Hotel Operations Management

Globsyn Business School HOTEL OPERATIONS MANAGEMENT
PRESENTED BY: Learning Group 5 & 6 (PGPM-11B)
- Vasundhara Kedia - Sourabh Soni - Sudeshna Chowdhary - Niloy Biswas - Sauryadipta Basu - Mandeep Pradhan - Alisha Ali - Ankita Ghosh - Ashutosh Dutt Pandey - Sayantan Roy
HOTEL OPERATIONS MANAGEMENT
- Sougata Ghosh Choudhury ACKNOWLEDGMENT
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 extend our gratitude to our faculty guide Prof. S Kar, 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 every time we diverted from it.
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TABLE OF CONTENTS
Abstract
PAGE NO.
1. Introduction 2. Literature Review 3. Scope of the Hotel Industry 4. Needs of customers & Hotel Service Design 5. The Conversion System 6. The hotel operations ( Process layout, flow chart and blueprint) 7. The Location Planning for Hotel 8. Facilities layput for the Hotel 9. Strategic and Operational Planning 10. Critical Quality Parameters 11. Supply Chain, Logistics and Procurement 12. Conclusion
5 6-7 8- 10 11-17 18-19 20-28
29-33 34-40 41-55 56-59 60- 67 68
Bibliography
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ABSTRACT
A hotel is rather like apple pie - it is very familiar, everyone has experienced one and everyone knows which he or she likes best. Hotels are therefore easy to relate to and, as an almost perfect archetype of service operations; they would seem to offer a rich context for the exploration of examples of POM theory. It is perhaps surprising then that hotels are underrepresented and sorely misunderstood in the production and operations management literature. Waller (1999) in his book on operations management gives Accor as an example of a service firm and never refers to it again. Out of the 84 firms referred to in this text, one paragraph on Accor is the only reference to a hotel company. There is Heinz, Hershey and Hoover, but no Hilton; McDonalds and McDonnell-Douglas but no Marriott. The same is true of many other POM textbooks. There is no indexed reference to hotels at all in Krajewski and Ritzman (1993), nor Schonberger and Knod (1994). Render and Heizer (1997) have three paragraphs on how hotel chains select sites and Slack, Chambers and Johnston (2001) have a one-page case study on Accors Formule 1 concept. Perhaps operations management textbooks dedicated to services may have more references to this industry? Glynn and Barnes (1995) brought together some of the worlds experts on services. Hotels are referred to in little depth only twice. Johnston and Clark (2001) reflect the overall trend and largely ignore hotels except for Holiday Inn. Hope and Muhlemann (1997), based on ideas developed by Lovelock (1983), identify hotel as providing high customisation and low judgement of contact personnel. But a budget hotel clearly has very little customisation, if any and there are circumstances where contact personnel may require a high degree of judgement, such as dealing with customer complaints or emergencies. Space does not allow for a full review of all seminal journal articles on operations management and the extent to which hotels are used to exemplify principles or concepts. Nonetheless we propose there is a prima facie case for suggesting that hotels have some characteristics that make them difficult to analyse. And, in our view, when such analysis is attempted it is not always accurate. Why is this?
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1. INTRODUCTION
Our starting point for this exploration of hotels in the context of operations management theory is to ask the question: are all operations the same? If they are then hotels will have policies and procedures similar to all industries in all contexts. It would not be significant that hotels are ignored in the OM literature. But even a cursory consideration of operations theory demonstrates that operations vary quite widely. One way a discipline copes with diversity is to develop some kind of taxonomy or typology. In the operations management field, Hayes and Wheelwright (1979) (although there are others) proposed a seminal taxonomy. It identifies five operational types: project, job shop, batch process, assembly line, and continuous flow. Most OM academics and practitioners would regard this analysis as a significant contribution to the field of knowledge (Sower et al., 1997). The taxonomy derives mainly from an analysis based on two criteria product/process mix and process life cycle. In the service literature, a similar taxonomy has been proposed by Schmenner (1986) who identified that services could be categorised according to their degree of labour intensity and level of customisation into four types, which he called service shop, service factory, mass service, and professional service. In todays changing business environment, there is an increased focus on delivering value to the customer at the cheapest possible costs. Hotel 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 industry (Brodsky, 2009). Starting from the sharp decrease in corporate, group and leisure travel demand due to the global financial crisis, hotel occupancy rates have fallen in properties around the country. MGM Resort International, which owns a dozen properties in Las Vegas and employee workforce of 50, 000, represents 12% as the states biggest source of revenue (Mason, 2012). In spring 2011, MGM Resort International (MGM) barely escaped from declaring bankruptcy due to its longterm debt (Garrahan, 2009). Today, with fifteen of the largest hotels in Las Vegas located on the Strip with room availability of 62,000, each hotel company is looking to be more attractive than their competitors (Tse, 2009). In an industry which is labor intensive many hotels are forced to make bolder and more visible moves in costs reduction to their operations. It comes as no surprise that much of these costs cutting efforts have been focused on payroll and other employee associated costs, like hiring freezes, cuts in employee perks, reduction of bonuses, and reductions in base salaries (Jones, 2009).
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2. LITERATURE REVIEW
The main function a hospitality organizations members must perform is the delivery of quality service to its customers. Service quality has been defined as how well a customers needs are met, and how well the service delivered meets the customers expectations (Lewis and Booms, 1983). Gronoos (1984) indicated that the perceived quality of service is dependent on a comparison between expected and perceived service, and is thus the outcome of a comparative evaluation process. Parasuraman et al. (1985) defined service quality as the degree and direction of discrepancy between a customers perceptions and expectations, whereas perceived service quality is the gap between a customers expectations and perceptions as a measurement of service quality. The smaller the gap, the better the quality of service and greater the customer satisfaction. Barsky (1996) suggests that the customers may be excellent sources of information for management on how the organization can provide quality service. Through surveys and focus groups, customers can help management to determine which service areas are most in need of improvement. Gunderson et al. (1996) defines customer satisfaction as, a guests postconsumption judgment of a product or service that can, in turn, be measured by assessing guests 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 obviously a starting point for providing customer satisfaction. A relatively easy way to determine what services customers prefer is simply to ask them. Greathouse et al. (1996) conducted research investigating the factors that travelers considered important in hotel accommodations. In this study, travellers questioned at visitor information centers rated cleanliness of room, value for price, friendliness of staff, and security of property as some of the most important attributes of a hotel. A number of studies on customer satisfaction in the hospitality industry have focused on identifying service attributes; that is, a customers needs and wants. From a marketing perspective, customer satisfaction is achieved when the customers needs and wants are fulfilled (Lam and Zhang, 1999). Lam and Zhang (1999) conducted a study to assess customers expectations and perceptions of service quality, and identified a gap between the two. They also explored the impact of service quality factors on overall customer satisfaction. Their findings revealed that reliability and responsiveness and assurance are the most significant factors in predicting customer satisfaction. In addition, these two factors had the largest differential scores, indicating that the customers perceptions fell well short of their expectations. The purpose of measuring customer satisfaction is to assess the quality of the existing management practices and identify directions for improvement. The aim of managing satisfaction is to obtain a higher rate of customer retention and improve a companys market share and profits (Gilbert and Horsnell, 1998). Many researchers propose that customer satisfaction influences customer loyalty, which in turn affects profitability (Anderson and Fornell, 1994; Gummesson, 1993; Heskett et al., 1990, 1994; Reicheld and Sasser, 1990; Rust et al.,1995; Schneider and Bowen, 1995; Storbacka et al., 1994; Zeithaml et al.,1990). Barsky (1992) discussed a theoretical model of customer satisfaction and then tested the model using a survey instrument. Using his survey instrument, he was able to support his hypothesis that intent to return is positively related to customer satisfaction.
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Operational Practices in Hotel Hotels should evaluate all potential EMS 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 monetary and human capital [30]. Operational practices taking the form of pollution prevention and emission reduction being related to reduction, and efforts to turn typical wastes into raw material related to reuse and recycling. Furthermore, economic ways to abate pollution by detecting waste in operating conditions, establishing material, energy, and water balances, following legislative trends, and predicting future waste treatment costs in the light of present expenses. The hotels use of these operations management procedures constitutes a strategic capability that may provide a sustainable competitive advantage by reducing cost or differentiating the hotels services [22]. Developing this capability usually takes a long time, since it is based on the hotel employees acquisition of certain abilities, such as knowledge, experience, coordination and skills with respect to both operations management techniques, and the hotel operations and delivery system [16]. Some aspects of environmental protection become increasingly important for operations management, and are perceived as a core component of operations strategy [1], [18]. Klassen (1993) found that operational practices are central to a firms environmental management [23]. Few studies relating to operational practices and firms environmental strategy have been mainly concentrated on the more highly regulated manufacturing sectors (e.g. the chemical and furniture industries) [15]. In summary, the existing EMP literature has a lack of empirical emphasis, most studies are conceptual in nature, and there is a dearth of comprehensive research exploring simultaneous operational practices. A number of conceptual and anecdotal studies have uncovered EMPs in specific industries with some studies focusing on waste reduction, some on manufacturing and remanufacturing issues, and yet others on design, or strategy.
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3. THE SCOPE OF THE HOTEL INDUSTRY

1. Accommodation Throughout this section "accommodation" is interpreted in a wide context to include any premises where any 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 necessarily include sleeping accommodation. In 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 include: (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 security of the accommodation. (d) The care, well-being, satisfaction and comfort of the accommodation user. The accommodation industry may classify establishments into two groups according to whether the aim is to make a profit, or purely 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) Non-profit making establishments - such as provincial hospitals, senior citizen's homes, student residences. CLASSIFICATION AND RATING SCHEMES To assist guests and tourism professionals, various classification schemes have been developed. Though there are exceptions, the more important schemes are roughly a comparable standard around the world. Some facilities though that may be considered three star in one country might not be in another (eg. tea and coffee making facilities are far more common in Australia and New Zealand than some other countries). Examples of Star Ratings For Motels, Hotels & Resorts: * Offer basic standard accommodation. Simply furnished, adequate lighting. Motel units have private facilities, but hotels and resorts may have shared bathrooms. ** Well maintained with an average standard of furnishings and fittings. *** Well appointed; comfortable standard of accommodation, furnishings, lighting, cooling and heating. Rooms contain telephone, clock radio, tea & coffee facilities with light breakfast available. **** Exceptional standard with high quality furnishings and fittings. High standards in presentation and guest services; restaurant on site, air conditioned rooms, comfortable lounge, hair drier, etc.
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***** International style and superior standard, extensive range of first-class services including 24-hour room service, and additional shopping and recreation facilities. For Serviced Apartments * Basic accommodation with moderate comfort. ** Average accommodation with higher degree of comfort. *** Good accommodation with better furnishings. **** Very good accommodation, with very high standard of comfort and at least one separate bedroom. ***** Very good with very high standard of comfort & furnishings, must have at least one separate bed room. ***** Excellent, luxuriously appointed, all sleeping areas and bed rooms are separate to the lounge. ***** International quality with an extensive range of first class guest facilities and services. 2. The Role of the Accommodation Manager The responsibilities of the accommodation manager will include some, or all of the following: (a) Assessing manpower requirements (b) Recruitment and selection of manpower (c) Induction and training of manpower (d) Deployment and scheduling of manpower (e) Supervision of manpower (f) Quality control (g) Inspection of premises (h) Developing standard methods for performing tasks (i) Increasing productivity (j) Welfare of personnel (k) Hygiene control (l) Pest control (m) Waste control (n) Selection and purchasing of supplies (cleaning agents, equipment, etc.) (o) Selection and purchasing of "linens" and soft furnishings (p) Selection and purchasing of all surfaces (floor coverings, wall coverings, furniture, etc) (q) Stores control (r) Linen control and laundering (s) Cleaning and maintenance of the premises and plant (t) Redecoration and up-grading schemes (u) Capital building projects (v) Interior design
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(w) Health, safety, fire and security arrangements (x) Care and welfare of the building user that is the client or personnel. In certain types of establishments, such as hotels or conference centres, the accommodation manager may also be responsible for front office operations and conferences. Accommodation management is a well established activity in certain types of operations (eg. hotels, hospitals and halls of residence. These all tend to have a well-defined organisation structure). ACCOMMODATION PRODUCTS Accommodation Clubs Guests can apply and join this type of club and obtain discounts on tariffs, and perhaps other services as well (such as discounts from certain car hire firms), eg. Best Westerns Gold Crown Club, Flag Inn Club. Frequent Guest Programs Each 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 A certain quantity of accommodation (eg. nights stayed) can be purchased in advance, usually at a discount. These passes are usually only valid for a particular period of time; frequently 12 months. Gift Certificates Some accommodation groups (eg. Marriott and Hyatt hotels) sell certificates which can be used at any properties within their group. Use of the certificate may be subject to availability at the time of the claim, and may not be valid during busy periods. 3. The Client It 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. In 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 easy to lose sight of the fact that a service, which is secondary to the main purpose, is being provided for the benefit of the building user, for example, the patient, with whom the manager of that service does not usually have direct contact. The health, safety, welfare and comfort of the client are of the greatest importance.
4. CUSTOMER NEEDS AND HOTEL SERVICE DESIGN

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Need of the Consumers : 1. Guests will be able to tailor every aspect of their hotel experience Traditional customer segmentation is likely to die and will instead be replaced by personalized service spectrums and a total service model. This will mean that guests of the future will be able to tailor every aspect of their experience including technology, hotel services, the bedroom, the journey, pricing and communications. Over two thirds of survey respondents agreed that by 2020 traveler motivations will become increasingly fragmented and diverse and harder to segment into clearly definable customer groupings. 2. The hotel of the future will be more personal, connected and responsive With changing guest requirements it is likely we will start to see hotels that cater for multiple needs and demands. We will start to see innovations such as intelligent furniture, personalized nutrition and responsive technologies that understand cognitive functions. More than nine out of ten people questioned felt that by 2020 hotel guests will expect their stay to be personalized around a set of choices they make at the time of booking or prior to arrival. 3. Horizon scanning, anticipation and rapid implementation will become some of the hallmarks of successful hotel groups Rohit Talwar, Chief Executive of Fast Future Research said: What we see is a shift from neatly defined customer segments to a more fragmented set of service spectrums that will demand hotels act in a way that is guest-focused personal, connected and informed. The right technology will be an increasingly important weapon in delivering on guest expectations and securing brand differentiation. Consumer choice model for hotels There are typically a number of alternatives available with varying attributes such as price, quality, and facilities which all impact the consumers end goal of getting a comfortable night sleep and enjoying the facilities for which they have chosen to pay. It is reasonable, therefore, to consider all five stages in the decision making model: problem recognition, search for information, evaluation of alternatives, purchase choice and evaluation of outcome. Problem recognition is normally quite straight forward. Organised travellers embarking on a predefined journey may decide to arrange their accommodation prior to travel. Others, perhaps on a less predictable trip may wait until the need for accommodation is more immediate. Search for information will take various forms and will include internal and external sources. Internal sources include their own past experiences for example if they stayed in a hotel before or if they have a loyalty toward a particular hotel chain/brand. Users of budget hotels are more likely to be influenced by physiological, safety, and social motives that users of upscale or luxury hotels that may be influenced by ego, and self-actualisation motives.
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Personal characteristics such as age, family lifecycle, career status, economic situation, and even usage occasion will also be factors. External sources include environmental influences and marketing stimuli. Marketing stimuli will comprise the accumulated industry and brand knowledge/attitudes absorbed/learned by the person through the media. This will, however consciously or subconsciously, influence the customer once they begin to search for information. At this stage, the consumer also becomes more interested in media communications and may, for example, even respond to an advertisement for accommodation. Environmental influences may include a travel agent, an infomediary website or directory, or perhaps word of mouth from friends, family, colleges, or a recognised opinion leader. Travellers not booking in advance may even conduct their information search when they arrive at their destination; perhaps searching physically, asking local people or a tourist office, or by consulting a local paper or online directory. Business travellers may have little or no need to search for information if their business already has partnerships with preferred accommodations. Evaluation of alternatives is an important part of buyer behaviour; it is of crucial importance to marketers to understand how customers evaluate and ultimately choose to purchase goods and services. In the absence of unexpected situational factors the customer is at least more likely to make their purchase decision based on their evaluation of alternatives.
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A QFD and SERVQUAL APPROACH TO HOTEL SERVICE DESIGN Current challenges facing the hotel service providers, such as high customer demands on quality, increasing competition for high customer satisfaction and the demand for full services, are directly related to better understand the attributes of hotel services and improve the service design characteristics accordingly. In service quality literature, SERVQUAL is the most widely used structure to measure customer expectations and perceptions. Quality Function Deployment (QFD) method is also a suitable means and works well to support the development of a wide range of services although it is originally stemming from product development. This study describes the development of a conceptual framework to measure the hotel service quality using the SERVQUAL model as a starting point, and then identifies service design and hotel guests requirements using a QFD approach. This integration of SERVQUAL and QFD approaches in the conceptual Hotel of Quality model has been illustrated through a case study. HOTEL OF QUALITY: THE ADJUSTED CONCEPTUAL MODEL The House of Quality (HoQ) is a fundamental element of the QFD process, which provides a framework to relate customer needs to design characteristics at the product/service development level (Vivek, Cudney, Smith, Ragsdell, and Paryani, 2007). The traditional HoQ comprises six main steps. The process of completing the HoQ is described by (Mizuno and Akao, 1994). The foundation of the house of quality is the belief that products or services should be designed to reflect customers desires and tastes. The house of quality is a kind of conceptual map that provides the means for interfunctional planning and communications (Hauser, John, and Clausing, 1988). The HoQ 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 way they rate the products/services against those of the competitors. These needs are translated into technical features by a relationship matrix that further deploys itself into a triangular correlation matrix and competitive technical assessments with its own set of operational goals and targets. The HoQ relates simply customer requirements, technical requirements and competitive analysis. The relationship matrix of HoQ shows the correlation between the customer requirements and the technical features so it is also called as the planning matrix. It is crucial that the house of quality should be developed carefully since it becomes the basis of the entire QFD process. Indeed, the house of quality helps the team to set targets, which are, in fact, entered on the bottom line of the house. For engineers it is a way to summarize basic data in usable form. For marketing executives it represents the customers voice. General Managers use it to discover strategic opportunities. In a nutshell, the house encourages all of these groups to work together to understand one anothers priorities and goals (Hauser et al, 1988). The development of the conceptual model for this study began with the imagination a hotel instead of a house and the translation house sections into hotel components. The typical HoQ concepts were changed to meaningful ones to the hospitality industry. By using this metaphor, hotel managers and practitioners could better understand the QFD basics defined in hotel jargons. As shown in Figure 1, the customer needs or "whats" were replaced with the "Hotel Front Office, where is the guest expresses her/his expectations and wants. The "Hotel Back office" was used instead of the service design requirements which are called as "hows". That is why
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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 "Customer Care Unit (CCU)". The relationships between "Front Office" and "Back office" were determined with the operations in the "Hotel Rooms". The functional interactions were assessed in the gable roof of the hotel. The last place is the hotel quality board where all of the assessments are integrated to determine the most important improvement. In using QFD, it is essential to define the "Whats" and "Hows" according to the nature of the issue. The key question to be asked is "what" the customers expectations would be from the hotel. Surveys, interviews with guests, organizing focus groups, gemba visits and content analysis are generally used in order to define the customer needs (Chow-Chua and Komaran, 2002; Gonzalez et al, 2004). This study uses SERVQUAL for primarily identifying the key dimensions of hotel service quality. SERVQUAL proposes five distinct dimensions to evaluate the service quality: reliability, responsiveness, assurance, empathy and tangibles. Table 2 shows the five dimensions of the SERVQUAL definitions adapted from (Zeithaml et al, 1990).
SERQUAL 5 DIMENSIONS
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Despite the wide usage of SERVQUAL by academics and practicing managers in various service industries, it needs to be modified based on the hotel customers' needs, i.e. customized according to the expectations of the guests. In literature, it is stated that only Miyoung and Haemoon (Miyoung and Haemoon, 1998) have used SERVQUAL in house of quality design to measure customer satisfaction in return for service quality. In this study, SERVQUAL has been modified to the hospitality industry and used in order to consider the guests expectations and needs in the early stages of hotel service design. SERVQUAL includes 22 general items describing five service quality dimensions (Zeithaml et al, 1990). A pilot study has been conducted using these 22 items. Then the list including 17 items given in Table 3 has been obtained by omitting or changing some items based on the guests feedback. This list describes the "whats" or the guests expectations and needs from a hotel. The Hows part of the Hotel Of Quality has been determined on the basis of service elements. The key question in this step is "how" the hotel would be able to deliver the required service(s) to its guests. For a production firm, it is easy to define the technical requirements based on the company's operational or managerial resource allocation plans. However for a hotel, if only the processes are considered, some important issues such as people and physical evidence aspects are ignored. Miyoung and Haemoon (1990) have only considered the hotel processes in their house of quality but not included the human factors and tangible representation of the hotel. The service mix not only includes the process itself, but also includes people and physical evidence (Zeithaml and Bitner, 2004). In this study, the 3Ps (process, people and physical evidence) of service mix given in Table 4, is used to define the service design requirements. These requirements have been modified based on expert opinions and converted to the hotel equivalent. Elements such as IT and automation, check-out, employee behaviour added to the service design requirements. The detailed version of the 3P's is shown in Table 5.
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Thus, the whole picture of the conceptual model of Hotel of Quality is given in Figure 2. As shown in Figure 2, all aspects of the Hotel of Quality are connected to guests needs and the translation process of guests' requirements into hotel functions and elements has been defined in a systematic way.
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CONVERSION SYSTEM ( INPUT- PROCESS- OUTPUT ) :
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6. HOTEL OPERATIONS
Most operations were a bundle of both tangible products and intangible services. The emphasis on hotel operations as being service derives from a focus on front-of-house activity 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 Johnston (1987) suggest there are basically three types; materials processing operations (MPO), customer processing operations (CPO) and information processing operations (IPO) In most cases, any operation is not uniquely a MPO, CPO, or IPO. This is certainly true in hotels. For instance, during the so-called hotel experience 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). Although the difference between processing people and things is often identified in the literature, rarely has it been systematically analysed to identify the implications of such differences. Clearly, customers are physiologically capable of action whereas materials are not. Such actions include the ability to move unaided; apply the senses of sight, hearing, touch, taste and smell; and communicate with the environment. As well as this physical interaction, customers also engage psychologically with their environment. This means that each customers values and attitudes may be slightly different, they may perceive their experiences differently, and hence they may respond to the service environment heterogeneously. We therefore propose that operations need to be modelled predominantly as either CPOs or MPOs. If an operation is a hybrid, i.e. it processes customers and materials, then it should be divided into its two constituent parts and each categorised accordingly. This is shown in Table 1. When hotel operations are compared on the basis of volume and variety, consistent with standard OM taxonomical systems, we find that most lie along the diagonal. Schmenner (1986) and Hayes and Wheelwright (1979) argue that it is logical for firms to move towards the diagonal, i.e. the line that represents a balance between volume and variety. Low variety enables the production of a high volume of standardised output. High volume is necessary as standardised products/services tend to be viewed as commodities that attract relatively low profit margins. However, highly customised products and services can be sold at premium prices, thereby paying for the relatively inefficient high variety production. Most of the hotel operations we have analysed lie on this diagonal (Jones and Lockwood 1999). Such comparative analysis of hospitality operations immediately enables us to identify some key aspects of the hotel industry: 1. Hotels are generally more complex than restaurant operations, simply because other than limited service hotels, they provide both lodging and foodservice. 2. Hybrid operations are more complex to manage than non-hybrid operations. 3. Hospitality materials processing operations can be job shops (e.g. la carte restaurant), batch production (e.g. cook-chill) or mass production (e.g. fast food).
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4. Most hospitality customer processing operations are service shops (e.g. table service restaurant) or mass services (e.g. banqueting). 5. There is generally a relationship between volume and variety, i.e. the greater the variety the less volume produced. 6. It follows therefore that hybrid operations that are batch production MPOs are typically associated with service shop CPOs, whilst mass production matches mass service. Process Configuration or Layout There are four basic layout types found in manufacturing and service settings (Brown et al 2000). These are: Fixed position a single, fixed position at which the product is assembled or service is processed by workers who move to that position for them to carry out their work. This layout is applied to products that are heavy, bulky or fragile such as in shipbuilding, aerospace, or dentistry. Process layout machines or activities are grouped together non-sequentially 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 may be multi-skilled enough to work across areas. This is the typical layout associated with job shop or batch production. It allows for a wide variety of products to be made in relatively small volumes. Breakdown of one machine does not halt production. Examples of sectors that use this approach are
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jewellery making, hairdressing, and low-volume furniture manufacture. Product layout has machinery dedicated to a particular product, usually laid out in a sequence, with distinct stages in manufacture? Workers are usually required to perform relatively simple tasks at one particular stage in the process. Whenever possible such tasks have been automated. This is the layout associated with mass production. It is used in car manufacture, chocolate production and fast food. Combination layout this combines elements of the process layout, such as clusters of machines, with product layout, with each cluster being organised sequentially. Hence each cluster or cell can produce in high volumes a variety of outputs based around a single product. This in essence is mass customisation, adopted in high-tech manufacturing operations. As far as we are aware no one has so far discussed the notion of process configuration as it applies to the hotel industry. It seems to us that two of the four types of layout can be found in Proceedings of the Twelfth Annual Conference of the Production and Operations Management Society, POM-2001, March 30-April2, Orlando Fl. the hotel industry1. The provision of accommodation services, i.e. hotel bedrooms, is an example of a fixed position layout. Room attendants move from room to room in order to service them. This means that they have to take the technology they 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 process layout. The kitchen is organised into different sections larder, sauce, vegetables, pastry, and so on each of which can produce a wide variety of outputs. The technology in each section is carefully selected to support this activity. For instance a large wooden chopping block in the larder, marble-topped tables in pastry, boiling pans in the veg. section. The same is true when production is scaled up for cookchill production, albeit that the equipment is considerably larger capacity. Issues in Process Choice and Layout in Hotels This analysis of choice and layout identifies some interesting issues with regards the industry. In manufacturing there tends to be quite a close fit between process choice and layout. This derives from the fact that manufacturing is essentially a materials processing operation. Any service elements of a product are usually decoupled from the actual manufacture of the product. However, in hotel operations both manufacture and service happen simultaneously. Hence such operations are both hybrids of process choice and have more than one process layout. This is illustrated in Table 2 which looks at different departments in a hotel from a choice and layout perspective.
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Fortunately (it could be argued) many of the processes in the industry are relatively simple and do not require sophisticated technology nor highly skilled labour. Thus the lack of fit between the type of process and the process layout has not become an issue. Housekeeping is a good example. The processes or activities undertaken to clean a guests room are basically identical and would normally lend themselves to both production-lining and even automation. If it were physically possible, one could envisage a factory in which rooms moved slowly along a production line and as they did so, a worker (or machine) polished the mirror, another vacuumed the floor, a third dusted the lampshades and so on. Of course, this cannot happen due to the size of the room and its fixed position. Hence tasks which could (should?) be dealt with on a mass production basis are actually managed as a job shop. The extent to which process choice and layout fit is a major issue because of the implications it has for efficiency. This is further complicated by the parts of the operation used by the customer, i.e. front-of-house. First, the sequence of activity is driven by the random arrival of each customer and second, the precise nature of the process may vary from one customer to another.
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Steps of Process : 1.Customer makes a request for information: Via: phone, computer, or in person 2. Hotel worker receives request and delivers information to customer * Marriott has outsourced all reservations to a company in New Jersey Only customers who walk can actually request information or services 3. Customer has two options 1. Leave the service process of the Marriott and look somewhere else 2. Prepay for a reservation to made Invisible to the customer 4. Hotel makes the reservation and checks for available rooms 5. Hotel reserves and allocates room for confirmed reservation 6.Enter customers information in the Marriott database -The Marriott values quality; each week random customers are selected and mailed scorecards to rate the level of quality that was provided by the Marriott. -Marriott has different programs that reward frequent customers such as the rewards program, the database allows the Marriott the opportunity to thank for the customer by mail or email to encourage the customer to revisit. 7. Housekeeping prepares room 8. Maintenance checks for broken appliances or equipment 8.b If defects are found maintenance reorder and fixes appliances 9. Final inspection of room is conducted 10. Bellhop unloads vehicles and takes luggage to room while customer checks in 11. Hotel continuous supplies power, water, health club, gift shops, bars, and restaurants functionally properly to add value to customers stay 12. Housekeeping and maintenance prepare their carts the night before to prepare for the next to keep the hotel clean 13. Hotel continuously add values to customer stay via guests services and delivering information on events and attractions nearby Visible to the customer 14. Customer checks out of hotel
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FLOWCHART FOR HOTEL RESERVATION :
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HOTEL ROOM AVAILABILITY REQUEST FLOWCHART
PROCESS MAPPING
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HOTEL SERVICE BLUEPRINT

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7. THE LOCATION PLANNING FOR HOTEL

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The most suitable location for hotels depends on the markets - the types of guests - for which they are intended to cater. Hotels catering solely for tourists need to be located in close proximity to the major tourist attractions of the particular destination. In a sun, sea and sand resort, for example, holidaymakers/vacationists will opt where possible for hotels on or very near to a beach, that is, for beach hotels. Those interested in peace and quiet and scenic attractions will seek hotels well away from the hustle and bustle of busy towns and cities. In contrast, business travellers will want or need to stay in hotels located in or near commercial or industrial centres or the specific organisations on which they will be calling. Air travellers in transit for a night will generally wish to stay in hotels located at or fairly close to the airport concerned. Motoring travellers might seek hotels or motels located on or near major traffic routes. Identifying the right location, and then applying the right product development to meet a market need, if it exists at all, is vital. The Australian coastline is littered with monuments to misunderstanding resort developments knocked up and flicked on to lay investors with little regard for the end user. Rushed development times, force-fit designs and an absence of market research are their hallmark attributes. A lack of comprehension of the realistic impact of seasonality is another trap. And then there is Infrastructure. All good property needs good infrastructure around it. Isolated sites with limited infrastructure require the developer to contribute enormously to compensate. With beach and island resorts, these circumstances result in failure more so than it does success. Infrastructure development is historically the role of government and most experienced developers would agree that the cost and expertise for infrastructure development best lay with government. Further, independently management infrastructure such as sewerage treatment works, power generation or private marine transport services to an island require an ongoing extra layer of costly management expertise eroding operational profitability. Destinations with a full range of publicly available infrastructure like airports, roads, bridges, electricity, a postal service, police and fire brigade (along with an existing general momentum of business and tourism activity) make it to the short list more often. They get financed more readily and endure as successful, sustainable projects much more often than the others. Once a site is identified the product development process necessitates that the best product for the achievable market occurs. The scarcest commodity in tourism is realism. A common trap is to assume that five star is the only way to go, and that although the destination is only mid market there are masses of people ready to jump in and pay double the locally established tariff levels to stay at this new development because it has say, a 40 square meter odd room that couldnt be used for anything else dressed up as a spa or meeting room. You will realise that the very location of a hotel will determine to a large extent the market(s) for which it can cater. Hotel location is fixed; it cannot be changed. Therefore, if markets the types of guests and their requirements - change, a hotel must adapt to fill those changing requirements. Such changes can and do occur. A once fashionable part of town or resort might gradually become less so, or decline in popularity; hotels located in such an area,
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which might once have catered for the wealthy or up-market tourists must - if they are to survive - adapt to serving the needs of less affluent guests or package tourists. In contrast, once sleepy and picturesque coastal villages might within a very short space of time become popular tourist destinations. Hotels in such areas which might once have served relatively small numbers of relaxed" guests, must adapt to the almost frantic pace of large numbers of package tourists - or give way to new hotels better able to cater for them. Because of their locations, some hotels are designed to, or able to, cater for a mix of different markets, for example for business travellers as well as for holidaymakers/vacationists. Some accommodate domestic business people (from other areas of the same country) as well as business people visiting the country. Similarly, 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 local people as well as for domestic and/or foreign travellers. Frequently, because of the location of an existing hotel, its management is tied to catering for a particular market or mix of markets. An accurate assessment of the market(s) which can be catered for - and the potential for the future - is essential by those considering taking over the running of a particular hotel. There are many matters to be considered by those involved with the development of tourism in a particular country or area of it, and by those involved in the establishment of new hotels to cater for the anticipated influx of tourists; hotel location is one of the main ones. Ideally, hotels should be located as close as possible or practicable to the major attractions which encourage tourists to visit a particular destination. If hotels are located too far from the attractions they are intended to serve and/or are difficult to access, their occupancy rates are likely to suffer. Factors Bearing on the Location of New Hotels Factors which might have a bearing on the location of new hotels include: The availability of suitable sites; land costs must be considered, as well as the suitability of the soil and terrain for construction purposes, utilities and access already in existence or needed. Also the current or likely level of development of an area, as there might be disadvantages as well as advantages in the construction of hotels in already heavily populated areas. On the other hand, construction in sparsely populated areas is likely to attract local people (e.g. hotel employees and their families and others involved in tourism) to the areas, and many of those will require housing, and other amenities. In a resort popular with tourists, prime sites might have already been developed (with perhaps less modern, smaller and now less suitable hotels - which might need to be upgraded, redeveloped and extended) resulting in new constructions having to be located more distant from attractions. In some cases - for example on long coastal
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stretches - it might be possible for hotel development to be spread along a fairly wide area - provided that utilities can be extended and that new access roads, etc, can be constructed. Cost economies are always important while selecting a location for the first time, but should keep in mind the cost of long-term business/organisational objectives. The following are the factors to be considered while selecting the location for the new organisations: 1. Identification of region: The organisational objectives along with the various long-term considerations about marketing, technology, 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 facility. 2. Choice of a site within a region: Once the suitable region is identified, the next step is choosing the best site from an available set. Choice of a site is less dependent on the organisations long-term strategies. Evaluation 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 analysis. 3. Dimensional analysis: If all the costs were tangible and quantifiable, the comparison and selection of a site is easy. The location with the least cost is selected. In most of the cases intangible costs which are expressed in relative terms than in absolute terms. Their relative merits and demerits of sites can also be compared easily. Since both tangible and intangible costs need to be considered for a selection of a site, dimensional analysis is used. Dimensional analysis consists in computing the relative merits (cost ratio) for each of the cost items for two alternative sites. For each of the ratios an appropriate weightage by means of power is given and multiplying these weighted ratios to come up with a comprehensive figure on the relative merit of two alternative sites, i.e., C1M, C2 M, , Cz items.
M
are the different costs associated with a site M on the z different cost
C1 N, C2 N, , Cz N are the different costs associated with a site N and W1, W2, W3, , Wz are the weightage given to these cost items, then relative merit of the M and site N is given by: (C1M/C1N)W1*(C2M/C2N)W2*.......................................................*(Cz M/Cz N)W z If this is > 1, site N is superior and vice-versa.
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Site Selection Considerations Site Inspection Checklist The destination Accessibility Ease and cost Proximity to airport Permits access by people with disabilities Adequate taxi/limousine service Sufficient parking space Availability and cost of shuttle service Adequate airport assistance
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Adequate number of flights into destination Seasonality of destination (peak season vs. off-season) Environment Availability of local attractions Shopping Recreation Restaurants Weather conditions Appearance Safety of area Economic health of community Reputation of area/facility for hosting meetings Support and services available from local convention bureau Availability of experienced suppliers, such as audiovisual firms, exhibit service contractors, temporary help, and security Destinations have long held widespread reputations with the markets they cater to and any new one development is unlikely to change the market profile of the destination. Better to study the profile of who currently visits and visits nearby competing destinations and identify how best to win them over. This is a surer and safer approach and normally only requires a modest amount of market research. A small survey of travel agents, wholesalers and the local tourism industry can provide valuable product development input. Getting it right means a more successful development with higher returns for all stakeholders.
8.FACILITIES ( LAYOUT ) FOR THE HOTEL

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The facility Efficient, friendly doormen and bellmen Attractive, clean lobby Registration desk easy to find: sufficient space and personnel in relation to guest rooms; ability to handle peak check-in/check-out times for major groups; efficient front desk personnel Modern elevators in sufficient number to serve guests when the facility is full Accessible, fully-staffed message and information desk: rapid response to telephone calls; quick delivery of messages Availability of guest services: drugstores, banks, emergency services, giftshop, concierge, safety deposit boxes Comfortable clean rooms: furniture in good condition, modern bathroom fixtures, adequate lighting, adequate closet space and hangers, smoke detectors, fire exit information clearly posted, refrigerator and/or wet bar Adequate lighting and cleanliness of hallways Availability of beverage and ice machines on each floor Service elevator accessibility Size of standard room vs. deluxe room Availability of towers or executive floor offering special guest services Rooms equipped for people with disabilities Number and types of suites and availability of suite floor plans Reservations procedures and policies Room category classifications (floor number, non-smoking, ocean view, etc.) and number available in each category Number of rooms available for early arrivals and late departures Current convention rate and rack rate for individual guests (not part of the group) Date hotel will provide firm rates Guarantee and deposit requirements Check-in and check-out hours Cutoff date for the room block Check-cashing policies and types of credit cards accepted Refund policy for cancellations Number of non-smoking floors (standard and concierge) Dates of any planned renovations Any change in hotel ownership being discussed Availability of a health club, hours, and cost Telephone access charges (long distance, local, and calling card) Key system for guest rooms Adequate parking space (free or for a fee) Hotel emergency plan (meeting manager should review it) Hotel emergency exits clearly marked Comparison of king-bedded versus double-bedded room categories
Meeting space
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Meeting rooms come in all shapes and sizes, and with a number of obstructions and inadequacies. The meeting manager must evaluate the potential of each room under consideration. They 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. Below are some questions the meeting manager should be prepared to answer before the site inspection: How many meeting rooms will be required? In addition to the formal program, will meeting rooms be needed for committee and business meetings? What is the estimated attendance for each session? Are attendees to be seated theater style, classroom style, or conference style? Are rooms with high ceilings and no columns or obstructions needed to accommodate audiovisual presentations? Is space needed in or near the meeting room(s) for refreshment breaks? What pre- and post-meeting space is required for affiliated ancillary groups? Are meeting rooms accessible to people with disabilities? Food and beverage service Public outlets Appearance and cleanliness Cleanliness of food preparation areas Adequate staffing at peak times Attitude of personnel Prompt and efficient service Variety of menus Cost range Reservations policy Feasibility of setting up additional food outlets for continental breakfast and quick luncheon service if necessary Feasibility of using public food outlets for group functions during non-peak hours Group functions Quality and service Diversity of menus Creativity or access to companies specializing in this Costs: tax and gratuities; projected price increase by the time of the meeting; extra labor charges for small group functions Liquor laws (restricted times) Cash bar policies: bartender cost and minimum hours, cashier charges, drink prices Refreshment break pricing: guarantee policies, when a guarantee is required, number prepared beyond guarantee Special services: tailored menus, theme parties, unique refreshment breaks, food substitutions available, table decorations, dance floor Size of banquet rounds (eight people or 10 people) Room service: diversity of menu, prompt and efficient telephone manner, prompt delivery, quality
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Exhibit space Number of loading docks and proximity to exhibit area Availability and location of freight receiving area Location of utilities Maximum floor load Security of area Location of fire exits Proximity to food service areas, restrooms, and telephones Availability of sufficient time for move-in and move-out Reputation of facility regarding union relations Decorations to enhance facility appearance Availability of supplemental lighting Proximity of exhibit hall to other portions of the meeting First aid station Availability of office space for exposition manager, service contractors, and suppliers Crate storage areas and policies Offices and other services Sufficient space for furniture and equipment necessary to perform the business at hand Good lighting Easy for attendees to locate Adequate electrical outlets Availability of house telephones or telephone jacks Ability to secure space after hours Is the hotel flexible regarding the tentative agenda, or is meeting space locked in by a signed contract? Are doors to meeting rooms wide enough to accommodate wheelchairs?
HOTEL GROUND FLOOR MAP
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PENTHOUSE FLOOR PLAN
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SUITE & SUITE TYPES

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9. Strategic and Operational Business Planning for Hotels
Demystifying Strategic Planning (Part 1) If you were driving somewhere you had never been before, you would probably use a map to guide you. Well, you would, if you wanted a hassle-free trip. Without the map, you are more likely to get lost, and even if you dont, you are certainly leaving things to chance. The same applies to achieving success in the hotel business which, as you well know, is also a journey of sorts and one with many twists and turns, so having a map to keep things on track is useful. In fact, its vital, because getting lost in a car is one thing losing your way in business life is an altogether more serious prospect. Some hotel owners and managers do lose their way not because of any lack of ability or effort but due to the fact that they dont fully think through what it is they are trying to achieve. They might talk about their goals for the business but they fail to define what these are in practice, or indeed to plan how to realise them. Sure, they might have a general idea of where they are going, but this can be as loosely defined as to outperform our competitors or maximise profit. Achievement, in any walk of life, is all about focus and direction: in business terms, this means defining clear and measurable goals and planning back from them. In other words, it involves building a strategic map. Building a Strategic Map for your business The ability to create a realistic strategic map for any business begins with having strong stakeholder-focus and any hotel has a variety of stakeholders:
The differentiation between Primary and Secondary stakeholders is simply the degree to which they exert influence over, or have impact on, the running of your hotel. Those who have significant influence and/or impact are seen as primary stakeholders and as such require most attention. Secondary stakeholders are not unimportant; its just that they are unlikely to have the same degree of power over the choices you make. However, their needs do need to be considered and addressed where appropriate.
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The foundation stone of creating a strategic map lies in placing primary stakeholders at the forefront of your thinking, in terms of the business decisions taken. It also means recognising that the path to success lies in satisfying their needs because, in doing so, you are ultimately satisfying your own. Guided by strong stakeholder-focus, strategic planning is essentially about trying to answer four age-old but vital questions:
A strategic map helps a business to become outcome-driven and as a result, this reduces (but of course cannot eradicate) the risk of failure. Naturally, it will always be necessary to respond to changing circumstances; for example, most hoteliers undoubtedly have to take difficult decisions to get through the current recession. However, armed with a strategic map, any such short term decisions are not taken in isolation; the map creates a context for all activities and informs every decision taken. Demystifying Strategic Planning (Part 2) Creating a strategic map, as we saw in Part One, requires reflection, analysis, action and evaluation guided by four core questions:
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(Click to enlarge flowchart) Where are we now? Current Position The first important stage in building your strategic map is to review where you are now as a business, which means reflecting upon a series of interrelated sub-questions such as: Areas To Sample Questions to Consider Focus On Try to identify the current strengths and weaknesses of your hotel:

How is the hotel performing financially? How does that compare to other similar hotels? Who are your customers? Can you divide them into different key segments? What are your customers needs? Are you meeting and more importantly exceeding them? How do you know? How does your service offering compare with that of your competitors? Where are the current gaps in what you offer? Are your employees competent, committed and motivated?
Hotel
Try to get a better feel for the dynamics of the markets you operate (or could operate) in:

Do you have a lot of competitors, or only a few? Are you operating in a mass market, or do you offer a specialist or niche experience? Is overall demand growing, or subsiding in your region? What drives the market(s) that you are in? Price, quality or both? Are you increasing market share or losing it in your key markets? How does the market operate? Do customers buy directly, online or through intermediaries, or all three? How is technology affecting the market dynamics?
Market
Industry
Try to get a feel for the trends in the industry relevant to your hotel and what supports are available to you:
What are the key trends in the industry? For example, are independent hotels being squeezed out by the major brands?
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What are the overall projections for the industry in your country/region? What supports are available for hotels such as yours? Who are the main hotel associations? Do you have a relationship with them?
Think about general economic and social trends:
What is the general economic outlook like for the short and medium term where you are? What is it like in the places where your customers come from? How are consumers habits/needs changing? Are there any regulations on the horizon which might have implications for the operation of your hotel? What are the future technology developments which will impact on hotels generally? What are the environmental issues that you need to respond to?
General
Preparing a SWOT Analysis The answers you find to the above, and additional, questions must then be interpreted. A well known tool for facilitating this analysis is the SWOT matrix which, as you are likely aware, involves summarising:
The current internal strengths and weaknesses of your hotel which in essence helps you to answer: where are we now? The opportunities and threats you face in the external business environment which will later influence how you answer: where do we want to be?
SWOT analysis is a widely used, but frequently misused tool. Often, managers sit around the table and everybody chips in what they believe are the strengths, weaknesses, opportunities and threats facing the business. Then, by discussion and agreement the SWOT is finalised. Unfortunately, compiling a SWOT based solely on opinions, or group-think is of little value; facts are required. Do your research first and then prepare the SWOT based on hard evidence.
Demystifying (Part 3)
Strategic
Planning
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Having discussed how to assess the current position in Part Two of this series, the next stage in building your strategic map involves answering the question: Where do we want to be? This begins with some big picture thinking, or through the development of Vision and Mission statements:

Vision is what you ultimately want to achieve in your hotel Mission describes what type of hotel you will operate as you work towards that vision
Vision broadly refers to the destination, whereas mission relates more to the journey and describes the type of hotel you want to operate with regard to your primary stakeholders as you move towards your vision.
Developing a Vision For Your Hotel To serve as a vehicle for explaining how to build your strategic map in practice, a fictitious example of the vision for a medium sized, independent 4* hotel situated in London could be: Vision To become the leading independent 4* hotel in London providing excellent products and services at reasonable prices to every customer, every time Defining your Mission The Mission might read something like this: Mission Our customers are our priority and we will provide them with a quality experience which is second to none. We recognise the importance of our employees in achieving this and we will create a positive working environment which encourages their loyalty, commitment and hard work. We strive to be excellent leaders and will undertake all our business activities in an honest and ethical manner to provide a fair return on our investment Living your Vision and Mission
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These are attractive statements of intent; but to add any real value, the Mission must be translated into measurable goals, such as:
These sample goals now provide focus and direction for the business; they are something to aim for and, if achieved, will ensure that the Mission is lived in reality and that the hotel is moving towards its Vision. Demystifying (Part 4) Strategic Planning
Having business goals is great, but still meaningless, unless something is done to make them a reality. This is where strategy and plans come in. In defining their strategies, the management team at our fictitious hotel would need to ask themselves certain questions based on their defined mission-related goals:
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Strategies are essentially choices you make, or options you take by answering similar questions to the samples provided above based on your own vision, mission and goals. The strategies you choose must help you to play to your strengths, reduce the impact of weaknesses, capitalise on opportunities and counteract threats. From Business Strategy to Annual Plans Whatever goals and related strategies are devised, it is clear that it will take more than one year to realise them, so an annual plan is needed to help implement the strategy. Whereas operational planning is concerned with doing things right so that the hotel runs smoothly, annual planning is focused on doing the right things so that you are actually implementing your strategies and progressing towards your goals. Your annual plan should define the range of finance, marketing, human resources and operational actions necessary to implement your strategies in any given year.
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Demystifying (Part 5)
Strategic
Planning
In Parts 1-4, the focus was on creating cohesive linkages fromVision and Mission right down tospecific activities in the annual plan. The final part of this series will explore the question: how will we know we are getting there? The answer to this question can, of course, only come from measuring progress, analysing the implications of the results you get and taking action to continuously improve. Five basic steps can be taken to manage continuous improvement with regard to your strategic map:
1. Define the results you want to achieve
You will already know what you want to achieve its your goals which have been developed based on your Vision and Mission.
2. Take action to achieve the results you want
Clearly, if you dont implement your strategies through an annual business plan as described in Part 4, then seeking to measure impact is pointless, because you wont see any results and, even if you did, you would not know why they occurred be they good or bad.
3. Consider how progress will be measured
Certainly, you already measure impact in areas such as financial performance; however, when seeking to identify progress towards your goals, there may be measurement gaps to be bridged, because clearly not all the goals in your strategic map will be financial in nature. The key point here is that you only need those measures which are of value for you and relate to each of your primary stakeholders, owners, customers and employees:
4. Measure Progress at defined intervals
At defined intervals, the measures you have identified need to be produced so that you can track progress. For some measures, such as financial data, you will produce them frequently
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whereas others, such as the employee engagement percentage, might be taken quarterly, biannually or annually depending upon the scale of your operation.
5. Analyse the results and make improvements
The final stage of the continuous improvement cycle is the most important component and is really the cornerstone of the strategic map itself. Depending upon actual results achieved against expected you will obviously be faced with some decisions. If progress is not matching expectations, you must identify whats causing the shortfall and take corrective action. Even when the result is positive, you still need to learn the lessons, so that you can make it even better in future. To strengthen your understanding of how your hotel is performing, you should also explore ways in which you can benchmark your results against industry norms and, better still, excellent companies. It is only through external comparison that you can really judge performance effectiveness. There is no magic pill for creating an effective strategic map for your hotel but the principles we have covered in these five articles will set you on a course where devising a winning strategy is a more likely option. All great hotels, whether they are big or small, independent or part of a chain, succeed in large part because they know what they want to achieve, implement a range of integrated actions to make that happen, track their progress and continuously improve based on the results they get.
Event planners often focus their strategies on targeted industries, attendees and exhibitors. Adding hotel and resort planning to the strategic mix can improve attendee experience and the bottom line. Hotel business planning typically involves location, time, space, services and cost. These components can also provide strategic advantages for your event. Travel between hotels, exhibit floor and meeting locations is often lost time for exhibitors, attendees and sponsors. A self-contained event with all activities and housing in one facility minimizes travel times and external distractions. It also encourages more interaction among exhibitors and attendees. On-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 expense of negotiating with multiple facilities and organizations. On the subject of self-contained properties, Tim Swan, director of sales & marketing at the Orlando World Center Marriott, explains, We often refer to this property as a land-locked cruise ship. The entire experience can be here. All the meeting space is under one roof and connected to the main building, complimented by an extensive collection of restaurants and recreational facilities.
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Simple (hotel/resort) amenities can enhance business and convenience. Free (or reduced rate) airport transportation provides many strategic benefits. A show sponsor, requiring many people at the event, could save several thousand dollars. Even small exhibitors (with 5 to 8 people) reduce costs by about $500. Strategic benefits extend beyond this obvious cost reduction. Arriving participants do not need to research and arrange transportation, which can easily waste half an hour at the airport. In addition to added convenience, this enables more time at the show. For a staff of 24 this equals 12 more person/hours of on-site working time. If average employee overhead is $42/hour, this is over $500 in additional savings. Sufficient additional on-site time may reduce the number of staff required, with corresponding reduction in travel expenses. When staff time is billable, this is an extra 1.5 days of revenue, without increasing staff size. Special hotel locations can motivate attendees or add focus to the event theme. Cheri Sprenger, marketing and communications coordinator for the Resort at Squaw Creek, points out their Tahoe location is a remote, beautiful mountain setting that provides a unique, 100 percent self-contained, retreat experience with an extensive list of on-site, outdoor recreational activities. Family activities are a commonly overlooked strategic benefit. Sprenger states, We offer extensive childrens activities that are more like a camp, rather than just babysitting. I find that is usually a big selling point to groups. When participants can bring their families, attendance tends to rise. In addition to convenience, theme and focus, using a hotel or resort can change the events cost and bottom line. Our space pricing [as a hotel/resort] is based on a groups overall spending, according to Swan. Pricing could be nominal or zero for a self-contained event generating sufficient revenue from other streams. In a convention center, space cost may be a fixed amount or contingent on participation from surrounding hotels, requiring more negotiation, time and coordination. It is important for planners to analyze total costs when comparing hotels, resorts and convention centers. Carpet is a good example. All of our space is carpeted, and that is included in our price. In many convention centers, show management and exhibitors pay for carpets in addition to space. This type of complete cost analysis may show that hotel space is less expensive than comparable space in a convention center.
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Setting Goals As the situational analyses answered to the question where are we now, the marketing objectives answer to the question where do we want to go. The next step is therefore to set goals which translate the companys mission into easily understood statements regarding the markets, products, sales, occupancy and marketing mix. As the marketing mix is made of the tools that a company uses to pursue its marketing objectives in the target market it is an essential part while setting the goals. (Bowie & Buttle 2004: 326-327) Objectives should be specific, measurable, achievable, realistic and carried out within a set timetable. They can be set as strategic long-term objectives or if the objectives are smaller and set to be reached within a short timeframe they should still be integrated with the longrun company goals and strategy. (Middleton et al.2009: 213) The more thoroughly the earlier situational -and SWOT-analyses have been done, the easier it is to set precise objectives. As setting objectives is an essential part of the marketing planning
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process and if the company fails to provide them it reflects to the managers and employees lack of clear direction. (Bowie & Buttle2004: 326-327) According to Kotler there should be two different types of objectives; financial and marketing. The financial objectives are done first so the company evaluates what they want for example the terms of the net profit to be. After the financial objectives are set they are converted into marketing objectives. (Kotler 1997: 99)
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9. CRITICAL QUALITY PARAMETERS
A hotel room purchase can also be viewed as a product consumers purchase. The relationships between hotel quality and price per room per season are also of great interest. This is especially so given the growing hospitality industry in developing countries, the high expectations of the growing middle class as well as the importance of tourism in today's changing world economy. Government officials concerned with hospitality capacity and the MICE (Meetings, Incentives, Conference and Exhibition) industry will be very interested as to how the hotels complement the revenue generating events. Hotel owners and managers also need to know the consumer's-perceived quality heuristic to be able to better price the rack rates and position the quality perception in the consumers' mind. In the hotel industry, the quality of a room is often reflected in the rack rates. It is generally believed that the higher the price, the higher the quality. Also, the available infrastructure and modern technology will further enhance the customers' experience. Thus higher rack rates translates into more resources to employ better customer service personnel, purchase better facilities, equipment, and develop good entertainment programs and services. This will ultimately result in greater customer satisfaction while staying at the hotel, as well as the possibility of repurchase at the same location or of the same brand in another place in the future., So definitely price plays a very important role on room occupancy for a hotel. Our 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 quality heuristic to determine whether the hotel room is worth the money that they are paying for. We identify three potential areas that become salient in these circumstances and in which hotels can better understand their threshold market behavior: Hotel Star Ratings, Hotel Brand Perception and Hotel Capacity. THE CONSUMER PRICE-PERCEIVED QUALITY
Based on previous research on the role of price in purchase decisions, it is useful to distinguish two opposite effects. First, price is associated with the expenditure items in the budget constraint. The theory of resource allocation explicitly states that consumers will treat it as a sacrifice of monetary resource as spending in one product necessarily decreases the possible purchase of another. Second, a higher price is usually taken as an indication of higher quality, even though the significance of such perceived correlation may vary across product categories. Higher product quality and a higher price will result in higher perceived quality for the average consumer. Besides the support from the behavioral literature discussed earlier, these parameters are also consistent with the studies that indicate product quality information cannot be fully conveyed or evaluated by consumers prior to purchase .
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Another issue in the formulation is the degree of dependence between the use of priceperceived quality heuristic and the amount of true quality information available. Existing research is inconclusive on this. On one hand, one may argue that the more information available to consumers, the less they will rely on price to judge quality. On the other hand, other studies suggest that the use of price-perceived quality heuristic is an intrinsic behavioral characteristic of consumers, and they still adopt it even if their knowledge of the products is increased by communication or personal usage . Hotel Star Ratings
Hotels are often rated by using the star classification system. Higher star ratings indicate more luxury. Hotels are independently assessed in traditional systems and rest heavily on the facilities provided. Some consider this disadvantageous to smaller hotels whose quality of accommodation could fall into one class but the lack of an item such as an elevator would prevent it from reaching a higher categorization. The origins of the stars are not clear. Government officials in Europe put stars on hotels to rank facilities and prices, but the Michelin tire company's guides for touring motorists added qualitative judgments and limited stars to the very best. Both Forbes/Mobil and AAA put hotels in five ranks. The first three levels (stars or diamonds) are determined relatively simply by evaluation of facilities and amenities. To rise above three requires overnight examination by anonymous inspectors. Recently, hotel rating systems have also been criticised by some who argue that the rating criteria for such systems are overly complex and difficult for laypersons to understand. It has been suggested that the lack of a unified global system for rating hotels may also undermine the usability of such schemes. (Clarke and McClathcy 2011). Also what makes a five-star hotel worth five stars? According to Forbes Travel Guide, which took over the Mobil guide, a hotel's rating is now more about the guest experience than about the property's physical attributes. However before the guest can have the experience, the guest will have to make perceptive quality inferences. As the star rating information pertains to the availability of amenities, consumers will have more information available pertaining to the quality of stay or experience. As amenities are absolute relative to star ratings, there is less reliance on price to perceive the quality. With more available quality information, consumers will naturally depend on the information. Thus with this in perspective, we propose proposition . Hotel Brand Perception
The belief that brand perceptions strongly influence buying behavior is widespread, and this belief underpins much of a business's marketing communication strategy. Firms look to image studies to explain current marketplace performance, eg. numbers of units sold and price gained. In 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 university. Romaniuk and Sharp
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(2002) indicated that generally the more positively the brand is perceived by the marketplace (potential business travelers and tourists in the case of the hospitality industry), the more the consumers (or potential guests) will buy. Brand perceptions can come from a variety of sources including consumer experiences, marketing, communications or word of mouth. Basically, any information that is encountered with the brand name when sufficiently processed will be linked to the brand name in memory and thus become part of that brand's image. Whether the consumer has a positive or negative perception of a certain brand will certainly affect the way consumers use the consumer price-perceived quality heuristic to infer quality and that will also determine whether they rely on quality information as well to perceive quality. Each year, the JD Powers and Associates report on North American Hotel Guest Satisfaction Index Study measures overall hotel guest satisfaction across six hotel segments: luxury, upscale, mid-scale full service, mid-scale limited service, economy/budget and extended stay. Seven key measures are examined within each segment to determine overall satisfaction: reservations; check-in/check-out; guest room; food and beverage; hotel services; hotel facilities; and costs and fees.
Hotel
Capacity
Jones (1988) presents a four part model of service delivery based on inputs, intermediate output, and outcomes, It argues that productivity is largely determined by managing stage 1, the relationship between inputs and intermediate output; capacity is stage 2, the relationship between intermediate output and actual output; and quality is concerned with the issue of ensuring successful outcomes from actual output. The model is hierarchical in that both capacity management and quality 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 provision: production-lining, decoupling and increasing consumer participation in the experience. Capacity in a hotel is the availability of rooms to accommodate their guests. Too many empty rooms will translate to higher operating costs while too many occupied rooms may translate to an overcrowding and higher demand for service production beyond the capacity of the hotel eg: Spa appointments. Capacity relates to availability of services and hence the overall quality of the hotel stay experience. In Lewis (1989), the capacity of the service provider also leads to the overall motivation of the employees which in turn translates to the quality of the service provided to the guests. The perception of smaller hotel capacity from consumers (potential guests) is that it implies limited economy of scale and service quality. As a consequence, this will mean that the quality if available would be over priced or not available. Reliance on the price-perceived quality would be reduced. In this case, any objective information about the quality would be heavily relied on. In developing this article, we hope to provide a framework for discussion, action and further
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empirical validation on the issue of hotel perceived quality with respect to three factors; Hotel Star Ratings, Hotel Brand Perception and Hotel Capacity. Hotel rack rates are on the rise worldwide (PR Newswire 2011) indicating prices that consumers are willing to pay for perceived quality. However we believe these perceptions are moderated by the three factors we indicated. The interdependence of quality information and price-perceived quality perception is also affected. Through the motivation in this article, we hope that future researchers will be able to design studies that can empirically validate these propositions. The findings will point to several ways that hotel owners and management can realign programs and reallocate resources to raise profitability levels and reduce costs. Primary among them is the connection between star ratings and actual guests' experience, whether to invest in the brand name or how to optimize capacity for the best guest experience. Service quality can be viewed from two perspectives internal and external. Internal quality is based on the conformance to specification. External quality is based on relative customer perceived quality. According to Parasuraman et al. (1994), four distinct gaps on the service provider side can impede delivery of service that consumer perceives to be of high quality. These gaps are: Gap 1: Not knowing what customers expect. Gap 2: Not selecting the right service design and standards Gap 3: Not delivering to service standard. Gap 4: Not matching performance to promises
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11. SUPPLY CHAIN, LOGISTICS AND PROCUREMNT
Supply Chain Supplies: 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 by each hotel. Mostly suppliers are localized so that they can deliver as and when required. Some of the products and services frequently purchased or contracted include: Construction
Cleaning and Maintenance Services (e.g., carpet cleaning, windows, janitorial, hood cleaning, etc) Dry Cleaning Energy and Electrical Supplies and Service Florist / Fresh Flowers Food & Beverages Golf and Related Products Interior Design Services IT Services Marketing & Advertising Waste Removal Suppliers include Guest Supply, Inc & American Supply Corp. Improvements that could help with delivery or quality of product are listed as below
Earlier supplier engagement to make sure the products are ready when required and proper inspection of the products are done prior to their use to check the quality of the product. Long lead times Incentive programs for the suppliers to be competitive and checks the quality. Recognition for the suppliers to achieve more in less. Resource sharing
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Procurement professionals deal with three different business models. First are the owned properties, at which spend is much easier to control. Second are company-operated or managed properties, where the spend is more difficult to control, but it can be influenced by purchasing to a certain extent. Third are franchised properties, which require more choices. Another new focus to improve quality is closer relationships with both internal customers and suppliers. The department uses customer surveys and other communication tools to find out what customers really want and how the purchasing department can deliver it. Breaking down traditional adversarial roles with suppliers, they work closely with suppliers to leverage their resources. The department also surveys suppliers anonymously on potential improvements To maintain the rooms and entertain guest, they have inventories listed below which mostly are obtained by their local suppliers.
Entertainment items (TV, VCR, Cable, music) Swimming pool items. Construction materials Cleaning and Maintenance Services (e.g., carpet cleaning, windows, janitorial, hood cleaning, etc) Dry Cleaning Energy and Electrical Supplies and Service Florist / Fresh Flowers Food & Beverages Golf and Related Products Interior Design Services IT Services Marketing & Advertising Waste Removal
A hotel ERP or property management system (PMS) simplifies inventory management to a large extent and makes tracking of purchase and sales accurate. There are numerous operations in inventory which happen simultaneously, 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 adequately can
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result in revenue leakage, wastage, and theft. A good inventory management system helps a hotel predict demand and supply rate with great accuracy and reduces the chance of error, it also helps a hotel accessbusiness intelligence, plan expenditure and keep a tighter control on profit. Besides all this, inventory management also facilitates vendor management and provides information such as:
Vendor Performance Allows hotel managers to choose better performing vendors by tracking information such as time of delivery time, accuracy of delivery, cost effectiveness etc. Vendor Accountability Ensuring a vendor delivers the right shipment and hotels. An integrated inventory management system allows hotel managers to pinpoint errors in delivery with great accuracy and make vendors accountable for their own action. Order Management to prevent bothoverstocking and stock outing situations
Data obtained from inventory management system can be advantageous to increase the efficiency of a hotel. To begin with inventory management maintains a database of all buying, selling and consumption trends and thus acts as an incredible source of business information as it pinpoints areas of concern and helps minimize fraud. Functions of Inventory Management software Here is a quick glance at some of the functions of a good inventory management software.
Stores creation sub store and main stores can be created with rate calculation like weighted average, last price and last in first out (LIFO) FSN can be defined and analysis reports are available Quotation analysis can be done with vendor analysis, 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 authorizations are available. Also available is a standing purchase order Service work order is available Item stock levels like minimum, maximum, and reorder level and reorder quantity can be defined with recording of Batch#, Consignment#, Capital goods etc Vendor master with vendor analysis, tax deduction at source entry applicable Reports on stock levels, consumption summary by cost centers/ departments, spending pattern based on the last year average consumption in comparison with current year Audit reports for transactions, PO, SPO, indents and purchase requisition is available Value added tax (VAT) reports can be accessed
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Budgets can be defined and budgets vs. actualization is available Physical stock entries can be made for a month end process and reports on physical stock, store balance, negative variance reports are available Access to efficiency reports Reports on reorder levels and reorder quantities and option to update reorder levels Lookups on stocks, consumptions and authorization status for PO, SPO, indents and purchase requisitions, vendor selection based on lat price and last received date
Procurement and stock Control Solution wInner Stock Control helps companies reduce food cost and improve efficiency resulting in higher profits and a quick return on investment. It is especially designed for use in restaurants, hotels, schools etc. and offers an easy way to manage foodservice back-office operations. Merchandise & Recipes. Merchandise forms the base of wInner SC. Merchandise is defined with properties such as name, category, tax %, stock units, storage location etc. Merchandise prices can be set or modified, and changes to the prices are reflected immediately in recipes and menu costs. Recipes are created using the merchandise list. Ingredients required can be searched and selected from this list. Integrating with wInner POS system or wInner Front Office, recipes can be linked to POS articles enabling real-time stock update based on POS sales. Inventory Management. wInner SC makes it easy to do actual inventory reports anytime. You can do an actual inventory of items by storeroom or outlet, and compare it to the ideal inventory based on POS activity and track down variances per item. Inventory reports create a snapshot of the inventory and are saved for later reference. This way you can consult past inventory reports for statistics and reference. Inventory variance reports will list down the products and identify variances in size and value. This enables you to pinpoint specific items in your inventory that contribute to your 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 very user-friendly grid type screen. Suppliers. Supplier data is kept in the centralised Address Book which is integrated throughout all wInner products. wInner SC can track an unlimited number of suppliers with full details. Each transaction for suppliers is recorded so it becomes easy to compare prices, or price patterns. Purchase orders, deliveries and invoices can be recorded with the supplier, and
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history of orders can be stored indefinitely. Purchase history enables you to compare different vendors and their prices so you can easily find the lowest price vendor. Stores & Outlets. For hotels and other businesses with multiple storage facilities, you need to do requisitions and transfer products between stores, kitchens, bars and other storage locations. wInner SC enables you to create multiple storage locations, and makes it very easy to manage mutations and transfers between stores. You can track inventory transactions and print out inventory status and variance reports per store or outlet. For hotels, you are able to keep track of actual and ideal food costs for each restaurant outlet. Purchase Orders & Requisitions. Purchase orders can easily be created from requisitions, making the purchasing managers work very simple. Requisitions can be generated automatically based on minimum stock levels, or based on POS sales activities. Purchase orders can be created with different status modes, and can be saved for later processing. Once an order is finalised, it can be printed and sent to the supplier. The receiving department has access to all purchase orders sent, so they can easily compare them when deliveries arrive. When deliveries vary, modifications can be added to the order to reflect the actual delivery of goods. Upon delivery, the delivery 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 displayed for every item, so you can find out if the item is below par stock level or not. You can see additional information about each product, such as default order quantity, quantity of last order etc, to help improve accuracy during ordering. Receiving. wInner SC makes it easy for you to record product deliveries. Rather than keying in each delivered item, delivery receipts are matched with purchase orders for price and quantity verification. Histories of deliveries are kept and saved for immediate comparison and future control of invoices. By comparing orders with deliveries, you can instantly spot errors on quantities, quality and prices that would otherwise fall in the favor of the vendor. This goes a long way in reducing your operations food costs. Just imagine how much you can lose over the course of a year without proper receiving and purchasing management. Integration. wInner SC combines sales volume data with your stock activity. POS articles are linked to Recipes or merchandise, and stock levels are updated in real-time. In other words, stock is deducted automatically the moment the waiter posts the article in the POS system. This integration enables you to focus on trends and decide which of your menu items need to be maintained, modified, promoted or replaced. Current Practices
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Procurement Management Procurement practices are used in the logistics and supply chain industry to support operational needs of the company by focusing on how purchasing is done, how the product is received from suppliers, building relationships with vendors and managing the procurement process by identifying opportunities and managing internal operations (Fantazy, Kumar, & Kumar, 2010). In todays procurement environment, importance has been placed on reducing costs during purchasing which leads to the best costs and value to its customers. Companies like Wal-Mart who go straight to the manufacturer, are very strong when they negotiate their price with vendors and make sure no other company is getting their products at the same low price. For example TJX companies the off-price retail store, makes their procurement strategy transparent by spending a lot of time with vendors to better understand their price structure and their strategy to best reduce costs. According to Robert Lindsay, a buyer in charge of food and beverage procurement at the Venetian /Palazzo in Las Vegas, his hotel purchasing is done on a two week rotation using the companys master distribution plan philosophy which includes one to three vendors. They ask for the best price and promotions to help save on costs through the lower prices. In their procurement process they, try to stay within a 1 - 5% value as part of their product costs strategy (R. Lindsay, personal communication, June 15, 2012). Due to the Venetian /Palazzo large structure and chain of events, a purchase has to go through to get processed. A study was done on their purchase order strategy to evaluate the steps it takes to generate a single purchase order. The study showed it took $75 to process a single purchase order. They reversed their strategy 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 Venetian /Palazzo, 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 necessary for ordering. Robert Lindsay has also seen improvements in the companys relationship with vendors and an increase in the accuracy of orders (R. Lindsay, personal communication, June 15, 2012). At the Four Queens, the manager in charge of purchasing, Wayne Bach, mentions that with its procurement process it focuses on three bids for 90% of its products. He tries to use specific vendors, using a specific rotation and adjusts based on the value of the products. The Four Queens uses procurement software which has helped them operationally match orders easily, improve auditing, and enable staff to more easily verify and track orders. The Four Queens has also seen a reduction in inventory levels and the costs associated with inventory (W. Bach, personal communication, June 13, 2012). The Venetian/Palazzo and Four Queens, like many other hotel companies, use procurement software called Stratton Warren to manage the whole procurement process via ecommerce. The change from the usual ordering process was because the previous system did not give accurate information on supply chain issues (Kothari, Hu, & Roehl, 2005). Stratton Warren has been integrated with other systems like warehouse management and financial systems to help gain better visibility and control of their procurement process and
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prevent any industry procurement challenges, like issues with purchases, deliveries, pricing, and quality standards, as well as help suppliers spend more time creating value for the hotels. For example, Hilton Hotels changed their procurement strategy by combining buying into national contracts for its various brands, and using local providers where it makes financial sense. Hilton Hotels makes sure they build strong relationships with suppliers for good deals, and then negotiate markups with the distributors that handle warehousing and delivery. Also as part of their strategy to control the whole supply chain process, they are making changes internationally by focusing on integrating their international procurement (Terry, 2007). Logistics and Supply Chain Implementation Recommendations IBMS 2009, Global Chief Supply Chain Officer Study conducted for the metals and mining industry mentions that 82% of companies believe that, the increase in supply chain competition is very aggressive in todays logistics and supply 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 complexity of logistics and supply chain management by collaboration and sharing information across the network, as well as using analytics and simulation to evaluate the increasing complexity (IBM, 2009). Different concepts have been developed to understand how the successful implementation of logistics and supply chain management can be achieved. For the hotel industry logistics and supply chain activities are grouped into tactical, strategic and operational levels to help create a more systematic approach by focusing on how implementation will happen from a higher level, then linking that to long-term goals and finally how these results translate in the shortterm. Operational level Costs. The operational level of logistics and supply chain management implementation focuses on decisions that are related to how to make the tactic approach happen in the short term. Today hotel costs associated with logistics and supply chain strategies have placed the emphasis on increasing efficiency and reducing total costs to stay competitive (IBM, 2009). During implementation, costs need to focus on purchase and inventory costs. It is important to monitor purchase costs with products that have a short life cycle and have to be replenished frequently, since hotels usually buy too many stock-keeping units (SKU) for the same use. It 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. Inventory costs during implementation need to focus on supplier relationships and using strategies like just-in-time inventory to reduce inventory costs in the hotel industry. Inventory costs can be cut down by forecasting, planning, and scheduling orders in the most costs-efficient way which allows the hotel to react to changes in demand and supply (Constantine, Ruwadi, & Wine, 2009). Simplifying complexities. It is important in logistics and supply chain implementation for hotel managers to manage strategies to eliminate complexities that do not add any value to the organization. It is important that logistics and supply chain functions are broken down into different areas based on which areas matter the most in the supply chain. This segmentation helps hotel managers easily identify the relationship between costs and price
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with suppliers and helps in negotiating better prices (Constantine, Ruwadi, & Wine, 2009). For example, one way Starbucks eliminated complexities in its logistics and supply chain transformation, was they made changes to how coffee beans were delivered to its processing plants. They decided to build facilities in those regions that helped reduce lead times and labor costs. (Cooke, 2010). This makes it important during implementation for hotel managers to regularly look at their logistics and supply chain operations and eliminate complexities that do not add value.
Right metrics. Applying key performance indicators (KPIs) to logistics and supply 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. Starbucks created a weekly scorecard to monitor third party carrier performance in areas of costs, service, and productivity agreed upon with their partners (Cooke, 2010). Applying KPIs to operations will help create transparency, improve costs, and help serve customers better, as well as lay the foundation for future logistics and supply chain initiatives. Risk management. Considering risk management is critical during logistics and supply chain implementation for hotel managers in order to evaluate risk associated with implementation in their strategy. Managers should have a good understanding of the benefits involved with sharing risk information across the network. It 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 standardized information (IBM, 2009). Hotel managers need to make use of past history as a benchmark for future risk and it should be used by hotel managers as a tool to achieve better logistics and supply chain visibility.
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11. Conclusion
One of the lessons that can be learned from this analysis is how change is acting on the industry. Is each of the different types growing at the same rate, or are some types expanding and others declining? Jones (1988) identified three key trends in hospitality operation design: production lining, decoupling, and customer participation. Production-lining refers to the concept of breaking down production activities into simple tasks so that they may be organised on a production-line basis, just as Henry Ford production-lined the motor manufacturing process in the 1920s. It has long been argued (Levitt 1972) that services in general are moving towards more industrialised processes and McDonaldization (Ritzer 1993) may be the result. Decoupling refers to the idea of separating, both in place and time, back-of-house from frontofhouse activity. Often the rationale for doing so is that one or the other (usually back-ofhouse can be production-lined). For instance, a number of health authorities in the UK have created one large central production kitchen for a number of hospitals and introduced cookchill, so that the kitchen may produce 5,000 to 6,000 meals for transportation the following day to five or more different hospitals. Hotels can decouple their reservations process from the unit to a central reservations office. Customer participation is otherwise known as self-service. Many hospitality operations now enable their customers to do things for themselves that were previously done for them. It is possible to check into a hotel by using a swipe card system, select salad items for a self-help salad bar, make your own cup of coffee in your room and check out using the in-room television set. The introduction of these ideas into the industry has not only led to firms moving towards the diagonal, but also along it, away from high variety/low volume in the direction of lower variety and higher volumes. For instance, la carte restaurants and full service hotels have been around since the 1880s, whereas Kemmons Wilson only conceived the mid-service hotel, which he called Holiday Inn, in 1952. Fast food only really began when Ray Kroc took over the McDonalds chain when it had 200 outlets in 1961. Cook-chill and sous-vide are even more recent innovations. These trends reflect what has happened in many other industries. The final question is the extent to which the hotel industry will follow other industries towards the notion of mass customisation. In this context both high volume and variety are accommodated, using a range of different approaches to achieve this technically difficult task. This remains the biggest challenge for hotel operators. How to provide large numbers of customers with high quality service of their choice, at a low price, and at sufficient speed ?!
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BIBLIOGRAPHY http://www.bestmanagement.com.au/library/site%20selection%20for%20hotel%20& %20resort%20developments.pdf http://planmagic.com/business_plan/hotel-resort/hotel-charts.html http://www.hotelnewsresource.com/article30272Top_Five_Reasons_for_Meeting_Planner_Si te_Selection.html Professional Meeting Management, third edition, published by the Professional Convention Management Association Cambridge International College- Hotel Operations and Management article Glynn, W.J. and Barnes, J.G. (1995) Understanding Services Management, Wiley:Chichester Hayes R.H. and Wheelwright, S.C. (1979) Linking Manufacturing Process and Product Life Cycle Harvard Business Review, Jan-Feb, 133-140 Hope, C. and Muhlemann, A. (1997) Service Operations Management: Strategy, design and delivery, Prentice Hall:Hemel Hempstead Johnston, R. and Clark, G. (2001) Service Operations Management, Prentice Hall:Harlow Jones P and Lockwood A, (1999), Hospitality Operating Systems, Distance Learning Unit, University of Surrey : Guildford Jones, P. (1988) The impact of trends in service operations on food service delivery systems International Journal of Operations and Production Management 8:7, 23-30 Jones, P. (2000) On the Performance Frontier: Understanding Operations Management in the Hospitality Industry, Inaugural Lecture, University of Surrey (unpublished) Krajewski, L.E. and Ritzman, L.P. (1993) Operations Management: Strategy and Analysis, Addison-Wesley Publishing:New York Levitt T. (1972) Production line approach to service, Harvard Business Review, 50:5, 20-31 Lovelock, C. (1983) Classifying services to gain strategic marketing insights, Journal of Marketing, 47:Summer, 9-20 Morris B and Johnston R (1987) Dealing with inherent variability - the difference between service and manufacturing explained, International Journal of Production and Operations Management, 7:4, 13-22 Render, B. and Heizer, J. (1996) Principles of Operations Management, Prentice Hall:Upper Saddle River NJ
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Sasser, W.E., Wyckoff, D.D. and Olsen, M. (1978) The Management of Service Operations, Allyn and Bacon:Boston Schmenner, R. (1986) How Can Service Businesses Survive and Prosper?, Sloan Management Review, Spring, 21-32 Schonberger, R.J. and Knod, E.M. (1994) Operations Management: Continuous Improvement, Irwin:Burr Ridge, Ill. Slack, N., Chambers, S. and Johnston, R. (2001) Operations Management, Prentice Hall:Harlow Sower V.E., Motwani J. and Savoie M.J. (1997) Classics in production and operations management, International Journal of Operations & Production Management, 17 (1) 15-28 Waller, D.L. (1999) Operations
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Globsyn Business School HOTEL OPERATIONS MANAGEMENT

PRESENTED BY: Learning Group 5 & 6 (PGPM-11B)

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- Sougata Ghosh Choudhury ACKNOWLEDGMENT

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4. CUSTOMER NEEDS AND HOTEL SERVICE DESIGN

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CONVERSION SYSTEM ( INPUT- PROCESS- OUTPUT ) :

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FLOWCHART FOR HOTEL RESERVATION :

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8.FACILITIES ( LAYOUT ) FOR THE HOTEL

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HOTEL GROUND FLOOR MAP

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PENTHOUSE FLOOR PLAN

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9. Strategic and Operational Business Planning for Hotels

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Think about general economic and social trends:

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