip ma! wait until the need for accommodation is more immediate.
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Search for information will take various forms and will include internal and e ternal sources. )nternal sources include their own past e periences for e ample if the! sta!ed in a hotel before or if the! have a lo!alt! toward a particular hotel chainCbrand. Isers of budget hotels are more likel! to be influenced b! ph!siological, safet!, and social motives that users of upscale or lu ur! hotels that ma! be influenced b! ego, and self%actualisation motives. Personal characteristics such as age, famil! lifec!cle, career status, economic situation, and even usage occasion will also be factors. J ternal sources include environmental influences and marketing stimuli. Marketing stimuli will comprise the accumulated industr! and brand knowledgeCattitudes absorbedClearned b! the person through the media. This will, however consciousl! or subconsciousl!, influence the customer once the! begin to search for information. $t this stage, the consumer also becomes more interested in media communications and ma!, for e ample, even respond to an advertisement for accommodation. Jnvironmental influences ma! include a travel agent, an infomediar! website or director!, or perhaps word of mouth from friends, famil!, colleges, or a recognised opinion leader. Travellers not booking in advance ma! even conduct their information search when the! arrive at their destination' perhaps searching ph!sicall!, asking local people or a tourist office, or b! consulting a local paper or online director!. >usiness travellers ma! have little or no need to search for information if their business alread! has partnerships with preferred accommodations. Evaluation of alternatives is an important part of bu!er behaviour' it is of crucial importance to marketers to understand how customers evaluate and ultimatel! choose to purchase goods and services. )n the absence of une pected situational factors the customer is at least more likel! to make their purchase decision based on their evaluation of alternatives.
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A =.D an( SER'=>AL APPROA*H TO HOTEL SER'I*E DESIGN #urrent challenges facing the hotel service providers, such as 6high customer demands on qualit!7, 6increasing competition for high customer satisfaction7 and 6the demand for full services7, are directl! related to better understand the attributes of hotel services and improve the service design characteristics accordingl!. )n service qualit! literature, "J3EQI$@ is the most widel! used structure to measure customer e pectations and perceptions. Qualit! <unction 1eplo!ment *Q<1- method is also a suitable means and works well to support the development of a wide range of services although it is originall! stemming from product development. This stud! describes the development of a conceptual framework to measure the hotel service qualit! using the "J3EQI$@ model as a starting point, and then identifies service design and hotel guests; requirements using a Q<1 approach. This integration of "J3EQI$@ and Q<1 approaches in the conceptual &otel of Qualit! model has been illustrated through a case stud!. HOTEL O. =>ALITY: THE AD@>STED *ON*EPT>AL MODEL The &ouse of Qualit! *&oQ- is a fundamental element of the Q<1 process, which provides a framework to relate customer needs to design characteristics at the productCservice development level *Eivek, #udne!, "mith, 3agsdell, and Par!ani, 9::5-. The traditional &oQ comprises si main steps. The process of completing the &oQ is described b! *Mi0uno and $kao, +,,/-. The foundation of the house of qualit! is the belief that products or services should be designed to reflect customers; desires and tastes. The house of qualit! is a kind of conceptual map that provides the means for interfunctional planning and communications *&auser, 8ohn, and #lausing, +,..-. The &oQ starts with the customer needs and the customer competitive evaluations together with the level of importance that the customers assign to their needs and the wa! the! rate the productsCservices against those of the competitors. These needs are translated into technical features b! a relationship matri that further deplo!s itself into a triangular correlation matri and competitive technical assessments with its own set of operational goals and targets. The &oQ relates simpl! customer requirements, technical requirements and competitive anal!sis. The relationship matri of &oQ shows the correlation between the customer requirements and the technical features so it is also called as the 6planning matri 7. )t is crucial that the house of qualit! should be developed carefull! since it becomes the basis of the entire Q<1 process. )ndeed, the house of qualit! helps the team to set targets, which are, in fact, entered on the bottom line of the house. <or engineers it is a wa! to summari0e basic data in usable form. <or marketing e ecutives it represents the customer;s voice. General Managers use it to discover strategic opportunities. )n a nutshell, the house encourages all of these groups to work together to understand one another;s priorities and goals *&auser et al, +,..-. The development of the conceptual model for this stud! began with the imagination a hotel instead of a house and the translation house sections into hotel components. The t!pical &oQ concepts were changed to meaningful ones
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to the hospitalit! industr!. >! using this metaphor, hotel managers and practitioners could better understand the Q<1 basics defined in hotel jargons. $s shown in <igure +, the customer needs or MwhatsM were replaced with the M&otel <ront (ffice7, where is the guest e presses herChis e pectations and wants. The M&otel >ack officeM was used instead of the service design requirements which are called as MhowsM. That is wh! the back office is the place in which the hotel operations are performed in hotel people jargon. The importance levels of the needs and the comparison rates with competitors were assessed in the M#ustomer #are Init *##I-M. The relationships between M<ront (fficeM and M>ack officeM were determined with the operations in the M&otel 3oomsM. The functional interactions were assessed in the gable roof of the hotel. The last place is the hotel qualit! board where all of the assessments are integrated to determine the most important improvement. )n using Q<1, it is essential to define the MWhatsM and M&owsM according to the nature of the issue. The ke! question to be asked is MwhatM the customers; e pectations would be from the hotel. "urve!s, interviews with guests, organi0ing focus groups, gemba visits and content anal!sis are generall! used in order to define the customer needs *#how%#hua and 2omaran, 9::9' Gon0ale0 et al, 9::/-. This stud! uses "J3EQI$@ for primaril! identif!ing the ke! dimensions of hotel service qualit!. "J3EQI$@ proposes five distinct dimensions to evaluate the service qualit!B reliabilit!, responsiveness, assurance, empath! and tangibles. Table 9 shows the five dimensions of the "J3EQI$@ definitions adapted from *Heithaml et al, +,,:-.
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SER=>AL 0 DIMENSIONS
1espite the wide usage of "J3EQI$@ b! academics and practicing managers in various service industries, it needs to be modified based on the hotel customersN needs, i.e. customi0ed according to the e pectations of the guests. )n literature, it is stated that onl! Mi!oung and &aemoon *Mi!oung and &aemoon, +,,.- have used "J3EQI$@ in house of qualit! design to measure customer satisfaction in return for service qualit!. )n this stud!, "J3EQI$@ has been modified to the hospitalit! industr! and used in order to consider the guests; e pectations and needs in the earl! stages of hotel service design. "J3EQI$@ includes 99 general items describing five service qualit! dimensions *Heithaml et al, +,,:-. $ pilot stud! has been conducted using these 99 items. Then the list including +5 items given in Table 4 has been obtained b! omitting or changing some items based on the guests; feedback. This list describes the MwhatsM or the guests; e pectations and needs from a hotel. The 6&ows7 part of the &otel (f Qualit! has been determined on the basis of service elements. The ke! question in this step is MhowM the hotel would be able to deliver the required service*s- to its guests. <or a production firm, it is eas! to define the technical requirements based on the compan!Ns operational or managerial resource allocation plans. &owever for a hotel, if onl! the processes are considered, some important issues such as people and ph!sical evidence aspects are ignored. Mi!oung and &aemoon *+,,:- have onl! considered the hotel processes in their house of qualit! but not included the human factors and tangible representation of the hotel. The service mi not onl! includes the process itself, but also includes people and ph!sical evidence *Heithaml and >itner, 9::/-. )n this stud!, the 4P;s *process, people and ph!sical evidence- of service mi given in Table /, is used to define the service design requirements. These requirements have been modified based on e pert opinions and converted to the hotel equivalent. Jlements such as )T and automation,
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check%out, emplo!ee behaviour added to the service design requirements. The detailed version of the 4PNs is shown in Table ?.
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Thus, the whole picture of the conceptual model of &otel of Qualit! is given in <igure 9. $s shown in <igure 9, all aspects of the &otel of Qualit! are connected to guests; needs and the translation process of guestsN requirements into hotel functions and elements has been defined in a s!stematic wa!.
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*ON'ERSION SYSTEM # INP>T$ PRO*ESS$ O>TP>T & :
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"/ HOTEL OPERATIONS

Most operations were a bundle of both tangible products and intangible services. The emphasis on hotel operations as being Gservice; derives from a focus on front%of%house activit! and a failure to recognise the importance of back%of%house. Perhaps of more significance is consideration of what flows through the operations process. Morris and 8ohnston *+,.5- suggest there are basicall! three t!pes' materials processing operations *MP(-, customer processing operations *#P(- and information processing operations *)P()n most cases, an! operation is not uniquel! a MP(, #P(, or )P(. This is certainl! true in hotels. <or instance, during the so%called Ghotel e perience; materials are processed *rooms, food and drink are prepared for consumption-, information is processed *orders taken, bills prepared-, and customer processing occurs *customers; requests are responded to, social interaction takes place-. $lthough the difference between processing people and things is often identified in the literature, rarel! has it been s stematicall anal!sed to identif! the implications of such differences. #learl!, customers are ph!siologicall! capable of action whereas materials are not. "uch actions include the abilit! to move unaided' appl! the senses of sight, hearing, touch, taste and smell' and communicate with the environment. $s well as this ph!sical interaction, customers also engage ps!chologicall! with their environment. This means that each customer;s values and attitudes ma! be slightl! different, the! ma! perceive their e periences differentl!, and hence the! ma! respond to the service environment heterogeneousl!. We therefore propose that operations need to be modelled predominantl! as either #P(s or MP(s. )f an operation is a h!brid, i.e. it processes customers and materials, then it should be divided into its two constituent parts and each categorised accordingl!. This is shown in Table +. When hotel operations are compared on the basis of volume and variet!, consistent with standard (M ta onomical s!stems, we find that most lie along the diagonal. "chmenner *+,.D- and &a!es and Wheelwright *+,5,- argue that it is logical for firms to Gmove towards the diagonal;, i.e. the line that represents a balance between volume and variet!. @ow variet! enables the production of a high volume of standardised output. &igh volume is necessar! as standardised productsCservices tend to be viewed as commodities that attract relativel! low profit margins. &owever, highl! customised products and services can be sold at premium prices, thereb! pa!ing for the relativel! inefficient high variet! production. Most of the hotel operations we have anal!sed lie on this diagonal *8ones and @ockwood +,,,-. "uch comparative anal!sis of hospitalit! operations immediatel! enables us to identif! some ke! aspects of the hotel industr!B +. &otels are generall! more comple than restaurant operations, simpl! because other than limited service hotels, the! provide both lodging and foodservice. 9. &!brid operations are more comple to manage than non%h!brid operations. 4. &ospitalit! materials processing operations can be job shops *e.g. R la carte restaurant-, batch production *e.g. cook%chill- or mass production *e.g. fast food-.
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/. Most hospitalit! customer processing operations are service shops *e.g. table service restaurant- or mass services *e.g. banqueting-. ?. There is generall! a relationship between volume and variet!, i.e. the greater the variet! the less volume produced. D. )t follows therefore that h!brid operations that are batch production MP(s are t!picall! associated with service shop #P(s, whilst mass production matches mass service. Process Configuration or Layout There are four basic la!out t!pes found in manufacturing and service settings *>rown et al 9:::-. These areB ST.i?e( !osi,ion U a single, fi ed position at which the product is assembled or service is processed b! workers who move to that position for them to carr! out their work. This la!out is applied to products that are heav!, bulk! or fragile such as in shipbuilding, aerospace, or dentistr!. STProcess layou, U machines or activities are grouped together non%sequentiall! to allow a range of different products to be made. Products move to a particular location for processing according to need. Workers tend to operate within one area, but ma! be multi%skilled enough to work across areas. This is the t!pical la!out associated with job shop or batch production. )t allows for a wide variet! of products to be made in relativel! small volumes. >reakdown
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of one machine does not halt production. J amples of sectors that use this approach are jeweller! making, hairdressing, and low%volume furniture manufacture. STPro(uc, layou, U has machiner! dedicated to a particular product, usuall! laid out in a sequence, with distinct stages in manufacture= Workers are usuall! required to perform relativel! simple tasks at one particular stage in the process. Whenever possible such tasks have been automated. This is the la!out associated with mass production. )t is used in car manufacture, chocolate production and fast food. ST*o9bina,ion layou, U this combines elements of the process la!out, such as clusters of machines, with product la!out, with each cluster being organised sequentiall!. &ence each cluster or cell can produce in high volumes a variet! of outputs based around a single product. This in essence is mass customisation, adopted in high%tech manufacturing operations. $s far as we are aware no one has so far discussed the notion of process configuration as it applies to the hotel industr!. )t seems to us that two of the four t!pes of la!out can be found in Proceedings of the !"elfth Annual #onference of the Production and $perations Management Societ , P$M%&''(, March )'%April&, $rlando Fl* the hotel industr!+. The provision of accommodation services, i.e. hotel bedrooms, is an e ample of a 5i?e( !osi,ion la!out. 3oom attendants move from room to room in order to service them. This means that the! have to take the technolog! the! need to perform this task with them. The same is true of table%service restaurants. Wait staff go each table to perform their duties and deliver service. Most traditional food production kitchens have a !rocess layou,. The kitchen is organised into different sections U larder, sauce, vegetables, pastr!, and so on U each of which can produce a wide variet! of outputs. The technolog! in each section is carefull! selected to support this activit!. <or instance a large wooden chopping block in the larder, marble% topped tables in pastr!, boiling pans in the veg. section. The same is true when production is scaled up for cookchill production, albeit that the equipment is considerabl! larger capacit!. Issues in Process Choice and Layout in Hotels This anal!sis of choice and la!out identifies some interesting issues with regards the industr!. )n manufacturing there tends to be quite a close fit between process choice and la!out. This derives from the fact that manufacturing is essentiall! a materials processing operation. $n! Gservice; elements of a product are usuall! decoupled from the actual manufacture of the product. &owever, in hotel operations both manufacture and service happen simultaneousl!. &ence such operations are both h!brids of process choice and have more than one process la!out. This is illustrated in Table 9 which looks at different departments in a hotel from a choice and la!out perspective.
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<ortunatel! *it could be argued- man! of the processes in the industr! are relativel! simple and do not require sophisticated technolog! nor highl! skilled labour. Thus the lack of fit between the t!pe of process and the process la!out has not become an issue. &ousekeeping is a good e ample. The processes or activities undertaken to clean a guest;s room are basicall! identical and would normall! lend themselves to both production%lining and even automation. )f it were ph!sicall! possible, one could envisage a factor! in which rooms moved slowl! along a production line and as the! did so, a worker *or machine- polished the mirror, another vacuumed the floor, a third dusted the lampshades and so on. (f course, this cannot happen due to the si0e of the room and its fi ed position. &ence tasks which could *should=- be dealt with on a mass production basis are actuall! managed as a job shop. The e tent to which process choice and la!out fit is a major issue because of the implications it has for efficienc!. This is further complicated b! the parts of the operation used b! the customer, i.e. front%of%house. <irst, the sequence of activit! is driven b! the random arrival of each customer and second, the precise nature of the process ma! var! from one customer to another.
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S,e!s o5 Process : +.#ustomer makes a request for informationB EiaB phone, computer, or in person 9. &otel worker receives request and delivers information to customer O Marriott has outsourced all reservations to a compan! in Aew 8erse! (nl! customers who walk can actuall! request information or services 4. #ustomer has two options +. @eave the service process of the Marriott and look somewhere else 9. Prepa! for a reservation to made )nvisible to the customer /. &otel makes the reservation and checks for available rooms ?. &otel reserves and allocates room for confirmed reservation D.Jnter customers information in the Marriott database %The Marriott values qualit!' each week random customers are selected and mailed scorecards to rate the level of qualit! that was provided b! the Marriott. %Marriott has different programs that reward frequent customers such as the rewards program, the database allows the Marriott the opportunit! to thank for the customer b! mail or email to encourage the customer to revisit. 5. &ousekeeping prepares room .. Maintenance checks for broken appliances or equipment ..b )f defects are found maintenance reorder and fi es appliances ,. <inal inspection of room is conducted +:. >ellhop unloads vehicles and takes luggage to room while customer checks in ++. &otel continuous supplies power, water, health club, gift shops, bars, and restaurants functionall! properl! to add value to customers sta! +9. &ousekeeping and maintenance prepare their carts the night before to prepare for the ne t to keep the hotel clean +4. &otel continuousl! add values to customer sta! via guests services and delivering information on events and attractions nearb! Eisible to the customer +/. #ustomer checks out of hotel
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3/ THE LO*ATION PLANNING .OR HOTEL The most suitable location for hotels depends on the markets % the t!pes of guests % for which the! are intended to cater. &otels catering solel! for tourists need to be located in close !ro?i9i,y to the major tourist attractions of the particular destination. )n a sun, sea and sand resort, for e ample, holida!makersCvacationists will opt where possible for hotels on or ver! near to a beach, that is, for 6beach hotels7. Those interested in peace and quiet and scenic attractions will seek hotels well awa! from the hustle and bustle of bus! towns and cities. )n contrast, business travellers will want or need to sta! in hotels located in or near commercial or industrial centres or the specific organisations on which the! will be calling. $ir travellers in 6transit7 for a night will generall! wish to sta! in hotels located at or fairl! close to the airport concerned. Motoring travellers might seek hotels or motels located on or near major traffic routes. )dentif!ing the right location, and then appl!ing the right product development to meet a market need, if it e ists at all, is vital. The $ustralian coastline is littered with 6monuments to misunderstanding7 U resort developments knocked up and flicked on to la! investors with little regard for the end user. 3ushed development times, force%fit designs and an absence of market research are their hallmark attributes. $ lack of comprehension of the realistic impact of seasonalit! is another trap. $nd then there is )nfrastructure. $ll good propert! needs good infrastructure around it. )solated sites with limited infrastructure require the developer to contribute enormousl! to compensate. With beach and island resorts, these circumstances result in failure more so than it does success. )nfrastructure development is historicall! the role of government and most e perienced developers would agree that the cost and e pertise for infrastructure development best la! with government. <urther, independentl! management infrastructure such as sewerage treatment works, power generation or private marine transport services to an island require an ongoing e tra la!er of costl! management e pertise eroding operational profitabilit!. 1estinations with a full range of publicl! available infrastructure like airports, roads, bridges, electricit!, a postal service, police and fire brigade *along with an e isting general momentum of business and tourism activit!- make it to the short list more often. The! get financed more readil! and endure as successful, sustainable projects much more often than the others. (nce a site is identified the product development process necessitates that the best product for the achievable market occurs. The scarcest commodit! in tourism is realism. $ common trap is to assume that five star is the onl! wa! to go, and that U although the destination is onl! mid market U there are masses of people read! to jump in and pa! double the locall! established tariff levels to sta! at this new development because it has sa!, a /: square meter odd room that couldn;t be used for an!thing else dressed up as a spa or meeting room. Vou will realise that the ver! location of a hotel will determine to a large e tent the market*s- for which it can cater. &otel location is 5i?e(' it cannot be changed. Therefore, if
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markets % the t!pes of guests and their requirements % change, a hotel must a(a!, to fill those changing requirements. "uch changes can and do occur. $ once 6fashionable7 part of town or resort might graduall! become less so, or decline in popularit!' hotels located in such an area, which might once have catered for the wealth! or 6up%market7 tourists must % if the! are to survive % adapt to serving the needs of less affluent guests or +pac,age tourists-* )n contrast, once 6sleep!7 and picturesque coastal villages might within a ver! short space of time become popular tourist destinations. &otels in such areas which might once have served relativel! small numbers of 6rela edM guests, must adapt to the almost frantic pace of large numbers of package tourists % or give wa! to new hotels better able to cater for them. >ecause of their locations, some hotels are designed to, or able to, cater for a A9i?B of different markets, for e ample for business travellers as well as for holida!makersCvacationists. "ome accommodate domestic business people *from other areas of the same countr!- as well as business people visiting the countr!. "imilarl!, some resorts, and the hotels serving them, are popular with domestic tourists as well as with foreign tourists. Then too, as we mentioned earlier, some hotels provide catering and other facilities for 6local7 people as well as for domestic andCor foreign travellers. <requentl!, because of the location of an e isting hotel, its management is A,ie(B to catering for a particular market or mi of markets. $n accurate assessment of the market*s- which can be catered for % and the potential for the future % is essential b! those considering taking over the running of a particular hotel. There are man! matters to be considered b! those involved with the development of tourism in a particular countr! or area of it, and b! those involved in the establishment of new hotels to cater for the anticipated influ of tourists' hotel location is one of the main ones* )deall!, hotels should be located as close as possible or practicable to the major attractions which encourage tourists to visit a particular destination. )f hotels are located too far from the attractions the! are intended to serve andCor are difficult to access, their occupanc! rates are likel! to suffer. Factors earing on the Location of !e" Hotels <actors which might have a bearing on the loca,ion o5 ne+ ho,els includeB% The availabilit! of suitable sites' land costs must be considered, as well as the suitabilit! of the soil and terrain for construction purposes, utilities and access alread! in e istence or needed. $lso the current or likel! level of development of an area, as there might be disadvantages as well as advantages in the construction of hotels in alread! heavil! populated areas. (n the other hand, construction in sparsel! populated areas is likel! to attract local people *e.g. hotel emplo!ees and their families and others involved in tourism- to the areas, and man! of those will require housing, and other amenities.
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)n a resort popular with tourists, 6prime sites7 might have alread! been developed *with perhaps less modern, smaller and now less suitable hotels % which might need to be 6upgraded7, redeveloped and e tended- resulting in new constructions having to be located more distant from attractions. )n some cases % for e ample on long coastal stretches % it might be possible for hotel development to be spread along a fairl! wide area % provided that utilities can be e tended and that new access roads, etc, can be constructed.
#ost economies are alwa!s important while selecting a location for the first time, but should keep in mind the cost of long%term businessCorganisational objectives. The following are the factors to be considered while selecting the location for the new organisationsB +. I(en,i5ica,ion o5 re ion: The organisational objectives along with the various long%term considerations about marketing, technolog!, internal organisational strengths and weaknesses, region specific resources and business environment, legal%governmental environment, social environment and geographical environment suggest a suitable region for locating the operations facilit!. 9. *hoice o5 a si,e +i,hin a re ion: (nce the suitable region is identified, the ne t step is choosing the best site from an available set. #hoice of a site is less dependent on the organisation;s long%term strategies. Jvaluation of alternative sites for their tangible and intangible costs will resolve facilities%location problem. The problem of location of a site within the region can be approached with the following cost%oriented non%interactive model, i*e., dimensional anal!sis. 4. Di9ensional analysis: )f all the costs were tangible and quantifiable, the comparison and selection of a site is eas!. The location with the least cost is selected. )n most of the cases intangible costs which are e pressed in relative terms than in absolute terms. Their relative merits and demerits of sites can also be compared easil!. "ince both tangible and intangible costs need to be considered for a selection of a site, dimensional anal!sis is used. 1imensional anal!sis consists in computing the relative merits *cost ratio- for each of the cost items for two alternative sites. <or each of the ratios an appropriate weightage b! means of power is given and multipl!ing these weighted ratios to come up with a comprehensive figure on the relative merit of two alternative sites, i*e., #+M, #9 M, W, #0 items.
M
are the different costs associated with a site M on the G0; different cost
#+ A, #9 A, W, #0 A are the different costs associated with a site A and W+, W9, W4, W, W0 are the weightage given to these cost items, then relative merit of the M and site A is given b!B *#+MC#+A-W+O*#9MC#9A-W9O.......................................................O*#0 MC#0 A-W 0 )f this is X +, site A is superior and vice%versa.
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Si,e Selec,ion *onsi(era,ions Si,e Ins!ec,ion *hecClis, !he destination Accessibili,y Jase T and cost Pro T imit! to airport Permits T access b! people with disabilities $dequate T ta iClimousine service
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"ufficient T parking space $vailabilit! T and cost of shuttle service $dequate T airport assistance $dequate T number of flights into destination "easonalit! T of destination *peak season vs. off%seasonEn2iron9en, $vailabilit! T of local attractions "hopping T 3ecreation T 3estaurants T Weather T conditions $ppearance T "afet! T of area Jconomic T health of communit! 3eputation T of areaCfacilit! for hosting meetings "upport T and services available from local convention bureau $vailabilit! T of e perienced suppliers, such as audiovisual firms, e hibit service contractors, temporar! help, and securit! 1estinations have long held widespread reputations with the markets the! cater to and an! new one development is unlikel! to change the market profile of the destination. >etter to stud! the profile of who currentl! visits and visits nearb! competing destinations and identif! how best to win them over. This is a surer and safer approach and normall! onl! requires a modest amount of market research. $ small surve! of travel agents, wholesalers and the local tourism industr! can provide valuable product development input. Getting it right means a more successful development with higher returns for all stakeholders.
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6/.A*ILITIES # LAYO>T & .OR THE HOTEL

#he facility Jfficient, T friendl! doormen and bellmen $ttractive, T clean lobb! 3egistration T desk eas! to findB sufficient space and personnel in relation to guest rooms' abilit! to handle peak check%inCcheck%out times for major groups' efficient front desk personnel Modern T elevators in sufficient number to serve guests when the facilit! is full $ccessible, T full!%staffed message and information deskB rapid response to telephone calls' quick deliver! of messages $vailabilit! T of guest servicesB drugstores, banks, emergenc! services, giftshop, concierge, safet! deposit bo es #omfortable T clean roomsB furniture in good condition, modern bathroom fi tures, adequate lighting, adequate closet space and hangers, smoke detectors, fire e it information clearl! posted, refrigerator andCor wet bar $dequate T lighting and cleanliness of hallwa!s $vailabilit! T of beverage and ice machines on each floor "ervice T elevator accessibilit! "i0e T of standard room vs. delu e room $vailabilit! T of 6towers7 or e ecutive floor offering special guest services 3ooms T equipped for people with disabilities Aumber T and t!pes of suites and availabilit! of suite floor plans 3eservations T procedures and policies 3oom T categor! classifications *floor number, non%smoking, ocean view, etc.- and number available in each categor! Aumber T of rooms available for earl! arrivals and late departures #urrent T convention rate and rack rate for individual guests *not part of the group1ate T hotel will provide firm rates Guarantee T and deposit requirements #heck%in T and check%out hours #utoff T date for the room block #heck%cashing T policies and t!pes of credit cards accepted 3efund T polic! for cancellations Aumber T of non%smoking floors *standard and concierge1ates T of an! planned renovations $n! T change in hotel ownership being discussed $vailabilit! T of a health club, hours, and cost Telephone T access charges *long distance, local, and calling card2e! T s!stem for guest rooms $dequate T parking space *free or for a fee&otel T emergenc! plan *meeting manager should review it&otel T emergenc! e its clearl! marked #omparison T of king%bedded versus double%bedded room categories
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$eeting s%ace Meeting rooms come in all shapes and si0es, and with a number of obstructions and inadequacies. The meeting manager must evaluate the potential of each room under consideration. The! should measure the room, prepare scale diagrams, incorporate all equipment, staging and decorations, and calculate the desired square footage per person for the required setup. >elow are some questions the meeting manager should be prepared to answer before the site inspectionB &ow T man! meeting rooms will be required= )n T addition to the formal program, will meeting rooms be needed for committee and business meetings= What T is the estimated attendance for each session= $re T attendees to be seated theater st!le, classroom st!le, or conference st!le= $re T rooms with high ceilings and no columns or obstructions needed to accommodate audiovisual presentations= )s T space needed in or near the meeting room*s- for refreshment breaks= What T pre% and post%meeting space is required for affiliated ancillar! groups= $re T meeting rooms accessible to people with disabilities= Food and be&erage ser&ice Public ou,le,s $ppearance T and cleanliness #leanliness T of food preparation areas $dequate T staffing at peak times $ttitude T of personnel Prompt T and efficient service Eariet! T of menus #ost T range 3eservations T polic! <easibilit! T of setting up additional food outlets for continental breakfast and quick luncheon service if necessar! <easibilit! T of using public food outlets for group functions during non%peak hours Grou! 5unc,ions Qualit! T and service 1iversit! T of menus #reativit! T or access to companies speciali0ing in this #ostsB T ta and gratuities' projected price increase b! the time of the meeting' e tra labor charges for small group functions @iquor T laws *restricted times#ash T bar policiesB bartender cost and minimum hours, cashier charges, drink prices 3efreshment T break pricingB guarantee policies, when a guarantee is required, number prepared be!ond guarantee
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"pecial T servicesB tailored menus, theme parties, unique refreshment breaks, food substitutions available, table decorations, dance floor "i0e T of banquet rounds *eight people or +: people3oom T serviceB diversit! of menu, prompt and efficient telephone manner, prompt deliver!, qualit! '(hibit s%ace Aumber T of loading docks and pro imit! to e hibit area $vailabilit! T and location of freight receiving area @ocation T of utilities Ma T imum floor load "ecurit! T of area @ocation T of fire e its Pro T imit! to food service areas, restrooms, and telephones $vailabilit! T of sufficient time for move%in and move%out 3eputation T of facilit! regarding union relations 1ecorations T to enhance facilit! appearance $vailabilit! T of supplemental lighting Pro T imit! of e hibit hall to other portions of the meeting <irst T aid station $vailabilit! T of office space for e position manager, service contractors, and suppliers #rate T storage areas and policies )ffices and other ser&ices "ufficient T space for furniture and equipment necessar! to perform the business at hand Good T lighting Jas! T for attendees to locate $dequate T electrical outlets $vailabilit! T of house telephones or telephone jacks $bilit! T to secure space after hours )s T the hotel fle ible regarding the tentative agenda, or is meeting space locked in b! a signed contract= $re T doors to meeting rooms wide enough to accommodate wheelchairs=
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HOTEL GRO>ND .LOOR MAP
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PENTHO>SE .LOOR PLAN
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S>ITE : S>ITE TYPES
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;/ S,ra,e ic an( O!era,ional Business Plannin 5or Ho,els
De9ys,i5yin S,ra,e ic Plannin #Par, %& )f !ou were driving somewhere !ou had never been before, !ou would probabl! use a map to guide !ou. Well, !ou would, if !ou wanted a hassle%free trip. Without the map, !ou are more likel! to get lost, and even if !ou don;t, !ou are certainl! leaving things to chance. The same applies to achieving success in the hotel business which, as !ou well know, is also a journe! of sorts and one with man! twists and turns, so having a map to keep things on track is useful. )n fact, it;s vital, because getting lost in a car is one thing U losing !our wa! in business life is an altogether more serious prospect. "ome hotel owners and managers do lose their wa! U not because of an! lack of abilit! or effort U but due to the fact that the! don;t full! think through what it is the! are tr!ing to achieve. The! might talk about their Ggoals; for the business but the! fail to define what these are in practice, or indeed to plan how to realise them. "ure, the! might have a general idea of where the! are going, but this can be as loosel! defined as to Goutperform our competitors; or Gma imise profit;. $chievement, in an! walk of life, is all about focus and directionB in business terms, this means defining clear and measurable goals and planning back from them. )n other words, it involves building a strategic map. Buil(in a S,ra,e ic Ma! 5or your business The abilit! to create a realistic strategic map for an! business begins with having strong stakeholder%focus and an! hotel has a variet! of stakeholdersB
The differentiation between Primar! and "econdar! stakeholders is simpl! the degree to which the! e ert influence over, or have impact on, the running of !our hotel. Those who have significant influence andCor impact are seen as primar! stakeholders and as such require most attention. "econdar! stakeholders are not unimportant' it;s just that the! are unlikel! to
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have the same degree of power over the choices !ou make. &owever, their needs do need to be considered and addressed where appropriate. The foundation stone of creating a strategic map lies in placing primar! stakeholders at the forefront of !our thinking, in terms of the business decisions taken. )t also means recognising that the path to success lies in satisf!ing their needs because, in doing so, !ou are ultimatel! satisf!ing !our own. Guided b! strong stakeholder%focus, strategic planning is essentiall! about tr!ing to answer four age%old but vital questionsB
$ strategic map helps a business to become outcome%driven and as a result, this reduces *but of course cannot eradicate- the risk of failure. Aaturall!, it will alwa!s be necessar! to respond to changing circumstances' for e ample, most hoteliers undoubtedl! have to take difficult decisions to get through the current recession. &owever, armed with a strategic map, an! such short term decisions are not taken in isolation' the map creates a conte t for all activities and informs ever! decision taken. De9ys,i5yin S,ra,e ic Plannin #Par, 1& #reating a strategic map, as we saw in Part (ne, requires reflection, anal!sis, action and evaluation guided b! four core questionsB
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*#lick to enlarge flowchart-here are +e no+D E *urren, Posi,ion The first important stage in building !our strategic map is to review where !ou are now as a business, which means reflecting upon a series of interrelated sub%questions such asB Areas To Sa9!le =ues,ions ,o *onsi(er .ocus On Try ,o i(en,i5y ,he curren, s,ren ,hs an( +eaCnesses o5 your ho,el:

&ow is the hotel performing financiall!= &ow does that compare to other similar hotels= Who are !our customers= #an !ou divide them into different ke! segments= What are !our customers; needs= $re !ou meeting and more importantl! e ceeding them= &ow do !ou know= &ow does !our service offering compare with that of !our competitors= Where are the current gaps in what !ou offer= $re !our emplo!ees competent, committed and motivated=
Ho,el
MarCe,
Try ,o e, a be,,er 5eel 5or ,he (yna9ics o5 ,he 9arCe,s you o!era,e #or coul( o!era,e& in:

1o !ou have a lot of competitors, or onl! a few= $re !ou operating in a mass market, or do !ou offer a specialist or niche e perience= )s overall demand growing, or subsiding in !our region=
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What drives the market*s- that !ou are in= Price, qualit! or both= $re !ou increasing market share or losing it in !our ke! markets= &ow does the market operate= 1o customers bu! directl!, online or through intermediaries, or all three= &ow is technolog! affecting the market d!namics=
Try ,o e, a 5eel 5or ,he ,ren(s in ,he in(us,ry rele2an, ,o your ho,el an( +ha, su!!or,s are a2ailable ,o you:
What are the ke! trends in the industr!= <or e ample, are independent hotels being squee0ed out b! the major brands= What are the overall projections for the industr! in !our countr!Cregion= What supports are available for hotels such as !ours= Who are the main hotel associations= 1o !ou have a relationship with them=
In(us,ry
ThinC abou, eneral econo9ic an( social ,ren(s:
What is the general economic outlook like for the short and medium term where !ou are= What is it like in the places where !our customers come from= &ow are consumers; habitsCneeds changing= $re there an! regulations on the hori0on which might have implications for the operation of !our hotel= What are the future technolog! developments which will impact on hotels generall!= What are the environmental issues that !ou need to respond to=
General
Pre!arin a S-OT Analysis The answers !ou find to the above, and additional, questions must then be interpreted. $ well known tool for facilitating this anal!sis is the "W(T matri which, as !ou are likel! aware, involves summarisingB
The current internal strengths and weaknesses of !our hotel U which in essence helps !ou to answerB where are we now=
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The opportunities and threats !ou face in the e ternal business environment which will later influence how !ou answerB where do we want to be=
"W(T anal!sis is a widel! used, but frequentl! misused tool. (ften, managers sit around the table and ever!bod! chips in what the! believe are the strengths, weaknesses, opportunities and threats facing the business. Then, b! discussion and agreement the "W(T is finalised. Infortunatel!, compiling a "W(T based solel! on opinions, or Ggroup%think; is of little value' facts are required. 1o !our research first and then prepare the "W(T based on hard evidence.
De9ys,i5yin #Par, 4&
S,ra,e ic
Plannin
&aving discussed how to assess the current position in Part Two of this series, the ne t stage in building !our strategic map involves answering the questionB Where do we want to be= This begins with some 6big picture7 thinking, or through the development of Eision and Mission statementsB

Eision is what !ou ultimatel! want to achieve in !our hotel Mission describes what t!pe of hotel !ou will operate as !ou work towards that vision
Eision broadl! refers to the destination, whereas mission relates more to the journe! and describes the t!pe of hotel !ou want to operate U with regard to !our primar! stakeholders U as !ou move towards !our vision.
De2elo!in a 'ision .or Your Ho,el To serve as a vehicle for e plaining how to build !our strategic map in practice, a fictitious e ample of the vision for a medium si0ed, independent /O hotel situated in @ondon could beB
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Eision To become the leading independent /O hotel in @ondon providing e cellent products and services at reasonable prices to ever! customer, ever! time De5inin your Mission The Mission might read something like thisB Mission (ur customers are our priorit! and we will provide them with a qualit! e perience which is second to none. We recognise the importance of our emplo!ees in achieving this and we will create a positive working environment which encourages their lo!alt!, commitment and hard work. We strive to be e cellent leaders and will undertake all our business activities in an honest and ethical manner to provide a fair return on our investment Li2in your 'ision an( Mission These are attractive statements of intent' but to add an! real value, the Mission must be translated into measurable goals, such asB
These sample goals now provide focus and direction for the business' the! are something to aim for and, if achieved, will ensure that the Mission is lived in realit! and that the hotel is moving towards its Eision.
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S,ra,e ic
Plannin
&aving business goals is great, but still meaningless, unless something is done to make them a realit!. This is where strateg! and plans come in. )n defining their strategies, the management team at our fictitious hotel would need to ask themselves certain questions based on their defined mission%related goalsB
"trategies are essentiall! choices !ou make, or options !ou take b! answering similar questions to the samples provided above U based on !our own vision, mission and goals. The strategies !ou choose must help !ou to pla! to !our strengths, reduce the impact of weaknesses, capitalise on opportunities and counteract threats. .ro9 Business S,ra,e y ,o Annual Plans Whatever goals and related strategies are devised, it is clear that it will take more than one !ear to realise them, so an annual plan is needed to help implement the strateg!. Whereas
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operational planning is concerned with doing things right so that the hotel runs smoothl!, annual planning is focused on doing the right things so that !ou are actuall! implementing !our strategies and progressing towards !our goals. Vour annual plan should define the range of finance, marketing, human resources and operational actions necessar! to implement !our strategies in an! given !ear.
S,ra,e ic
Plannin
)n Parts +%/, the focus was on creating cohesive linkages fromEision and Mission right down tospecific activities in the annual plan. The final part of this series will e plore the questionB how will we know we are getting there= The answer to this question can, of course, onl! come from measuring progress, anal!sing the implications of the results !ou get and taking action to continuousl! improve. <ive basic steps can be taken to manage continuous improvement with regard to !our strategic mapB
%/ De5ine ,he resul,s you +an, ,o achie2e
Vou will alread! know what !ou want to achieve U it;s !our goals which have been developed based on !our Eision and Mission.
1/ TaCe ac,ion ,o achie2e ,he resul,s you +an,
#learl!, if !ou don;t implement !our strategies through an annual business plan as described in Part /, then seeking to measure impact is pointless, because !ou won;t see an! results and, even if !ou did, !ou would not know wh! the! occurred U be the! good or bad.
4/ *onsi(er ho+ !ro ress +ill be 9easure(
#ertainl!, !ou alread! measure impact in areas such as financial performance' however, when seeking to identif! progress towards !our goals, there ma! be measurement gaps to be bridged, because clearl! not all the goals in !our strategic map will be financial in nature. The ke! point here is that !ou onl! need those measures which are of value for !ou and relate to each of !our primar! stakeholders, owners, customers and emplo!eesB
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8/ Measure Pro ress a, (e5ine( in,er2als
$t defined intervals, the measures !ou have identified need to be produced so that !ou can track progress. <or some measures, such as financial data, !ou will produce them frequentl! whereas others, such as the emplo!ee engagement percentage, might be taken quarterl!, bi% annuall! or annuall! depending upon the scale of !our operation.
0/ Analyse ,he resul,s an( 9aCe i9!ro2e9en,s
The final stage of the continuous improvement c!cle is the most important component and is reall! the cornerstone of the strategic map itself. 1epending upon actual results achieved against e pected !ou will obviousl! be faced with some decisions. )f progress is not matching e pectations, !ou must identif! what;s causing the shortfall and take corrective action. Jven when the result is positive, !ou still need to learn the lessons, so that !ou can make it even better in future. To strengthen !our understanding of how !our hotel is performing, !ou should also e plore wa!s in which !ou can benchmark !our results against industr! norms and, better still, e cellent companies. )t is onl! through e ternal comparison that !ou can reall! judge performance effectiveness. There is no magic pill for creating an effective strategic map for !our hotel but the principles we have covered in these five articles will set !ou on a course where devising a winning strateg! is a more likel! option. $ll great hotels, whether the! are big or small, independent or part of a chain, succeed in large part because the! know what the! want to achieve, implement a range of integrated actions to make that happen, track their progress and continuousl! improve based on the results the! get.
Jvent planners often focus their strategies on targeted industries, attendees and e hibitors. $dding hotel and resort planning to the strategic mi can improve attendee e perience and the bottom line. &otel business planning t!picall! involves location, time, space, services and cost. These components can also provide strategic advantages for !our event.
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Travel between hotels, e hibit floor and meeting locations is often lost time for e hibitors, attendees and sponsors. $ Gself%contained event; with all activities and housing in one facilit! minimi0es travel times and e ternal distractions. )t also encourages more interaction among e hibitors and attendees. (n%site meeting space, golf courses, hiking trails and sports courts allow for seminars, tournaments, team building or spouse programs. These features enable planners to avoid the time and e pense of negotiating with multiple facilities and organi0ations. (n the subject of self%contained properties, Tim "wan, director of sales P marketing at the (rlando World #enter Marriott, e plains, 6We often refer to this propert! as a Gland%locked cruise ship.; The entire e perience can be here. $ll the meeting space is under one roof and connected to the main building, complimented b! an e tensive collection of restaurants and recreational facilities.7 "imple *hotelCresort- amenities can enhance business and convenience. <ree *or reduced rateairport transportation provides man! strategic benefits. $ show sponsor, requiring man! people at the event, could save several thousand dollars. Jven small e hibitors *with ? to . people- reduce costs b! about Y?::. "trategic benefits e tend be!ond this obvious cost reduction. $rriving participants do not need to research and arrange transportation, which can easil! waste half an hour at the airport. )n addition to added convenience, this enables more time at the show. <or a staff of 9/ this equals +9 more personChours of on%site working time. )f average emplo!ee overhead is Y/9Chour, this is over Y?:: in additional savings. "ufficient additional on%site time ma! reduce the number of staff required, with corresponding reduction in travel e penses. When staff time is billable, this is an e tra +.? da!s of revenue, without increasing staff si0e. "pecial hotel locations can motivate attendees or add focus to the event theme. #heri "prenger, marketing and communications coordinator for the 3esort at "quaw #reek, points out their 6Tahoe location is a remote, beautiful mountain setting that provides a unique, +:: percent self%contained, retreat e perience with an e tensive list of on%site, outdoor recreational activities.7 <amil! activities are a commonl! overlooked strategic benefit. "prenger states, 6We offer e tensive children;s activities that are more like a camp, rather than just bab!sitting. ) find that is usuall! a big selling point to groups. When participants can bring their families, attendance tends to rise.7 )n addition to convenience, theme and focus, using a hotel or resort can change the event;s cost and bottom line. 6(ur space pricing Kas a hotelCresortL is based on a group;s overall spending,7 according to "wan. 6Pricing could be nominal or 0ero for a self%contained event generating sufficient revenue from other streams. )n a convention center, space cost ma! be a fi ed amount or contingent on participation from surrounding hotels, requiring more negotiation, time and coordination. )t is important for planners to anal!0e total costs when comparing hotels, resorts and convention centers. #arpet is a good e ample. $ll of our space is carpeted, and that is included in our price. )n man! convention centers, show management and e hibitors pa! for carpets in addition to space. This t!pe of complete cost anal!sis ma! show that hotel space is less e pensive than comparable space in a convention center.7
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Se,,in Goals $s the situational anal!ses answered to the question 6where are we now7, the marketing objectives answer to the question 6where do we want to go7. The ne t step is therefore to set goals which translate the compan!;s mission into easil! understood statements regarding the markets, products, sales, occupanc! and marketing mi . $s the marketing mi is made of the tools that a compan! uses to pursue its marketing objectives in the target market it is an essential part while setting the goals. *>owie P >uttle 9::/B 49D%495(bjectives should be specific, measurable, achievable, realistic and carried out within a set timetable. The! can be set as strategic long%term objectives or if the objectives are smaller and set to be reached within a short timeframe the! should still be integrated with the long% run compan! goals and strateg!. *Middleton et al.9::,B 9+4The more thoroughl! the earlier situational %and "W(T%anal!ses have been done, the easier it is to set precise objectives. $s setting objectives is an essential part of the marketing
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planning process and if the compan! fails to provide them it reflects to the managers and emplo!ees lack of clear direction. *>owie P >uttle9::/B 49D%495$ccording to 2otler there should be two different t!pes of objectives' financial and marketing. The financial objectives are done first so the compan! evaluates what the! want for e ample the terms of the net profit to be. $fter the financial objectives are set the! are converted into marketing objectives. *2otler +,,5B ,,-
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;/ *RITI*AL =>ALITY PARAMETERS
$ hotel room purchase can also be viewed as a product consumers purchase. The relationships between hotel qualit! and price per room per season are also of great interest. This is especiall! so given the growing hospitalit! industr! in developing countries, the high e pectations of the growing middle class as well as the importance of tourism in toda!Ns changing world econom!. Government officials concerned with hospitalit! capacit! and the M)#J *Meetings, )ncentives, #onference and J hibition- industr! will be ver! interested as to how the hotels complement the revenue generating events. &otel owners and managers also need to know the consumerNs%perceived qualit! heuristic to be able to better price the rack rates and position the qualit! perception in the consumersN mind. )n the hotel industr!, the qualit! of a room is often reflected in the rack rates. )t is generall! believed that the higher the price, the higher the qualit!. $lso, the available infrastructure and modern technolog! will further enhance the customersN e perience. Thus higher rack rates translates into more resources to emplo! better customer service personnel, purchase better facilities, equipment, and develop good entertainment programs and services. This will ultimatel! result in greater customer satisfaction while sta!ing at the hotel, as well as the possibilit! of repurchase at the same location or of the same brand in another place in the future., "o definitel! price pla!s a ver! important role on room occupanc! for a hotel. (ur goal in this paper is to offer propositions that can motivate empirical research pertaining to the factors that influence how consumers use the price%perceived qualit! heuristic to determine whether the hotel room is worth the mone! that the! are pa!ing for. We identif! three potential areas that become salient in these circumstances and in which hotels can better understand their threshold market behaviorB &otel "tar 3atings, &otel >rand Perception and &otel #apacit!. THE *ONS>MER PRI*E$PER*EI'ED =>ALITY
>ased on previous research on the role of price in purchase decisions, it is useful to distinguish two opposite effects. <irst, price is associated with the e penditure items in the budget constraint. The theor! of resource allocation e plicitl! states that consumers will treat it as a sacrifice of monetar! resource as spending in one product necessaril! decreases the possible purchase of another. "econd, a higher price is usuall! taken as an indication of higher qualit!, even though the significance of such perceived correlation ma! var! across product categories. &igher product qualit! and a higher price will result in higher perceived qualit! for the average consumer. >esides the support from the behavioral literature discussed earlier, these parameters are also consistent with the studies that indicate product qualit! information cannot be full! conve!ed or evaluated b! consumers prior to purchase .
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$nother issue in the formulation is the degree of dependence between the use of price% perceived qualit! heuristic and the amount of true qualit! information available. J isting research is inconclusive on this. (n one hand, one ma! argue that the more information available to consumers, the less the! will rel! on price to judge qualit!. (n the other hand, other studies suggest that the use of price%perceived qualit! heuristic is an intrinsic behavioral characteristic of consumers, and the! still adopt it even if their knowledge of the products is increased b! communication or personal usage . Ho,el S,ar Ra,in s
&otels are often rated b! using the star classification s!stem. &igher star ratings indicate more lu ur!. &otels are independentl! assessed in traditional s!stems and rest heavil! on the facilities provided. "ome consider this disadvantageous to smaller hotels whose qualit! of accommodation could fall into one class but the lack of an item such as an elevator would prevent it from reaching a higher categori0ation. The origins of the stars are not clear. Government officials in Jurope put stars on hotels to rank facilities and prices, but the Michelin tire compan!Ns guides for touring motorists added qualitative judgments and limited stars to the ver! best. >oth <orbesCMobil and $$$ put hotels in five ranks. The first three levels *stars or diamonds- are determined relativel! simpl! b! evaluation of facilities and amenities. To rise above three requires overnight e amination b! anon!mous inspectors. 3ecentl!, hotel rating s!stems have also been criticised b! some who argue that the rating criteria for such s!stems are overl! comple and difficult for la!persons to understand. )t has been suggested that the lack of a unified global s!stem for rating hotels ma! also undermine the usabilit! of such schemes. *#larke and Mc#lathc! 9:++-. $lso what makes a five%star hotel worth five stars= $ccording to <orbes Travel Guide, which took over the Mobil guide, a hotelNs rating is now more about the guest e perience than about the propert!Ns ph!sical attributes. &owever before the guest can have the e perience, the guest will have to make perceptive qualit! inferences. $s the star rating information pertains to the availabilit! of amenities, consumers will have more information available pertaining to the qualit! of sta! or e perience. $s amenities are absolute relative to star ratings, there is less reliance on price to perceive the qualit!. With more available qualit! information, consumers will naturall! depend on the information. Thus with this in perspective, we propose proposition . Ho,el Bran( Perce!,ion
The belief that brand perceptions strongl! influence bu!ing behavior is widespread, and this belief underpins much of a businessNs marketing communication strateg!. <irms look to
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image studies to e plain current marketplace performance, eg. numbers of units sold and price gained. )n the case of hotels, the star ratings of hotels and the price of the room per night is often used to benchmark the brand perception of the universit!. 3omaniuk and "harp *9::9- indicated that generall! the more positivel! the brand is perceived b! the marketplace *potential business travelers and tourists in the case of the hospitalit! industr!-, the more the consumers *or potential guests- will bu!. >rand perceptions can come from a variet! of sources including consumer e periences, marketing, communications or word of mouth. >asicall!, an! information that is encountered with the brand name when sufficientl! processed will be linked to the brand name in memor! and thus become part of that brandNs image. Whether the consumer has a positive or negative perception of a certain brand will certainl! affect the wa! consumers use the consumer price%perceived qualit! heuristic to infer qualit! and that will also determine whether the! rel! on qualit! information as well to perceive qualit!. Jach !ear, the 81 Powers and $ssociates report on Aorth $merican &otel Guest "atisfaction )nde "tud! measures overall hotel guest satisfaction across si hotel segmentsB lu ur!, upscale, mid%scale full service, mid%scale limited service, econom!Cbudget and e tended sta!. "even ke! measures are e amined within each segment to determine overall satisfactionB reservations' check%inCcheck%out' guest room' food and beverage' hotel services' hotel facilities' and costs and fees.
Ho,el
*a!aci,y
8ones *+,..- presents a four part model of service deliver! based on inputs, intermediate output, and outcomes, )t argues that productivit! is largel! determined b! managing stage +, the relationship between inputs and intermediate output' capacit! is stage 9, the relationship between intermediate output and actual output' and qualit! is concerned with the issue of ensuring successful outcomes from actual output. The model is hierarchical in that both capacit! management and qualit! management depend upon actions taken in the preceding stages. The paper then goes on to relate the model and these issues to three clear trends in service provisionB production%lining, decoupling and increasing consumer participation in the e perience. #apacit! in a hotel is the availabilit! of rooms to accommodate their guests. Too man! empt! rooms will translate to higher operating costs while too man! occupied rooms ma! translate to an overcrowding and higher demand for service production be!ond the capacit! of the hotel egB "pa appointments. #apacit! relates to availabilit! of services and hence the overall qualit! of the hotel sta! e perience. )n @ewis *+,.,-, the capacit! of the service provider also leads to the overall motivation of the emplo!ees which in turn translates to the qualit! of the service provided to the guests. The perception of smaller hotel capacit! from consumers *potential guests- is that it implies limited econom! of scale and service qualit!. $s a consequence, this will mean that the qualit! if available would be over priced or not available. 3eliance on the price%perceived
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qualit! would be reduced. )n this case, an! objective information about the qualit! would be heavil! relied on. )n developing this article, we hope to provide a framework for discussion, action and further empirical validation on the issue of hotel perceived qualit! with respect to three factors' &otel "tar 3atings, &otel >rand Perception and &otel #apacit!. &otel rack rates are on the rise worldwide *P3 Aewswire 9:++- indicating prices that consumers are willing to pa! for perceived qualit!. &owever we believe these perceptions are moderated b! the three factors we indicated. The interdependence of qualit! information and price%perceived qualit! perception is also affected. Through the motivation in this article, we hope that future researchers will be able to design studies that can empiricall! validate these propositions. The findings will point to several wa!s that hotel owners and management can realign programs and reallocate resources to raise profitabilit! levels and reduce costs. Primar! among them is the connection between star ratings and actual guestsN e perience, whether to invest in the brand name or how to optimi0e capacit! for the best guest e perience. "ervice qualit! can be viewed from two perspectives U internal and e ternal. )nternal qualit! is based on the conformance to specification. J ternal qualit! is based on relative customer perceived qualit!. $ccording to Parasuraman et al. *+,,/-, four distinct gaps on the service provider side can impede deliver! of service that consumer perceives to be of high qualit!. These gaps areB Gap +B Aot knowing what customers e pect. Gap 9B Aot selecting the right service design and standards Gap 4B Aot delivering to service standard. Gap /B Aot matching performance to promises
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%%/ S>PPLY *HAIN< LOGISTI*S AND PRO*>REMNT
Su!!ly *hain Su!!lies: Major supplies for cleaning and maintenance like towels and soaps are stored in each hotel as backup, but major supplies are ordered from their supplies as and when required b! each hotel. Mostl! suppliers are locali0ed so that the! can deliver as and when required. "ome of the products and services frequentl! purchased or contracted includeB Z #onstruction
Z #leaning and Maintenance "ervices *e.g., carpet cleaning, windows, janitorial, hood cleaning, etcZ Z Z Z Z Z Z Z Z 1r! #leaning Jnerg! and Jlectrical "upplies and "ervice <lorist C <resh <lowers <ood P >everages Golf and 3elated Products )nterior 1esign "ervices )T "ervices Marketing P $dvertising Waste 3emoval "uppliers include Guest "uppl!, )nc P $merican "uppl! #orp. )mprovements that could help with deliver! or qualit! of product are listed as below
Jarlier supplier engagement to make sure the products are read! when required and proper inspection of the products are done prior to their use to check the qualit! of the product. @ong lead times )ncentive programs for the suppliers to be competitive and checks the qualit!.
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3ecognition for the suppliers to achieve more in less. 3esource sharing
Procurement professionals deal with three different business models. <irst are the owned properties, at which spend is much easier to control. "econd are compan!%operated or managed properties, where the spend is more difficult to control, but it can be influenced b! purchasing to a certain e tent. Third are franchised properties, which require more choices. $nother new focus to improve qualit! is closer relationships with both internal customers and suppliers. The department uses customer surve!s and other communication tools to find out what customers reall! want and how the purchasing department can deliver it. >reaking down traditional adversarial roles with suppliers, the! work closel! with suppliers to leverage their resources. The department also surve!s suppliers anon!mousl! on potential improvements To maintain the rooms and entertain guest, the! have inventories listed below which mostl! are obtained b! their local suppliers.
Jntertainment items *TE, E#3, #able, music"wimming pool items. #onstruction materials #leaning and Maintenance "ervices *e.g., carpet cleaning, windows, janitorial, hood cleaning, etc1r! #leaning Jnerg! and Jlectrical "upplies and "ervice <lorist C <resh <lowers <ood P >everages Golf and 3elated Products )nterior 1esign "ervices )T "ervices Marketing P $dvertising Waste 3emoval
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$ hotel J3P or propert! management s!stem *PM"- simplifies inventor! management to a large e tent and makes tracking of purchase and sales accurate. There are numerous operations in inventor! which happen simultaneousl!, these include sales through point of sale terminals, room service, purchase of food, beverages, other room related consumables and durables. Tracking all these activities can be difficult and if not tracked adequatel! can result in revenue leakage, wastage, and theft. $ good inventor! management s!stem helps a hotel predict demand and suppl! rate with great accurac! and reduces the chance of error, it also helps a hotel accessbusiness intelligence, plan e penditure and keep a tighter control on profit. >esides all this, inventor! management also facilitates vendor management and provides information such asB
'en(or Per5or9ance E $llows hotel managers to choose better performing vendors b! tracking information such as time of deliver! time, accurac! of deliver!, cost effectiveness etc. 'en(or Accoun,abili,y E Jnsuring a vendor delivers the right shipment and hotels. $n integrated inventor! management s!stem allows hotel managers to pinpoint errors in deliver! with great accurac! and make vendors accountable for their own action. Or(er Mana e9en, E to prevent bothoverstocking and stock outing situations
1ata obtained from inventor! management s!stem can be advantageous to increase the efficienc! of a hotel. To begin with inventor! management maintains a database of all bu!ing, selling and consumption trends and thus acts as an incredible source of business information as it pinpoints areas of concern and helps minimi0e fraud. .unc,ions o5 In2en,ory Mana e9en, so5,+are &ere is a quick glance at some of the functions of a good inventor! management software.
"tores creation U sub store and main stores can be created with rate calculation like weighted average, last price and last in first out *@)<(<"A can be defined and anal!sis reports are available Quotation anal!sis can be done with vendor anal!sis, tender forms, comparison sheets and auto generation of purchase order is available Purchase requisition, purchase orders, indents can be mailed, printed and two levels of authori0ations are available. $lso available is a standing purchase order "ervice work order is available )tem stock levels like minimum, ma imum, and reorder level and reorder quantit! can be defined with recording of >atch[, #onsignment[, #apital goods etc Eendor master with vendor anal!sis, ta deduction at source entr! applicable
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3eports on stock levels, consumption summar! b! cost centersC departments, spending pattern based on the last !ear average consumption in comparison with current !ear $udit reports for transactions, P(, "P(, indents and purchase requisition is available Ealue added ta *E$T- reports can be accessed >udgets can be defined and budgets vs. actuali0ation is available Ph!sical stock entries can be made for a month end process and reports on ph!sical stock, store balance, negative variance reports are available $ccess to efficienc! reports 3eports on reorder levels and reorder quantities and option to update reorder levels @ookups on stocks, consumptions and authori0ation status for P(, "P(, indents and purchase requisitions, vendor selection based on lat price and last received date
Procure9en, an( s,ocC *on,rol Solu,ion w.nner "tock #ontrol helps companies reduce food cost and improve efficienc! resulting in higher profits and a quick return on investment. )t is especiall! designed for use in restaurants, hotels, schools etc. and offers an eas! wa! to manage foodservice back%office operations. Merchandise P 3ecipes. Merchandise forms the base of w)nner "#. Merchandise is defined with properties such as name, categor!, ta F, stock units, storage location etc. Merchandise prices can be set or modified, and changes to the prices are reflected immediatel! in recipes and menu costs. 3ecipes are created using the merchandise list. )ngredients required can be searched and selected from this list. )ntegrating with w)nner P(" s!stem or w)nner <ront (ffice, recipes can be linked to P(" articles enabling real%time stock update based on P(" sales. )nventor! Management. w)nner "# makes it eas! to do actual inventor! reports an!time. Vou can do an actual inventor! of items b! storeroom or outlet, and compare it to the ideal inventor! based on P(" activit! and track down variances per item. )nventor! reports create a snapshot of the inventor! and are saved for later reference. This wa! !ou can consult past inventor! reports for statistics and reference. )nventor! variance reports will list down the products and identif! variances in si0e and value. This enables !ou to pinpoint specific items in !our inventor! that contribute to !our food cost variances. Monitoring item transactions as well as controlling wastage and spoilage becomes a snap and food costs can be reduced. The actual stock take can be entered in a ver! user%friendl! grid t!pe screen.
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"uppliers. "upplier data is kept in the centralised $ddress >ook which is integrated throughout all w)nner products. w)nner "# can track an unlimited number of suppliers with full details. Jach transaction for suppliers is recorded so it becomes eas! to compare prices, or price patterns. Purchase orders, deliveries and invoices can be recorded with the supplier, and histor! of orders can be stored indefinitel!. Purchase histor! enables !ou to compare different vendors and their prices so !ou can easil! find the lowest price vendor. "tores P (utlets. <or hotels and other businesses with multiple storage facilities, !ou need to do requisitions and transfer products between stores, kitchens, bars and other storage locations. w)nner "# enables !ou to create multiple storage locations, and makes it ver! eas! to manage mutations and transfers between stores. Vou can track inventor! transactions and print out inventor! status and variance reports per store or outlet. <or hotels, !ou are able to keep track of actual and ideal food costs for each restaurant outlet. Purchase (rders P 3equisitions. Purchase orders can easil! be created from requisitions, making the purchasing manager;s work ver! simple. 3equisitions can be generated automaticall! based on minimum stock levels, or based on P(" sales activities. Purchase orders can be created with different status modes, and can be saved for later processing. (nce an order is finalised, it can be printed and sent to the supplier. The receiving department has access to all purchase orders sent, so the! can easil! compare them when deliveries arrive. When deliveries var!, modifications can be added to the order to reflect the actual deliver! of goods. Ipon deliver!, the deliver! note number or code can be added to the order, and upon receipt of the invoice, the invoice information is added as well. When making the requisition or purchase orders, the current stock on hand is displa!ed for ever! item, so !ou can find out if the item is below par stock level or not. Vou can see additional information about each product, such as default order quantit!, quantit! of last order etc, to help improve accurac! during ordering. 3eceiving. w)nner "# makes it eas! for !ou to record product deliveries. 3ather than ke!ing in each delivered item, deliver! receipts are matched with purchase orders for price and quantit! verification. &istories of deliveries are kept and saved for immediate comparison and future control of invoices. >! comparing orders with deliveries, !ou can instantl! spot errors on quantities, qualit! and prices that would otherwise fall in the favor of the vendor. This goes a long wa! in reducing !our operation;s food costs. 8ust imagine how much !ou can lose over the course of a !ear without proper receiving and purchasing management. )ntegration. w)nner "# combines sales volume data with !our stock activit!. P(" articles are linked to 3ecipes or merchandise, and stock levels are updated in real%time. )n other words, stock is
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deducted automaticall! the moment the waiter posts the article in the P(" s!stem. This integration enables !ou to focus on trends and decide which of !our menu items need to be maintained, modified, promoted or replaced. *urren, Prac,ices Procure9en, Mana e9en, Procurement practices are used in the logistics and suppl! chain industr! to support operational needs of the compan! b! focusing on how purchasing is done, how the product is received from suppliers, building relationships with vendors and managing the procurement process b! identif!ing opportunities and managing internal operations *<anta0!, 2umar, P 2umar, 9:+:-. )n toda!;s procurement environment, importance has been placed on reducing costs during purchasing which leads to the best costs and value to its customers. #ompanies like Wal%Mart who go straight to the manufacturer, are ver! strong when the! negotiate their price with vendors and make sure no other compan! is getting their products at the same low price. <or e ample T8\ companies the off%price retail store, makes their procurement strateg! transparent b! spending a lot of time with vendors to better understand their price structure and their strateg! to best reduce costs. $ccording to 3obert @indsa!, a bu!er in charge of food and beverage procurement at the Eenetian CPala00o in @as Eegas, his hotel purchasing is done on a two week rotation using the compan!;s master distribution plan philosoph! which includes one to three vendors. The! ask for the best price and promotions to help save on costs through the lower prices. )n their procurement process the!, tr! to sta! within a + % ?F value as part of their product costs strateg! *3. @indsa!, personal communication, 8une +?, 9:+9-. 1ue to the Eenetian CPala00o large structure and chain of events, a purchase has to go through to get processed. $ stud! was done on their purchase order strateg! to evaluate the steps it takes to generate a single purchase order. The stud! showed it took Y5? to process a single purchase order. The! reversed their strateg! to cut down on these processes which lead to few drops and fewer invoices to generate up the chain. The procurement process has also helped the Eenetian CPala00o, consolidate purchasing that has led to larger discounts and improved service from suppliers, increased speed in the flow of important information, and reduced the time necessar! for ordering. 3obert @indsa! has also seen improvements in the compan!;s relationship with vendors and an increase in the accurac! of orders *3. @indsa!, personal communication, 8une +?, 9:+9-. $t the <our Queens, the manager in charge of purchasing, Wa!ne >ach, mentions that with its procurement process it focuses on three bids for ,:F of its products. &e tries to use specific vendors, using a specific rotation and adjusts based on the value of the products. The <our Queens uses procurement software which has helped them operationall! match orders easil!, improve auditing, and enable staff to more easil! verif! and track orders. The <our Queens has also seen a reduction in inventor! levels and the costs associated with inventor! *W. >ach, personal communication, 8une +4, 9:+9-. The EenetianCPala00o and <our Queens, like man! other hotel companies, use procurement software called "tratton Warren to manage the whole procurement process via ecommerce. The change from the usual ordering
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process was because the previous s!stem did not give accurate information on suppl! chain issues *2othari, &u, P 3oehl, 9::?-. "tratton Warren has been integrated with other s!stems like warehouse management and financial s!stems to help gain better visibilit! and control of their procurement process and prevent an! industr! procurement challenges, like issues with purchases, deliveries, pricing, and qualit! standards, as well as help suppliers spend more time creating value for the hotels. <or e ample, &ilton &otels changed their procurement strateg! b! combining bu!ing into national contracts for its various brands, and using local providers where it makes financial sense. &ilton &otels makes sure the! build strong relationships with suppliers for good deals, and then negotiate markups with the distributors that handle warehousing and deliver!. $lso as part of their strateg! to control the whole suppl! chain process, the! are making changes internationall! b! focusing on integrating their international procurement *Terr!, 9::5-. Lo is,ics an( Su!!ly *hain I9!le9en,a,ion Reco99en(a,ions )>M;" 9::,, Global #hief "uppl! #hain (fficer "tud! conducted for the metals and mining industr! mentions that .9F of companies believe that, the increase in suppl! chain competition is ver! aggressive in toda!;s logistics and suppl! chain environment. The competition has lead to new revenue opportunities which represents new competition. The article talks about how it is important for companies to implement better strategies to reduce costs and manage the comple it! of logistics and suppl! chain management b! collaboration and sharing information across the network, as well as using anal!tics and simulation to evaluate the increasing comple it! *)>M, 9::,-. 1ifferent concepts have been developed to understand how the successful implementation of logistics and suppl! chain management can be achieved. <or the hotel industr! logistics and suppl! chain activities are grouped into tactical, strategic and operational levels to help create a more s!stematic approach b! focusing on how implementation will happen from a higher level, then linking that to long%term goals and finall! how these results translate in the short%term. O!era,ional le2el *os,s/ The operational level of logistics and suppl! chain management implementation focuses on decisions that are related to how to make the tactic approach happen in the short term. Toda! hotel costs associated with logistics and suppl! chain strategies have placed the emphasis on increasing efficienc! and reducing total costs to sta! competitive *)>M, 9::,-. 1uring implementation, costs need to focus on purchase and inventor! costs. )t is important to monitor purchase costs with products that have a short life c!cle and have to be replenished frequentl!, since hotels usuall! bu! too man! stock%keeping units *"2I- for the same use. )t is important that during implementation, hotels have a product portfolio and suppliers that are consistent and develop a strategic relationship with each other to help keep costs down in the process. )nventor! costs during implementation need to focus on supplier relationships and using strategies like just%in%time inventor! to reduce inventor! costs in the hotel industr!. )nventor! costs can be cut down b! forecasting, planning, and scheduling orders in the most costs%efficient wa! which allows the hotel to react to changes in demand and suppl! *#onstantine, 3uwadi, P Wine, 9::,-.
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Si9!li5yin co9!le?i,ies/ )t is important in logistics and suppl! chain implementation for hotel managers to manage strategies to eliminate comple ities that do not add an! value to the organi0ation. )t is important that logistics and suppl! chain functions are broken down into different areas based on which areas matter the most in the suppl! chain. This segmentation helps hotel managers easil! identif! the relationship between costs and price with suppliers and helps in negotiating better prices *#onstantine, 3uwadi, P Wine, 9::,-. <or e ample, one wa! "tarbucks eliminated comple ities in its logistics and suppl! chain transformation, was the! made changes to how coffee beans were delivered to its processing plants. The! decided to build facilities in those regions that helped reduce lead times and labor costs. *#ooke, 9:+:-. This makes it important during implementation for hotel managers to regularl! look at their logistics and suppl! chain operations and eliminate comple ities that do not add value.
Ri h, 9e,rics/ $ppl!ing ke! performance indicators *2P);s- to logistics and suppl! chain operations during implementation is vital to help monitor how well suppliers and vendors are meeting set targets, which helps improve top and bottom line performance. "tarbucks created a weekl! scorecard to monitor third part! carrier performance in areas of costs, service, and productivit! agreed upon with their partners *#ooke, 9:+:-. $ppl!ing 2P);s to operations will help create transparenc!, improve costs, and help serve customers better, as well as la! the foundation for future logistics and suppl! chain initiatives. RisC 9ana e9en,/ #onsidering risk management is critical during logistics and suppl! chain implementation for hotel managers in order to evaluate risk associated with implementation in their strateg!. Managers should have a good understanding of the benefits involved with sharing risk information across the network. )t is important to be able to manage risk, using information available on the difficulties of monitoring risk and to be able to react to risk through the use of standardi0ed information *)>M, 9::,-. &otel managers need to make use of past histor! as a benchmark for future risk and it should be used b! hotel managers as a tool to achieve better logistics and suppl! chain visibilit!.
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%%/ *onclusion
(ne of the lessons that can be learned from this anal!sis is how change is acting on the industr!. )s each of the different t!pes growing at the same rate, or are some t!pes e panding and others declining= 8ones *+,..- identified three ke! trends in hospitalit! operation designB production lining, decoupling, and customer participation. Production%lining refers to the concept of breaking down production activities into simple tasks so that the! ma! be organised on a production%line basis, just as &enr! <ord production%lined the motor manufacturing process in the +,9:s. )t has long been argued *@evitt +,59- that services in general are moving towards more industrialised processes and Mc1onaldi0ation *3it0er +,,4- ma! be the result. 1ecoupling refers to the idea of separating, both in place and time, back%of%house from front%ofhouse activit!. (ften the rationale for doing so is that one or the other *usuall! back% of%house can be production%lined-. <or instance, a number of health authorities in the I2 have created one large central production kitchen for a number of hospitals and introduced cook%chill, so that the kitchen ma! produce ?,::: to D,::: meals for transportation the following da! to five or more different hospitals. &otels can decouple their reservations process from the unit to a central reservations office. #ustomer participation is otherwise known as self%service. Man! hospitalit! operations now enable their customers to do things for themselves that were previousl! done for them. )t is possible to check into a hotel b! using a swipe card s!stem, select salad items for a self%help salad bar, make !our own cup of coffee in !our room and check out using the in%room television set. The introduction of these ideas into the industr! has not onl! led to firms moving to"ards the diagonal, but also along it, awa! from high variet!Clow volume in the direction of lower variet! and higher volumes. <or instance, R la carte restaurants and full service hotels have been around since the +..:s, whereas 2emmons Wilson onl! conceived the mid%service hotel, which he called &olida! )nn, in +,?9. <ast food onl! reall! began when 3a! 2roc took over the Mc1onalds chain when it had 9:: outlets in +,D+. #ook%chill and sous%vide are even more recent innovations. These trends reflect what has happened in man! other industries. The final question is the e tent to which the hotel industr! will follow other industries towards the notion of mass customisation. )n this conte t both high volume and variet! are accommodated, using a range of different approaches to achieve this technicall! difficult task. This remains the biggest challenge for hotel operators. &ow to provide large numbers of customers with high qualit! service of their choice, at a low price, and at sufficient speed =]
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BIBLIOGRAPHY httpBCCwww.bestmanagement.com.auClibrar!CsiteF9:selectionF9:forF9:hotelF9:P F9:resortF9:developments.pdf httpBCCplanmagic.comCbusiness^planChotel%resortChotel%charts.html httpBCCwww.hotelnewsresource.comCarticle4:959Top^<ive^3easons^for^Meeting^Planner^" ite^"election.html Professional Meeting Management, third edition, published b! the Professional #onvention Management $ssociation #ambridge )nternational #ollege% &otel (perations and Management article Gl!nn, W.8. and Wile!B#hichester >arnes, 8.G. *+,,?/nderstanding Services Management,
&a!es 3.&. and Wheelwright, ".#. *+,5,- @inking Manufacturing Process and Product @ife #!cle Harvard 0usiness Revie", 8an%<eb, +44%+/: &ope, #. and Muhlemann, $. *+,,5- Service $perations Management: Strateg , design and deliver , Prentice &allB&emel &empstead 8ohnston, 3. and #lark, G. *9::+- Service $perations Management, Prentice &allB&arlow 8ones P and @ockwood $, *+,,,-, Hospitalit $perating S stems, 1istance @earning Init, Iniversit! of "urre! B Guildford 8ones, P. *+,..- The impact of trends in service operations on food service deliver! s!stems .nternational 1ournal of $perations and Production Management .B5, 94%4: 8ones, P. *9:::- $n the Performance Frontier: /nderstanding $perations Management in the Hospitalit .ndustr , )naugural @ecture, Iniversit! of "urre! *unpublished2rajewski, @.J. and 3it0man, @.P. *+,,4- $perations Management: Strateg and Anal sis, $ddison%Wesle! PublishingBAew Vork @evitt T. *+,59- Production line approach to service, Harvard 0usiness Revie", ?:B?, 9:%4+ @ovelock, #. *+,.4- #lassif!ing services to gain strategic marketing insights, 1ournal of Mar,eting, /5B"ummer, ,%9:
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Morris > and 8ohnston 3 *+,.5- 1ealing with inherent variabilit! % the difference between service and manufacturing e plained, .nternational 1ournal of Production and $perations Management, 5B/, +4%99 3ender, >. and &ei0er, 8. *+,,D- Principles of $perations Management, Prentice &allBIpper "addle 3iver A8 "asser, W.J., W!ckoff, 1.1. and (lsen, M. *+,5.- !he Management of Service $perations, $ll!n and >aconB>oston "chmenner, 3. *+,.D- &ow #an "ervice >usinesses "urvive and Prosper=, Sloan Management Revie", "pring, 9+%49 "chonberger, 3.8. and 2nod, J.M. *+,,/- $perations Management: #ontinuous .mprovement, )rwinB>urr 3idge, )ll. "lack, A., #hambers, ". and 8ohnston, 3. *9::+- $perations Management, Prentice &allB&arlow "ower E.J., Motwani 8. and "avoie M.8. *+,,5- #lassics in production and operations management, .nternational 1ournal of $perations & Production Management , +5 *+- +?%9. Waller, 1.@. *+,,,- $perations
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Globsyn Business School

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