NGUYEN THI ANH THU (ID: 109071508)

Asignment 1 – Introduction to Management.

HOTEL MANAGEMENT.
Is Your Hotel A Mess?
Over the years, our company has assumed management or conducted operational reviews of
hundreds of hotels. Obviously, many—but not all—of them had big problems, so we’ve had the
opportunity to have an intimate look at the workings of all types of hotels, both good and bad,
and we’ve noticed some commonalities we think are symptomatic—and, therefore, instructive.

In virtually all the hotels we’ve served—the good and the bad—these commonalities are almost
corporate-culture issues. If we find two or three of the good (or bad) aspects, we usually will find
more—again, good or bad. Don’t get confused: There are profitable hotels that have a few
shortcomings, but they may be the ones to keep your eye on when things get tough. Conversely,
some of the most beautifully groomed hotels that feature all the amenities and perfect guest
service are, quite simply, losers—and that’s because no one in management is aggressively
focused on the bottom line.

What are some of the positive commonalities—the good signs—that a hotel offers? To begin
with, well-groomed, uniformed, name-tagged employees who greet guests with a smile make an
excellent first impression, both on guests and new management companies. Sharp curb appeal
and public-space cleanliness are usually signs of good things to come. Once you get more “into”
a hotel’s behind-the-scenes areas, things become clearer: Orderly offices, storage spaces and
housekeeping areas are examples of the good signs that usually follow good first impressions.

On the other hand, we always seem to find a messy front desk—not necessarily on the working
surface but in drawers, cabinets and storage closets—when we take over a troubled hotel.
Clutter, disorganization and years of dust and trash appear in virtually every problem property.
We inevitably find old furniture, out-of-date supplies and never-to-be-used “spare maintenance
parts” left in storerooms and maintenance shops. This usually happens in hotels where
management claims to lack sufficient storage space—another sign of rampant disorganization.

Now, I’m not saying these shortcomings are the cause of mediocre profitability—but I am saying
they’re signs of management’s poor organizational skills and lack of focus on orderliness and
cleanliness. And here’s another thing: Management’s lackadaisical attitude toward keeping
things organized and clean most certainly influences employees’ attitudes about their own work
habits. Unkempt employee restrooms, for example, not only are a sign of management’s lack of
concern for staff, but set a poor standard for what management expects of those same
employees in keeping guest areas clean.

Some time ago, our company assumed management of—and subsequently closed (yes, closed)
—a 160-room hotel. In the process of cleaning up the property, we filled 10 dumpsters, each of
which held eight cubic yards of trash. This trash didn’t include old, unused furniture, guestroom
trash or kitchen garbage—it was just stuff that had cluttered offices, housekeeping areas, the
front office, storerooms and the maintenance shop. Imagine 80 cubic yards of “stuff”—talk about
disorganization (maybe chaos is a better description). More recently upon assuming
management of a 140-room hotel in the Florida Panhandle we had 23 construction dumpsters of
clutter removed.
Here’s another sign of a poorly run hotel: low linen pars. They’re not the result of poor
profitability—they’re a cause. If we see housekeepers stripping rooms to get linen back to the
laundry, washed and used again immediately, that’s a sure sign that there are more things
wrong than insufficient linen supplies. (Undoubtedly, the stripping process includes placing the
linen on the floor, which is an unsanitary and unsightly bad habit which ads to linen wear.) For
example, it means there are undoubtedly days where not all the rooms get made up—and
therefore occupancy may suffer due to unavailability of rooms. As absurd as it may sound, linen
wears out more than twice as fast if it is washed and used daily rather than every other day or
so. Circulating linen daily by stripping beds and running it back and forth also takes more labor.
In the end, minimal linen supplies turns out to be pennywise and pound foolish—keeping an
adequate supply of linen, about 2.15 to 2.5 par, saves money.

Likewise, if printed and other collateral materials are poor in quality, it’s a sign that the hotel is
too. In full-service hotels, menus are threadbare—good hotels get new ones, poor hotels don’t.
Raggedy in-room telephone books are another example of things poorly run hotels pay no
attention to—and phone books cost nothing to replace. Are phone books in guest rooms even
necessary in the age of the internet?
Finally (and perhaps most important), a hotel’s accounting methods also are reliable indicators
of what’s really going on—after all, if you can’t keep score, you can’t win the game. There are
really three issues involved in good accounting: gathering all data on a timely basis from all
areas of the hotel (payroll, revenues, statistics and accounts payable); compiling it quickly and
accurately in the form of financial statements; and interpreting and acting on the information
once it’s gathered. If this isn’t being done, it’s another symptom of poor organization and lack of
attention to detail. Without this information, management cannot effect changes for the better in
a timely manner. Of course, management must know what the data means and what they can
do to make the numbers improve—sadly, this business basic is too often missing in hotel
management.

In well over half the problem hotels we’ve been retained to manage, financial statements do not
conform to the Uniform System of Accounts for the Lodging Industry. This makes it difficult, if not
impossible, to compare a hotel’s operating results to similar hotels. Most of the owners and
managers of these properties were aware of the Uniform System but didn’t consider it
worthwhile to change their accounting system—in other words, they thought had a better way of
looking at their accounting data than more 80 percent of the other hoteliers in the world. Now
that’s arrogance—it reminds me of the soldier who was marching to a different cadence, then
had the gall to tell his sergeant, “Everybody’s out of step but me.”

If you don’t make sure every last detail of your hotel is well attended to, you’re out of step and
marching rapidly toward big trouble. Make lists of what needs to be done to make your property
as immaculate as can be—not only in terms of cleanliness and orderliness, but operationally as
well. Maybe a good place to start is organizing and cleaning the front-desk area and working
your way through the back-of-the-house areas that your guests don’t see.

Look your hotel over carefully and critically. If negative symptoms like those I’ve described exist,
you need to ask yourself where your priorities really lie.

Changing Times Require Changing Hotel Business Models

Hotel business is conceptualised. In the context of evolving economic environments, the
widespread belief that hotels are strictly in the business of selling rooms to guests in need of
accommodation is narrow and thus limiting. If the industry does not take full advantage of the
opportunities presented by economic trends, hotel assets will remain underutilised, potential
markets will remain untapped, strategic alliances that should occur naturally will not materialise
and significant revenues will be foregone.

This article presents two concepts that could offer opportunities for the industry if hotels are
willing to take a few steps away from the traditional business models.

The Catwalk Concept

A model to capitalise on the opportunities presented by the proliferation of international brands

Hotels should capitalise on a key side effect of the global proliferation of international hotel
brands: efforts aimed at building hotel brands have resulted in branding the guest population as
well. Guests loyal to a particular hotel brand share identity traits and lifestyle preferences with
each other and differ from guests that prefer different brands. Therefore, branded hotels are
brick and mortar containers for very distinct, well defined, self-selected captive audiences that
could be accessed for marketing purposes. This argument holds true to the extent that hotel
brand preference is a reliable indicator of purchasing behavior and brand preference for other
products and services.

A branded hotel can take three specific steps to capitalise on this opportunity:

• First, conduct research to identify specific brands of other products and services that
appeal to their guests, for example, one such brand could be a particular type of flat-screen
television whose design and price tag has been targeted to a specific type of customer.
• Second, explain to the companies identified the benefits of gaining access to their
guests; the hotel could build guest market profiles to support the claims that its guests fit the
profile of the flat-screen television’s target audience.
• Third, find inconspicuous ways to grant these companies access to the guests, for
example, the hotel could agree to display the flat-screen televisions in its rooms so that the
guests interact freely with the product, without ever feeling part of a marketing campaign.
Variations on this approach can be applied to any type of product or service that could be
adopted by a hotel, as long as its brand target market is compatible with the hotel’s guest profile.
Examples include products such as design furniture, art collections and electronic gadgets or
services related to wellness, health, continued learning or entertainment. The approach
proposed here should not be confused with practices already employed by hotels that have
successfully marketed and sold their own products to their guests by using the rooms as display
space and offering hotel products via catalogues.

The value proposition to the purveyors of goods and services is twofold.

• First, they would enjoy marketing benefits derived from their ability to reach a target
audience in an environment that allows this audience direct and free interaction with their
products. This opportunity would be especially valuable in instances when new products are
tested in the market: the costs of testing the product will be reduced and the ability to reach the
desired audience enhanced.
• Second, using hotel space as exhibition space or product-testing ground may also result
in direct sales to the guests and indirect sales to audiences reached by word-of-mouth
generated by the guests.
The value proposition to hotel guests is also twofold.

• First, they would benefit from exclusive access to tailored products or new concepts that
will enhance the value derived from staying in that hotel.
• Second, they could benefit from exclusive discounts.
The value proposition to the hotels themselves is multidimensional.

• Direct benefits would be derived from additional income streams, as hotels can sell the
same space many times over during the same time period (that is, the guests would pay the
daily rate to gain access to the desired room, interested suppliers of goods and services would
pay to gain access to the guests).
• Indirect benefits could be derived from the added prestige of associating the hotel’s
brand with other established brands, or from the increase in demand from guests as a result of
marketing strategies that exploit the potential discounts offered to them.
In conclusion, the trend of increased proliferation of international brands may be better exploited
by the adoption of a hotel business model which recognizes that branding efforts have
transformed guests into assets and other companies (including hotel suppliers) into potential
customers.

The Sanctuary Concept

A model to capitalise on the opportunities presented by a particular aspect of globalisation
Hotels should capitalise on the trend of globalisation by tailoring their product to serve the rapidly
growing population of professionals who relocate across the globe every few years in search of
better career prospects. The demand generated by these professionals is recession proof, as it
can be captured in good times, when people move to a new region, and bad times, when they
move out. Moreover, for a hotel chain with international reach, this demand can be captured at
both ends, in the city left behind and in the new destination.

The extended stay hotel concept taps into this market to some degree. However, to fully
capitalise on this pool of demand, hotels should focus on the particular needs of this type of
guest. It is true that guests relocating to a new city require direct access to hotel rooms because
they need accommodation; however, these guests have a more pressing and important need for
access to the institutions and facilities of an unfamiliar new city. This need highlights two
opportunities, one related to a tailored product hotels could offer, the other related to the
Catwalk opportunities afforded by catering to this type of guest.
Hotels could tailor their product to incorporate logistic and ambassadorial functions aimed at
drastically reducing the acclimatisation period of any newcomer by making the process short and
effortless. This value proposition could be particularly attractive if addressed to corporations,
which would then benefit from a speedier acclimatisation of their new hires in two ways.

• Relocation costs would be cut significantly by reducing the time spent in hotel
accommodation, searching for permanent accommodation and going through the necessary red
tape.
• The companies would also benefit from an employee that can focus on the job
immediately instead of spending a long amount of time trying to settle in their new city.
The concierge services of such a hotel would include assistance with obtaining residencies and
driving licenses and help with finding a permanent residence, purchasing a car, and so forth.
The rooms could be tailored for guests travelling with many possessions; the common spaces
could be designed to increase networking and interaction between people that share the same
potentially nerve-racking experience of relocating and starting a new life in a new home.
The Catwalk opportunities are very significant, as the relocating guests share basic needs that
go beyond issues of lifestyle and consumer preferences. Virtually all of these guests will need a
house and furniture and most of them need a car. Moreover, there will be a great immediacy for
these needs, which should be satisfied within weeks so that they can focus on their new job.
How valuable would it be for real-estate agents, furniture distributors, car dealers and other
purveyors of related goods and services to gain direct access to the guests of a hotel catering
exclusively to this demand segment? The strategic alliances that could be formed to create an
effortless transition period for these guests are worth investigating.
In conclusion, the growth in the number of professionals that habitually relocate in search of
better career prospects may be better exploited by the adoption of a hotel business model that
tailors its product and creates strategic alliances with suppliers of goods and services that can
make their transition period smooth and effortless.

Conclusion
The Catwalk and Sanctuary concepts have been designed to illustrate possible ways in which
hotels could better capitalize on enduring trends by engaging in creative uses of previously
underutilised assets: hotel spaces, hotel guests, and hotel time. The vital prerequisite for such
concepts to be adopted and gain traction is to recognize that hotels are strategically positioned
to provide a wider type of access (not just to rooms) to satisfy the multiple needs (not just for
accomodation) of several entities (not just guests) in a particular place and during a particular
moment in time.

Marketing a Hotel Online In a Struggling Economy

INTRODUCTION
In a struggling economy, businesses slow down. This is especially true for hotels as their growth
is directly related to the health of the economy. Consequently, your marketing budget shrinks
and you need to be careful about how to spend your marketing budget wisely. In other words,
identify what marketing methods work, and what don't. It is more important than ever that you
pay attention to your return on investment (ROI).

In 2008, 37%-38% of all hotel bookings will be generated from the Internet (one-third in 2007,
29% in 2006). At least another third of all hotel bookings will be influenced by the Internet, but
done offline (call center, walk-ins, group bookings, etc). All major hotel brands are already
generating an excess of 40% of the (CRS) bookings via their brand websites. By the end of
2010, over 45% of all hotel bookings will be completed online.

The internet has surfaced as the leader in travel and hotel sales. It has established itself as the
most important distribution and marketing channel in the hospitality industry. Since this is the
case, it only makes sense for you to give some serious thought and planning to Internet-related
campaigns in your hotel's marketing mix. In other words, when your marketing budgets shrink,
you could benefit by accentuating your online strategy versus offline strategy. The bonus is that
Internet marketing is almost totally measurable, which allows for quick evaluation and continual
adjustments to improve results.

MARKETING ON THE INTERNET

The primary objective of all your online marketing efforts should be to attract the right visitors to
your web site and to encourage them to make a reservation. Of course, bringing more and more
visitors helps in brand building exercise too. There are several ways to promote your website
online. Below we list just a few of them.

First and Foremost – Create and Enhance Your Hotel's Website

Hotel Internet marketing starts and ends with the hotel website. The hotel website has become
the first, the only and in many cases — the last point of contact with the travel consumer. It is
only natural that creating and enhancing the hotel website should be the top priority. The
objective is to create an attractive look and feel; and at the same time make sure that the
website is content/feature rich so that it provides required information to its visitors.

Most of the hoteliers are content with having a web site as the sum- total of their Internet
marketing efforts. Whereas the fact is that having a website is just a starting point and not the
end. Once you have a well designed website in place, it is crucial that you promote it or market it
online. What's the point in spending all that time and effort to create a website which brings in
tiny amount of visitors? If promoted properly, your website can generate substantial amount of
leads and reservations for your hotel.

You need to keep a close eye on latest trends and usability enhancements and accordingly
enhance the website at regular intervals. However, more often than not, it doesn't happen. A fine
example could be the screen resolution with which websites are designed. We noticed that a lot
of websites still cater to 800x600 pixels screen resolution (perhaps, even less) whereas the
current trend is that more and more computers are using a screen size of 1024x768 pixels or
more. Therefore, a substantial amount of web page real estate is going wasted.

Another example could be that of images and graphics used on websites. Many hoteliers don't
realize that today, Internet users have a lot more bandwidth/internet speed at their disposal than
what they had a couple of years ago. Still, many websites continue to use small sized, highly
optimized graphics, thereby compromising on quality and presentation. These are just a couple
of examples. There are several other factors contributing to websites being archaic – verbose
content copy, poorly done virtual tours, confusing navigation, and other redundant elements.

Content Copy - Study Your Competition

You need to thoroughly study and understand your competition since having an edge over your
competitor's website should be one of the primary objectives for your website. In order to do so,
you have to understand exactly what your competitors are doing online – the manner in which
they display their services, facilities and amenities, use of graphics, search engine penetration,
etc.

Travelers are getting more and more skeptical of hotels' website content. Write concise and
straight forward content copy for your website with appropriate graphics. Graphics and animation
go a long way in sending the right message to your visitors. It is important that your website
demonstrates your hotel's facilities and amenities in as attractive a manner as possible. But at
the same time, make sure it is searchable. For that to happen, you need to understand what
people search for on the Internet and then accordingly plug in the right kind of content and other
sales elements into the web pages. In the online world, your website is your biggest asset. The
content that you write for it can either build brand equity or tarnish the brand image of the hotel.

Search Engine Optimization (SEO)

Optimize web pages by reviewing website's HTML source code, META Tags, implement popular
keywords in the content, etc. In short, do whatever it takes to improve your website's "Organic
Search", which is the free/unpaid search on search engines.

Make sure that the agency or SEO specialists that you hire have enough experience and
knowledge of hotel selection and booking process. The problem with many SEO specialists is
that they tend to populate hotel sites with unrelated non-travel visitors through the careless use
of poorly selected key words/phrases and other means. The number of visitors your SEO efforts
generate is important. But even more important is the number of reservations generated from
these visitors. Having a lot of visitors to your website would be of little use if they do not help in
generating reservations. Therefore, conversion is the key.
Having a good link strategy is a very important part of SEO. When ranking your web site, several
search engines consider the number and quality of in-bound links to rank your website.
Participating in local search – Google and Yahoo – also helps. It also keeps your hotel near the
top of search engine results.

Paid Search Campaigns

Implement "Paid Search" Campaigns such as Pay Per Click (PPC) or Google AdWords or
Yahoo Search Marketing or Microsoft adCenter. It is worth investing in Paid Search Campaigns
to start with since it brings immediate results as opposed to Organic Search (SEO above), which
usually has a gestation period of three to six months. As your Website's visibility improves in
Organic Search, investment on Paid Search could be reduced.

The sad part is that many site promoters use PPC to replace and not supplement efforts to
improve a web site's ability to earn good organic search results. Organic search should be your
goal. User behavior supports this too. Users are more inclined to click on organic search results
than paid search results.

Finally, as with SEO, remember that the number of reservations or conversions, not simply the
number of site visits, determines a Paid Search Campaign's success.

Packages and Promotions

Identify which aspects of your product resonate best with your customers. Why are people
staying at your hotel to begin with: good location, business amenities, free breakfast, etc.
Package and promote your hotel's unique value proposition to potential customers. For example,
create unique hotel offers based on your unique hotel product attributes or attributes in the local
environment. Several years ago, someone had the brilliant idea to include a complimentary
breakfast as a value-added feature to improve sales. It worked so well that nearly every hotel
now offers it; it is no longer a special feature and could even be a deficit for those who do not
offer it.

The vast majority of travelers make a value judgment when selecting a hotel. Create special
promotions, which focus on value-added features targeted to the market segment you are
seeking.

Consumer Generated Media (CGM) - Guest Reviews and Feedback

Social media sites have become very popular as these websites provide a means for keeping in
touch with friends, colleagues, and relatives. However, in a tough economy where marketing
budgets are limited, it makes more sense to focus on travel-related social media sites
like TripAdvisor.com and HotelChatter.cominstead of non-travel focused websites such
as YouTube.com or FaceBook.com. Yes, if you have the resources to focus on both types of
websites, do so by all means. While travel-related social media websites play a significant role in
travel planning, non-travel focused, popular social media websites are important from the
perspective of brand building and awareness.

Make sure your own website supports Consumer Generated Media (CGM) including blogs, trip
planners, guest reviews, experience sharing, etc. For instance, it should allow visitors to read
and post reviews, comments and feedback. People do read reviews and experiences of the
visitors who have stayed at your hotel in the past. This trend is increasingly catching up with
people as part of their planning process for both business and leisure travel.

From a guest's perspective, it is more convenient for him to write a candid comment about the
services that he experienced at your hotel than to go to the front desk or a consumer court and
vent out his frustrations. That's what people like to read before planning their travel – blunt and
honest guest reviews – whether good or bad. And it does make an impact on their travel
decisions.

THE BOTTOM LINE

Internet marketing involves more than simply having a web site. It consists of varied but
interrelated components such as design, development and online marketing. Online Marketing
can alone have several channels such as: Search Engine Marketing, which includes SEO and
Paid Search Advertising, display advertising, e-mail, newsletter, online PR, etc. Tying these
components together require expert knowledge and years of experience.

But the Internet is still the most effective, least expensive way to expose your hotel to global
traffic and new reservations. It is the largest and most important marketing and distribution
channel in hospitality. According to Telecommunications Industry Association (TIA), 83% of
travel planning in the US is done online. By 2010 the Internet will contribute over 45% of all
travel-related bookings in North America. The cost to sell directly to consumers via your website
can be really low as compared to the hefty distribution costs via the Global Distribution System
(GDS) and the third-party online intermediaries. Reducing the reliance on these two very
expensive channels will directly affect the bottom line.

If used effectively, the Internet can provide the required exposure and incremental business for
your hotel. In these uncertain times, the Internet can produce a large portion of a hotel's overall
business.

Online Marketing Trends and Opportunities in India

At a time when companies are cutting advertising budgets, online marketing provides much-
needed edge to marketing. Indian market has seen 19% increase in the regular internet users
this year over 2007, boasts of an active eight million online buyers. With regular internet users
already reaching a sizeable 40 million this year, search engines are becoming a significant
marketing tool for Indian companies across all industries. More and more Indians are turning to
search engines like Google, Yahoo and MSN. The SEM industry is likely to double in size to
$225 million by 2009-10. With Indian online industry headed towards Rs 2,000 crore, takers of
online marketing have increased in the past four to five years. Online marketing will soon
become the preferred mode of advertising for many businesses in India. Since most Internet
users now avail search services and buy online, online marketing is becoming an active
advertising model for result-oriented projects in India.

Get Involved in the Legislative Process

Mid-term elections prompted me to reflect back on how my interest in being active in the political
process evolved. Some define "active in the political process" as voting in elections while others
define it as being a politician or a lobbyist.
The Minnesota Lodging Association, in conjunction with the Minnesota Restaurant Association,
like many other state associations across the United States hosts an annual event called
Hospitality Day at the Capitol. The American Hotel & Lodging Association (AH&LA) has a similar
event in Washington, DC called the Legislative Action Summit (LAS). (To learn when the next
LAS is visit AHLA.com.) The recent mid-term elections prompted me to reflect back about how
my interest in being more active in the political process evolved. Some people define "active in
the political process" as voting in major elections while others define it as being a politician or a
lobbyist.

A majority of the people I know fall in the first category every four years and occasionally every
two years, if they are really dedicated. Really interested voters may even read the headlines and
first paragraph of news articles about the current big issues like minimum wage, congressional
ethics, the fallout from the recent election, not to mention the war on terror around the world. Not
enough people in our industry, particularly at the hotel operations level, fall into a third category:
those that are aware of the issues and make the effort to express their opinions to their
representatives or give guidance to sympathetic lobbyists by being involved with industry
associations.

Influence of the Individual

The most influential group among us may be individual citizens who simply contact their elected
representatives at any level of government.

It doesn't take much effort to vote occasionally and the result is that you and many others have
elevated someone to the highest office and responsibility they have ever had. The question
arises as to whom is going to keep this elected person's feet grounded in reality? They have to
hear from us.

This leads me back to Hospitality Day at the Capitol and the Legislative Action Summit. Several
years ago I was asked to speak about sharing my views with legislators. I realized many years
ago that writing my state and national representatives about my opinions was not only
acceptable but my responsibility. I encourage everyone to do at least that. If you can participate
in a more active and personal way, that would have even more of an impact. Believe me, they
want to hear from us. They certainly aren’t experts on all issues and they are keenly aware of
their need for guidance from knowledgeable people.

Legislators really appreciate hearing from hoteliers and others that provide insights and
assistance that helps them determine public policy. They understand that each hotelier employs
several of their constituents. They know that by working with you, they are also communicating
with many others that they represent.

Most people don’t write to their elected representatives. This is what makes those letters they do
receive so important – legislators realize that each letter represents hundreds of their
constituents’ views. Another powerful tool is to write letters to the editor of your local paper.
Elected representatives read papers just like you and I. However, they tend to read the letters to
the editor of their local paper before anything else because they understand that it is their
constituents’ opinions that are written there and that each letter reaches their entire district and
may represent thousands of people.

Help from the Associations

If you are not sure what to say, simply write a draft letter and send it the Government Affairs
department for your association at the state or national level as appropriate. They will be glad to
comment on your letter, help you with accuracy and generally make sure you don't put your
writing “foot” in your mouth. Even if you don't need their input, it is important that you send them
a copy of your letter. This helps the government affairs department staff know what the various
members of our industry feel and what comments the various legislators are receiving so they
can follow up on them.

For me, the next step was calling legislators on the phone and visiting with them in person. I
procrastinated for years out of fear that I was not going to present myself and my industry
properly. For those who know me, it may be difficult to picture me afraid to talk to someone.
Frankly, I had even visited several prominent national politicians, hosted them in my hotels and
visited with former President Reagan and his wife alone over dessert many years ago. Trust me,
it's not the same as letting your own representative know face-to-face what you believe and
want.

My election to the position of treasurer of the Minnesota Hotel & Lodging Association many
years ago prompted me to contact my legislators in person. I realized that if I was going to
represent my peers in forums and legislative committees I had to learn to talk to legislators
without being awed by their elected position. This served me well when I was elected as an
officer of the AH&LA.

Visits a Natural Step

I convinced myself that visiting with a legislator was a natural step after writing to one. With
encouragement from Tom Day and Tom Newcome, lobbyists for the Minnesota associations, I
started writing to my state senators and representatives advising them that I would be calling to
make appointments and to discuss issues. Note that I wrote them to tell them that I'd be calling.
Writing first made the steps easier and it set an agenda for the subsequent meeting. I also made
sure that Tom Day's schedule allowed him to accompany me so he could go on my first
appointment with me. I was, to say the least, apprehensive.

I started with my local legislators but eventually needed to deal with a number of state
legislators. Obviously there is a senator and a representative associated with the district where I
live, where my office is, and where my hotels are. While the legislators representing one's district
of residence are most interested in your views, those representing your business districts are
also concerned about the impact of legislation on the business and its employees. Each of us
usually has at least two senators and representatives that we should contact.

Before visiting with a legislator, at any level, be sure to know a little about the person and what
issues they tend to be interested in pursuing and what side of you issues they may already have
taken a position on. Also be familiar with how an issue affects your business and the others in
the area. Both state and national elected officials value being updated about what is going on
locally.

In addition to you making appointments to visit them, legislators appreciate your inviting them to
visit you. Legislators often hold town hall meetings where they hear from their constituents in an
open forum. Hotels with large meeting rooms are ideal locations for these events. In offering
space for these, hoteliers develop a personal relationship with the legislators and their staffs.
Tours of your hotels also provide a great opportunity to educate and develop a close relationship
with your representatives. Most people, including legislators, only see the lobby and guestrooms
of hotels. They do not understand what it takes to make a hotel run. A simple tour of your
property can provide insights to the complexities of running your business, from tax depreciation
issues affecting your equipment to immigration issues that allow you to provide the service they
expect. Before long, they will be calling you for advice.

Hidden Issues

Issues before our legislators are both big and newsworthy or small, quiet and expensive. Sure,
we're all aware of the minimum wage and various tax rates. But were you aware of the elevator
inspection issue? Or how about the changing breakfast buffet sanitary requirements and fees or
some similar national or state issue that will cost our industry money?

I happened to be sitting on a subcommittee hearing where a union associated with the

electricians had their business manager, a unionized electrical contractor and lobbyist testify that
elevators are never inspected after they are installed in Minnesota and that any one can work on
them. Obviously, they felt that only licensed, union electricians who had gone through the
traditional apprentice, journeyman, and master program should be allowed to work on elevators.
No one mentioned that electricians don’t know about hydraulics, emergency breaks and the
mechanical safety devices on the doors! The legislators need to have this pointed out to them.

For that particular issue, no daily paper or television station reported this minor amendment.
They only covered minimum wage, worker's compensation and the local utility’s nuclear waste.
Had I not attended the hearing, I would never have known about this important and potentially
costly issue being decided by the representatives. If some minor amendments make it through
the entire legislative process, costs and hassles will increase at many hotels without an
offsetting benefit.

Certainly, I am not recommending that we all start attending legislative sub-committee meetings.
At the national level and in most states we are lucky to have an excellent paid staff to monitor
legislative and regulatory issues and a politically active membership. Through their Government
Affairs and Legislative Committees, Grass Roots Network and Political Action Committees
(PACs), the associations' positions on issues are brought to the attention of legislators
throughout the various states and in Washington.

Association web sites are a good source of information on issues of interest to our industry. All
branches of government and virtually every elected official have a web site as well.

PACs

PACs raise and disperse funds within the guidelines of law for use in funding some of our
industry’s efforts to bring our views to Congress and our legislatures. PAC fundraising functions
at the state and national levels are also excellent opportunities to get together with your industry
peers.

PAC is not a four letter word and contributing to a PAC is not a bad thing only done by the
corporate titans and lobbyists. Contributing to the PAC of your choice in any amount, no matter
how small, is simply exercising your right to free speech. It is another way to exercise your
constitutional right to petition your government. One should seriously consider contributing to our
industry’s state PAC in your state and national PACs such as HotelPAC (AH&LA) or that of your
company, if it sponsors one.

Grass Roots Networks

Many state lodging associations have a Grass Roots Network. The Grass Roots Network
consists of a core group of volunteers from the association. These people serve as the base of a
statewide telephone or email network (calling tree). The state is divided into zones made up of
several legislative districts. In each of these there are volunteer zone captains who contact about
five area managers who, in turn, contact at least five members who have volunteered to
participate by contacting their legislators. This system generates hundreds of calls or emails to
legislators throughout the state.

The Legislative Action Summit and Hospitality Day at the Capitol are a series of events while
Congress or the state legislature is in session. Owners, management, staff and families from the
industry come to Washington, DC or the state capitol. The sessions usually consist of legislative
updates and an orientation to the current issues before the legislators which affect our industry.
Usually several political leaders and consultants will speak to the group.

Before people head over to the legislative or congressional offices, the government affairs staff
will refresh everyone's memory on proper etiquette for expressing one's views to a legislator.
We're reminded not to threaten them with withholding our vote next election, not to exaggerate,
and not to be awed by them.

After the meeting with their representatives people return to meet with their Grass Roots
Network members from their zone to discuss their legislators’ responses and to share their own
positions on various items of legislation. Usually in the late afternoon or early evening the
legislators and/or their staff members join the members for cocktails and hors d'oeuvres.

These events are a tremendously motivating civics class where members of the hospitality
industry can participate in government in an encouraging and reassuring environment.

Everyone Benefits

Clearly everyone benefits from the AH&LA’s and our various state associations' efforts in the
legislative arena. Those who don't belong to the associations and as a result are not
participating at any level in the governance of their state and our country shouldn't complain
about what results from the legislative sessions because they did not volunteer to contribute to
the process.

Those that participate at any level and especially those that volunteer to serve on the
Government Affairs Committees or Grass Roots Network or even just contribute to a PAC have
a right to complain because they went a few steps beyond voting. I invite you to become a
legitimate, licensed complainer by at least taking that first step of writing a letter.

---------------

Kirby D. Payne, CHA, is president of Tiverton, RI-based HVS/American Hospitality Management

Company, a full-service hotel-management company with offices in South Florida and staff in
Minneapolis, MN. The company has operated hotels throughout the United States and served a
multiplicity of clients, including lenders, airport authorities, law firms and individual investors.
Payne, a 30-plus-year hotel-industry veteran, served as the 2002 Chair of the American Hotel &
Lodging Association (AH&LA), is a former director of the National Restaurant Association, and
currently serves as a commissioner on the Certification Commission of the AH&LA’s Educational
Foundation. For more information about the company

Hotel F&B - To Lease or Not to Lease?

Hotel F&B should be leased, is a mantra I hear. People claim hotels should include F&B
because it can be profitable. I feel the profit motive should be secondary. The primary role of
F&B is to enhance the potential Room Revenues of a hotel.
You hear it all the time, particularly from new hotel owners and operators: Food and beverage
operations do not make a profit.

"Hotel F&B should be leased out" is the mantra I keep hearing. This philosophy, of course, begs
a number of questions, the most obvious of which are these three:

• How will an F&B tenant make money if the "landlord" can't - especially when the tenant is
paying rent?
• Why would a heavily invested hotel owner want an inter-related business with different
business goals (and, possibly, incompatible clientele) in the building - especially when the
owner would have minimal control over that other business?
• Here is the really big question - What, exactly, is profit?
While some people claim that hotels should include F&B facilities because they can, in theory,
be profitable, I believe the profit motive should be secondary. The way I see it, the primary role
of an F&B facility is to enhance the potential revenues of a hotel's Rooms Department,
particularly in the case of convention and resort properties.

A good F&B operation, whether it's hotel-operated or leased out, allows more marketing
flexibility - and believe me, this helps sell rooms in off season or slow days of the week. The
mere presence of an F&B operation allows a hotel to appeal to more market segments, thus
giving it a broader, more secure income base. A hotel F&B operation should be conceptualized
with three goals in mind: first, to maximize room revenue; second, to do that profitably; and third,
to appeal to non-hotel patrons.

To ensure that these goals are reached, a hotel needs to follow up with the same kind of F&B
marketing and management effort in which a lessee would invest.

Case in point

My company, HVS/American Hospitality Management, recently took on an assignment to do an

operational overview of a mid-priced, full-service hotel. Generally speaking, this hotel is
operated as a limited-service, mid-priced property with a leased F&B operation. The hotel is
affiliated with a well-known national brand, it's in a major metropolitan area and it's managed
quite competently. Following are excerpts from our report on the leased F&B operation, its
problems, their impact on the hotel, and some changes that we felt should be implemented in
order to minimize detriment to the hotel:

Our experiences in the restaurant, recently leased to a new operator, have been mediocre at
best. On several occasions we noticed one gentlemen walking around dressed in a jacket - we
assume he was either the manager or the lessee - while none of the employees were wearing
uniforms. This creates the impression that the restaurant is a less-than-professional
operation. happen. The restaurant should be provided with a list of guests (and their room
numbers) who have established credit at check-in; the list could be produced by the night
auditor and updated for afternoon check-ins.

On one occasion, we mentioned to our server that the restaurant was extremely cold. She
informed us that the restaurant was on the same system as the hotel and that the restaurant
could not control the temperature. (The lobby was warm enough, so we are unsure of the
validity of her statement.) Regardless, the restaurant was extremely uncomfortable - and
remained so.

On two separate occasions, we observed kitchen staff talking on the phone near the parking-lot
entrance to the hotel. They were wearing dirty kitchen uniforms, were loud and obviously were
on lengthy calls - they clearly had planted themselves there because they had beverages and
were sitting down. This should not be allowed. Brief calls (no longer than three minutes) can be
permitted as long as they are unobtrusive and the employees are neat in appearance - which
wasn't the case in this instance.

Suggested Solutions

Our recommendations for improving this hotel's F&B operation could well be applied to a great
many leased hotel F&B operations that neither enhance the hotel's image nor its bottom line.

It is crucial that a restaurant operation not detract from the rest of the hotel.
Guests and other restaurant patrons, understandably enough, believe that a hotel restaurant is
run by the hotel - therefore, ownership and management should demand that the F&B lessee
follow the property's standards for behavior and appearance. Restaurant employees should
wear uniforms (with footwear and accessory standards and with professionally done name tags
that carry the hotel or restaurant's logo), be well-groomed and be held to behavior standards that
contribute to - rather than detract from - the hotel's image.

Sometimes, the F&B tenant's lease includes the right to use the landlord's liquor license - thus, it
would be the liquor-license owner and fee-simple owner who would be sued in a dram-shop
liability action. With this is mind, the restaurant lessee should be required to conduct server
training for all current and future employees on a regular basis and provide the landlord with
documentation of that training. The documentation should include the course name, content
and instructor, as well as the signature of every employee in attendance.

The lease payment for the restaurant space is often predicated on the tenant's revenues. In
order to maximize these revenues - and, in turn, the hotel's income - some joint marketing efforts
should occur. These might include:

• Distribution of restaurant discount coupons by the front-desk staff at check-in and with
management's compliments.
• Guestroom tent cards promoting the restaurant, its hours and room-service items that
include fast-food items such as pizza.
• Hotel/restaurant package promotions during traditionally slow periods.
• Penetrating commercial business by including a hot, cooked-to-order breakfast in the
room rate.
• Availability of professionally done menus for food-and-beverage service in meeting
rooms.
• Inclusion of a restaurant representative in executive committee meetings.
The restaurant should not be viewed as a space to lease out in order to collect minimal rent and
avoid the hassles of running an F&B operation. Rather, it must be developed as an asset that
contributes to the overall profitability of the hotel enterprise. While F&B leasing is a common
practice among limited-service operators, the full benefit of the restaurant's presence
will never be realized unless the two businesses are marketed together using a well-planned,
positive strategy. However, most of these ideas incur expenses and the sharing of these costs
must be determined by a determination of the extent to which each party benefits from the
project. And, everyone needs to be fair and every month there would be a financial analysis of
the allocation of these expenses. It can get complicated.

An Analysis of F&B and Hotels

Let's go back to the first of the three questions I referred to at the top of this article: How will an
F&B tenant make money if the "landlord" can't - especially when the tenant is paying rent?

It's my opinion that the tenant doesn't have as much revenue potential as the owner simply
because the tenant has no way to get the full potential out of the hotel's marketing staff. For
instance, how would the hotel's sales staff be commissioned for the banquet business they
book? Would the banquet commission also be based on rooms business associated with the
event? Whose money - the hotel's or the tenant's - would be used to pay the commission?

On the expense side, efficiencies of scale are missing. Before the tenant pays the rent, for
example, the tenant must pay the same expenses the owner would have had to pay (regardless
of how those expenses might be allocated on the hotel's financial statement), plus separate
accounting, insurance, etc. Many items might cost substantially more because of the lesser
purchasing power, some of which can be mitigated with a lessee with multiple locations. Labor-
cost efficiencies also are lost: Why should hotel staff clean up a room-service spill in the hall or
remove trays from a room?

The most common conflict between the two businesses lies in the area of banquet bookings.
The leased F&B operator cares only about F&B revenues - and will book any event, any length
of time in advance to maximize those revenues. Hotel management normally would hold back
on booking banquets without associated rooms business - mainly to have that space available
as an enticement to various forms of group rooms business that includes meeting and banquet
needs. Clearly, there must be cut-offs, depending on business patterns, when the space is
released for banquet business - but never to the detriment of a lucrative group booking. A hotel
will earn far more in revenue from group-rooms business than from even the biggest wedding
banquet - but an F&B lessee doesn't think in those terms.

Similarly, an F&B lessee may well limit the extent of time for, say, room service to be available -
the thinking being that room-service orders slow down between certain hours, so why stay open
and waste those labor costs? From the hotel's perspective, though, room-service availability
even during normally slow hours - say, between 10 p.m. and 1 a.m. - is a marketing advantage
that may lose money during those slow hours, but compensates by being a major marketing
hook.

In short, if the F&B tenant's targeted clientele and philosophy are incompatible with the hotel's
clientele and philosophy - and they often are - the arrangements either will be difficult to settle on
to everyone's satisfaction or the hotel will suffer.

Defining profit

Finally, let's answer the "really big question" I referred to earlier: What, exactly, is profit? To a
hotel owner, it's cash-on-cash return. It doesn't make any difference what department is or isn't
making money - that information is simply used as a tool to analyze ways to improve cash flow.
An internally managed F&B operation might have a combined departmental profit of between 10
percent and 35 percent of F&B revenues. Some F&B expenses such as credit card
commissions, accounting, marketing, and maintenance, for instance, are allocated to other
departments, thus eroding the true departmental margin without actually depicting it on the P&L.
On the other hand, there is no accurate way to measure how much additional room revenue -
which, after all, is the crucial element in a hotel's financial success - a well-managed F&B
operation contributes.

Here's my bottom line on this topic: In the abstract, I would recommend that hotel owners never
give up even partial control of the hotel's profit potential, and that they manage the entire hotel -
including F&B facilities - with the goal of maximizing cash flow. Well-managed hotel F&B
operations can make a profit, but even if they don't, they can be an asset and a contributing
factor in a hotel's overall profitability - and that is more easily accomplished when the hotel's
management has complete control. However, there are circumstances, markets, and properties
where there is substantial marketing benefit to be gained by the hotel from outsourcing the F&B
operation to a very well-known local or national operator via a lease or management contract
due to the immediate credibility and value of the brand name. However, if this route is pursued, it
is critical that the operational and marketing issues addressed earlier in this article be
unequivocally detailed in the contract to ensure that the owner derives a net benefit from the
arrangement. Certainly, the owner would be giving up some of the profit potential from the F&B
operation but there could be greater profit derived from the rooms and other areas of the
operation and all that truly matters is the net from the property as a whole.
On one occasion we charged the bill to our room - and there was no attempt to verify that we
had indeed registered or that we had credit available for a restaurant charge. Had we been
cash-paying guests who had left a minimal deposit for telephone charges, we apparently would
have been allowed to charge in the restaurant even though the hotel had no ability to capture
the charge. This should never

What Time Is The 3 PM Parade? (Should your hotel have

some Mickey Mouse® in it?)
Vicki Richman attended Disney Institute. We have incorporated much of what she learned into
our company. Every year we improve our company’s culture and that of our hotels. If the Walt
Disney Company is any benchmark, it's clearly worth doing.
Several years ago the Disney Institute held a seminar in Minneapolis . Among the co-sponsors was the
Minnesota Hotel & Lodging Association. Vicki Richman from our staff attended and I have adapted her
notes for this article.

There is a lot of information provided in this seminar which we have incorporated into our company
culture. Our company has a culture and a vision, but it has never been refined and promoted through all
levels of the company in a structured way. Every year we attempt to improve our company’s culture and
that of each of our hotels. If the Walt Disney Company is any benchmark, it's clearly worth doing.

Later in this article I'll even tell you what time the 3 PM parade starts! Here are the notes with
explanatory comments added where they may be helpful.

LEADERSHIP AND CREATIVITY

Disney believes that storytelling is an important part of the company's job for its guests, staff,
and investors. When Frank Wells and Michael Eisner were brought on-board, they made a video
for the stockholders to watch to learn about them and where they felt the company should go.
Walt Disney had a short video about himself and his dreams. These videos are very effective in
communicating their "story". Communication of history and vision is essential to developing a
well-run company whose staff are supportive.

Traits of Disney leaders: risk taker; childlike (curiosity, creativity, wonder, etc.); iron fist in a
velvet glove; visionary; motivator; and management by walking/wandering around. Apparently
this was very important to Walt Disney who saw himself as a bee, going around from flower to
flower pollinating other people and their efforts.

Whenever staff is overheard saying "I" or "they" to a guest that person is always immediately
corrected. They must always say "we". As in a Guest Service Agent (desk clerk) saying, "I'm
sorry we didn't get your room made up on time." As opposed to, "I'm sorry they (housekeeping)
didn't..." If they say "we" enough, they will come to believe it.

Disney believes strongly that creativity can be enhanced with synergy, adding 1 + 1 and getting
3. Bringing diverse groups together with different perspectives to create "dynamic tension" such
as in brainstorming sessions is used to develop creativity. Brainstorming sessions must always
have the following: defined goal; structure; a facilitator who can control flow; diverse participants;
and a scribe. It is important in brainstorming sessions that creativity be promoted.

Always say "yes, and" because it keeps discussion going while "yes, but" stops the flow of
ideas. Disney's goal in planning is creating value for all of their stakeholders (guests, staff,
stockholders, etc.). Both their financial objectives and strategic objectives focus on increasing
value for everyone. The example given in the seminar was IllumiNations, a fireworks, light, laser
and music show each evening in EPCOT. The restaurants in the pavilions were not doing
well. By adding the IllumiNations show guests enjoy an additional event included in their
admission and there were substantially increased food and merchandise revenue for Disney's
lessees.

STAFF SELECTION, ORIENTATION, AND TRAINING

When it comes to staff selection, Disney believes they are not hiring, but are casting for a role in a
show. Aren't we doing the same thing at our hotels? Each person hired needs to project the image of the
company. Before they fill out an application they watch a nine minute video which projects, without
being obvious, the company culture. Specifics covered are: pay availability; transportation; and
appearance. This is in effect a pre-orientation and serves to screen out potential applicants who don't want
to or cannot fit it for what ever reason. Men who watch and know they won't adhere to the hair length
standards (above the ears) simply tend not to apply.

We have adapted this idea into a brochure which is given out to job applicants. The brochure,
titled “What you can expect when you join our team and what we expect from you”, has eight
panels. Three give information about the company, the hotel (about types of guests and what
various departments do) and its culture. Three panels give details of our expectations of
employees and our promises to the employees.

Disney uses personality profiling to determine where there is a fit. Even if the person is not
selected, the process makes them feel good about the company. After all, their friends and
relatives are both potential guests and cast members! Orientation is done through videos and
other consistent visual aids and the central element is communicating the following in order to
begin the process of getting them wrapped up in the company culture: the company's past (its
traditions), the company's present (how operations work), and the company's future (the vision).
New cast members get a name tag day one, and are told if the name tag is not on at all times,
even backstage (back-of-the-house), they are sent home because they need to maintain the
feeling and standards among employees as well.

Of course, this is true about their entire uniform (costume). Variations or missing items are
never allowed. Name tags have first name only and city if they want. No last names to break
down barriers with guests and other staff.

Disney gives many quizzes throughout orientation and training as to Disney facts (name the
seven dwarfs) and facility facts (extensive tours of the entire property are essential). All
orientation is done by line staff from different areas of the company (like the guy who loads
the Space Mountain cars) who are picked to be "Tradition Assistants" for two to three days a
month. This builds self-esteem, loyalty, sense of importance, and the applicants can really ask
questions about working on the line.

Training is either 1-on-1 or 2-on-1. They teach job skills and people skills with equal emphasis -
more on this in the service section of this article.

When it comes to caring for staff, they feel you must ensure that the physical environment is
supportive. Disney's Golden Rule: treat staff as they expect staff to treat guests - this is essential
to set an example.

If any supervisor notes a crabby staff member they will talk to that person and send them home,
if necessary, so that negativity is not spread. Upbeat attitudes must be engendered back-of-the-
house to carry to the front-of-the-house.
No Disney visuals are in break rooms or cafeteria because the staff told management they
overload on it and need a real break. Many personal services are provided because staff cannot
get anywhere easily once at work, such as vehicle registration, voter registration, dry cleaning,
etc. In addition, Disney provides a private lake with recreational area for staff and families only.

Longevity and performance recognition through pins, awards, parties, etc. are also important
aspects of caring for employees at Disney.

SERVICE

Since nothing is unique (people can alternatively go to Universal Studios), then what Disney is
selling is only 10% product and 90% service. This is obviously very true of hotels, too. 65% of
Disney’s guests are repeat. But more important to them than their repeat guest, is the guest who
becomes their advocate. The one who goes home and says, "We won't be going back to Disney
in the next few years or maybe never but it was great, you should go".

Disney recommends taking a magnifying glass to what you are doing RIGHT (rather than what
you are doing WRONG), examine it, map it out so you understand and can translate those
elements to what you are doing wrong.

The guest (or employee) might not always be right, but always allow them to be wrong with
dignity. In order to give good service you must have these four elements:

1. Know who your guests are, what they want, and when:

• Poor service is different for everyone, so you need to treat each one individually.
• Since 65% of guests are repeat, their "wow" threshold is very high, and one needs to be
raising the bar at all times. So you always need to pay attention to detail and exceed the guests'
expectations.
• Disney has "guestologists" that study who their guests are and what their needs are.
They do this through telephone surveys, in-person surveys, comment cards, guest letters, focus
groups, and secret shoppers.
• Some facts: 38% from New England (#1 state is New York); 23% international; saved 2.5
years for Disney vacation; families of 3.3 people; and the #1 need is to see Mickey Mouse
(translation: need to escape reality)
• Sometimes guests want "aggressively friendly" and others just want "warm and
welcoming" and staff are trained to recognize the signs. For instance, if the family has driven to
Disney (the valet should notice out-of-state plates), they are tired and anxious, so just welcome
them and move them along to their Disney hotel room efficiently. However, if it's 8 am at the
turnstiles into the Magic Kingdom , welcome them aggressively.
• There are no newspapers in any Disney store
• When their tickets are taken at the turnstile, it's easy to tell from the ticket if it is their first
day or last day and the staff is trained to acknowledge this to the guest
2. Need to communicate the service goal to staff:

Everyone's job description whether they be in accounting or line staff on a ride has the Same
first two items:

• Keep the property clean. Everyone must pick up trash - it's a big no-no if anyone is
spotted walking by trash anywhere
• Create happiness.
Service Standards (in order of priority):

• Safety for guests and staff is never sacrificed.

• Courtesy, treat every guest as a VIP - all staff must offer to take the family's picture if
they see one being left out - it costs nothing to create a magical moment (Cast members must
always be anxious to help and be aggressively friendly.)
• The show is extremely important so they must pay attention to detail in everything
- never lose the theme anywhere
• Efficiency, the system and equipment must be effective. Also, all staff learns that they are
needed to show up when they are told and do what they are trained to do otherwise the whole
show suffers. People need to be needed and know they are important.
All of the staff's performance appraisals rate the person using these standards. They are taught
that they need to make all of their decisions based on these four goals and in this order. For
instance, have they ever sacrificed courtesy for efficiency? That is a no-no. Never sacrifice
courtesy for the show either.

Two Disney Tidbits: It takes 37 magic moments to recover from 1 tragic moment. A good coach has a
staff that has confidence in him/her while a great coach has a staff that has confidence in themselves!

3. Set the stage:

The setting must be consistent with what you want people to feel and must always communicate
your essence. The setting supports both the service theme and the service standards.

The setting includes:

The environment: They have "smelletzers" which spew specific smells throughout the park.
When you first walk into the Magic Kingdom onto Main Street, they have the smell of just-baked
chocolate chip cookies.

Objects within the environment: Size and arrangement of objects, shapes and lines, lighting,
shadows, color, temperatures, and sound. Look at everything in your environment and assess
its impact on the guest experience.

Procedures that enhance the quality of the environment: Never allow procedures to
negatively impact on guest experience, always have procedures that benefit the experience.
Facts are negotiable, perceptions are not so no matter what really happens, all that matters is
how your guests perceive it.

4. Deliver a quality show (service delivery):

In order to deliver service, you must have well-trained people and they must have systems that
support them and enable them to provide good service. At Disney, a quality show is made up of
three components: people; systems; and service recovery.

People: Staff are taught that the front line is the bottom line. Orientation of all staff includes
behavior skill training such as: importance of first impressions; posture; gestures (their staff is
taught not to gesticulate when talking to guests); facial expressions; vocal image; and use of
humor (everyone's view of what is funny is different so humor is to be avoided).

Cast members are also taught tips on how to be comfortable in their job, like standing for long
periods of time without getting tired. Disney tries to keep staff motivated to succeed in their jobs.
It is communicated that 62% of all managers were in line positions to start, that they have a
future with the company and it is a good company to have a future with. Lateral moves are
celebrated and acknowledged like promotions. They teach staff that getting skills in many areas
makes them more versatile, more useful for the company so line staff is cross-trained in many
different areas of company.

All management staff are required to work in the park in line positions (cleaning tables, etc.)
during peak times for a specific number of hours. They are all dressed in blue lab coats so other
staff knows who they are. It's fun for everyone. Turnover of permanent staff is only 17.8%!

Systems: Systems have been developed to enable line staff to provide timely, useful
service. For instance, losing your car, locking keys in car, or running out of gas. Attendants in
golf carts can be there within minutes to open car doors, provide two gallons of gas, cut keys
(even with the computer chip), jump batteries, etc. to help the poor parking lot attendant who is
facing the tired dad and his troop.

Disney believes that only 5% of top management knows what the operational problems are, only
20% of middle management knows, and 100% of line staff knows. So, Disney looks to learn the
service needs of guests and what is preventing staff from fulfilling them directly from the line
staff.

Service Recovery: It's ok to apologize to the guest even if they are wrong; always ask the
guest: What can I do for you? Empower line staff to fix the problem; follow up with the guest and
in a timely manner, it makes them feel important; and provide feedback to staff.

Obviously you had to be at this seminar to benefit the most from it. Properly adapted and
implemented, there are many things here that will help my company and yours do better. We
can't all be Disney and we don't all have their resources to accomplish some things. But,
concept is also important and we, too, are in a service-oriented business with guests (we don't
even have to translate their language!) who want happiness in a clean property.

Oh yes, so, what time IS the 3 PM parade? First, cast members know never to laugh at the
person asking this question. Apparently, it is the most frequently asked question in
the Magic Kingdom . Next, they are taught to understand that what they really need to know is
what time does the 3 PM parade pass by where the guest plans to be during the time of the
parade. In other words, the answer is, "Where will you be?" And then, answer the question,
"The 3 PM parade passes the fire house on Main Street at 3:12 PM."

Think about the orientation and training that street sweepers receive from Disney in order to
ensure that everyone can provide quality service to their guests. Can you match it? We all need
to try!

--

Kirby D. Payne, CHA is President of Tiverton (Newport), Rhode Island based

HVS/American Hospitality Management Company, a growing hotel investment, management
and consulting firm. Payne is a Past Chair of the American Hotel & Motel Association, and
serves on the Certification Commission of the AH&LEF’

Voice over Internet Protocol (VoIP) - From an Hotelier's

Perspective
E-mail and cellular phones have replaced the telegram as a method of delivering information.
VoIP is going to have the same impact on the current worldwide telephone system. Making the
migration strategically will be essential for hoteliers.
On January 27, 2006, Western Union discontinued its telegram services. It should come as no
surprise that e-mail and cellular phones have replaced the telegram as a method of delivering
information. VoIP is going to have the same impact on the current worldwide telephone system
(known as the PSTN or public switched telephone network). Although it will not happen
overnight, making the migration strategically will be essential for hoteliers.
What is VoIP?
VoIP allows you to make telephone calls using a computer network, over a data network like the
Internet. VoIP converts the voice signal from your telephone into a digital signal that travels over
the internet then converts it back at the other end so you can speak to anyone with a regular
phone number. When placing a VoIP call using a phone with an adapter, you'll hear a dial tone
and dial just as you always have. VoIP also allow you to make a call directly from a computer
using a conventional telephone or a microphone.

In order to view VoIP from an hotelier's perspective, we first need to look in the context of the
broader consumer and business sectors and then consider how those issues apply. After all,
consumers and business travellers are our intended guests.

Infrastructure
Currently, virtually all homes have been cabled with analog cabling while data requires a better
quality of cable. Most new home construction is continuing this legacy installation practice
except in high-end developments where some data cabling is installed as well. Businesses have
virtually all been retrofitted with data cabling to all work station locations and now have parallel
cable infrastructures for voice and data. New construction is continuing this parallel installation,
but VoIP now makes it possible to eliminate this dual cabling requirement.

Hotels are truly a blend of both scenarios. Hotel rooms have been traditionally cabled in a similar
fashion to homes and the administrative locations are installed as in any other business. New
construction is, or should be, following the same approach as other businesses are realizing the
cost savings of avoiding parallel cable infrastructures. Additional construction savings can be
made due to the recent advent of IPTV, or television signal over a data network, which will also
eliminate coax cabling, the traditional method of delivering TV signals. Reducing the wired
infrastructures from three to one will not only reduce construction costs, but also ongoing
maintenance. The ability to connect any required device to the same cable network will
enormously enhance flexibility as well.

Savings Opportunities
For today's traveler, telephone service is as much as part of a hotel stay as a bed and a hot
shower. But hotels have traditionally had to charge high rates for phone service because of their
own costs (which include high-capacity trunk lines that are often under-utilized) and their need to
ensure that those services are sufficiently profitable. These high rates have not been popular
with guests.

However, because hotel chains have so many locations – and because those locations are
typically connected via an IP network that supports the chain’s data services – an important new
communications opportunity has emerged. By utilizing that IP network to carry the long-distance
portion of guests’ voice calls, hotels can significantly lower their telecom costs.

In fact, those savings can be substantial enough to allow hotels to pass a significant percentage
of those savings on to their guests and still increase their per-call profits. This opportunity is
particularly lucrative for hotels with multi-national locations and sufficient spare capacity on their
IP networks. International call can be extremely expensive, especially in countries that still have
regulated monopolies in place. The use of a hotel’s corporate IP network allows the expensive
monopolies to be bypassed. This voice-enabling of the IP network can also be used to eliminate
long-distance charges for calls between hotels themselves, as well for forwarding calls from a
hotel chain’s call center to its individual locations and vice versa.

Investment and Cost of Ownership

Traditional PABXs are proprietary in design and, apart from guestroom analog phones, so is
virtually all of the hardware. The buyer is locked in to single source pricing for ongoing
maintenance, parts and upgrades. Additionally, although they traditionally have been perceived
to have the benefit of longevity, you still have the same basic system 10 years later and it is not
reflective of the current and foreseeable rate of technological change.

IPT systems are essentially network servers and switches, and the software is being written
primarily for open platforms. This makes them far more flexible and easily upgraded as the
individual components can be modified or replaced with relative ease. Since the components are
not proprietary, maintenance, parts and upgrades can be competitively sourced. Over time, this
will not only reduce the ongoing cost of ownership, but also ensure that the system can be
regularly refreshed and that after 10 years it is still a current solution.

Also important from a labor standpoint, the skill set needed to manage the system is largely the
same as that required to manage the network overall. This reduces the diversity of skills and
personnel required to support and maintain the system whether they are internally or externally
sourced.

Scalability
Scalability is the primary area where VoIP can bring significant benefits and cost savings to
business enterprises, including hotels. When VoIP calls need to eventually connect to the PSTN,
costs are accrued, but when VoIP calls remain within the data network from end-to-end, they are
free. Businesses with multiple locations can eliminate all internal administrative long distance
charges which, while low domestically, can still be significant. These savings are considerably
greater when the business enterprise is distributed globally.

VoIP offers features to small enterprises that are typically only found in much larger and
expensive PABXs. Many individual hotel properties have historically had to install PABXs that
were oversized, and therefore overpriced, but essential to deliver the services required. VoIP
systems can offer better priced solutions tailored to individual enterprises, while still offering the
required, and often richer, feature sets. When scalable applications are coupled with the
elimination of redundant cabling infrastructure, expansion becomes simpler, both small and large
businesses can operate more efficiently at a lower cost.

Service Offerings
A much hyped aspect of VoIP/IPT has been the ability to deliver enhanced services to the guest
and to the operation in general. To a large extent these benefits have not yet been realized and
the killer apps have not been identified, but that does not mean they will not. VoIP/IPT simply
introduces the potential for an IP device to replace the traditional analog device in the guestroom
for voice communications. What the device looks like and what else it can deliver beyond voice
is, and should be, largely outside the realm of IT and in the hands of those who can understand,
develop and deploy targeted, guest centric product solutions. As IPT implementations continue
to grow, the opportunities will be identified for enhanced service solution development.

VoIP and IPT have converged with data services and how we communicate is changing. It is
now possible, and becoming increasingly functional, to simultaneously utilize text, voice and
video messaging with application sharing and conferencing. Consumers and business travellers
are increasingly becoming savvier in the use of these tools and expect to be able to shape their
own communications environment. Hoteliers need to enable their guests' ability to do so and find
ways to provide enhanced services and find potential revenue streams in the process. The
fundamental hospitality requirement to satisfy guest needs will drive the services and solutions
to be developed.

Challenges
VoIP is not without potential challenges and these need to be understood.

• Quality of Service: The first is quality of service (QoS), or the quality of the call
connection itself. VoIP requires a robust network to avoid quality of service (QoS) issues and
dropped calls. If the wireless coverage is less than perfect in the home environment, the
consumer can make the choice of correcting it or living with it. The same issues will not be
tolerated in the guestroom or business so the deployment must be carefully planned.
• Robustness: One of the inherent advantages of the PSTN has been that it is self-
powered over its own analog cabling. Digital telephone sets used primarily for administration
have typically been line powered as well. Traditional PABXs have always had robust power
backup capacity to ensure that in the event of a local power failure, telephones still operate. IPT
implementations do not yet have the same level of redundancy that is an assumed requirement
of a telephone system. The system must be supported by UPS units not only at the core, but
also at any point where a network device is connected to a power source. This is absolutely key
as a fire/life/safety issue in hospitality and should be as important in the consumer and business
verticals as well.
• Security: As with any data service, security is essential to prevent eavesdropping and
unauthorized access to the network and, in particular, wireless deployments. An advantage,
however, that has been previously referenced is that the same personnel responsible for
network security in general will manage the security concerns. Voice security then becomes a
recognized element of an enterprise's overall security strategy.
• Emergency Services: Not all VoIP services connect directly to emergency services
through 9-1-1.
Challenges mentioned above continue to be an issue for many VoIP vendors, but the necessary
changes in the technology architectures are being resolved. Any system should be thoroughly
tested and certified in advance so it meets current and predicted emergency response
requirements.

Conclusion
By virtue of their numerous locations, hotels have a tremendous opportunity to bypass national
and international long distance carriers by using their existing IP networks to carry voice traffic.
Barriers to such a bypass strategy include risk of call-quality degradation, concerns about
management complexity, and the need to minimize disruption of existing infrastructure, so the
deployment must be carefully planned.

The key is to proactively consider how best to move your hotel along a path that most efficiently
utilizes the benefits of the new technologies. The speed of change will be fast enough, though,
that no hotel should take a wait and see attitude toward VoIP adoption. From a technology
viewpoint at least, no one wants to be known as the last customer to send a telegram.

Aspects of these considerations may change with new developments in internet technology. You
should always check with the VoIP service provider you choose to confirm any advantages and
limitations to their service.
Do You Have An Ethics Policy? Now More Than Ever,
“Good Ethics is Good Business”
In my 30-plus years in this industry, I’ve occasionally seen the issue of unethical behavior rear
its ugly head. In the management-company world, the unethical behavior I’ve most frequently
seen is like a form of bait and switch.
In my 30-plus years in this industry, I've occasionally seen the issue of unethical behavior rear
its ugly head.

In the management-company world, the unethical behavior I've most frequently seen is like a
form of bait and switch, where the management company says to the asset manager of the
foreclosing financial institution, "Let us manage your hotel because we’re very likely to buy it
eventually."

I've yet to see any of these "bait-and-switch" management companies buy a hotel in such
circumstances. Ethical management firms work hard to present a good proposal - and then can
lose a contract when the lender believes the unethical bait-and-switcher's pitch.

Here's another example: Not long ago I was at a major metropolitan airport and saw the C.E.O.
of a small publicly traded company being picked up by a limousine, apparently to be taken
home. I've seen the man on TV and in the papers, along with the news that his company has
lost virtually all of its contracts, its employees who haven't been laid off face that scary prospect.
If it's to survive, this man's company needs more money from lenders or the markets.

Was it ethical for this C.E.O. to be squandering precious dollars on a limo? Couldn't that money
have been used for one more direct-mail piece—or better yet, to keep one employee working
another day or so? I wish I could have taken some action against this C.E.O.

That's admittedly an extreme example (albeit one that bothers me a lot). There are other, more
practical reasons to focus on making sure your company is an ethical one. Here's my take on
them.

If dishonesty, for instance, is part of a corporate culture, it breeds a mindset that eventually will
consume the company—you need look no further than the shameful Enron case to see how true
this is. Employees will think it's acceptable behavior and, in one way or other, could start stealing
from the company—and investing a lot of time keeping track of and covering up their
transgressions. Also, ethical employees who become aware of the situation may well leave to
find a more comfortable work environment—or, to refer to Enron again, become whistle-blowers
—thereby compounding the company's losses and hastening its demise.

Sometimes an unethical company (hotel) culture is spawned by something as seemingly simple

as permitting unlicensed software to be used on a few of the company's personal computers.
Management has just signaled that cheating is OK. It may be easy to rationalize but is it right?

A few years ago, one of the trade magazines published an excellent article that focused on
ethics, the author making the excellent point that "good ethics is good business." He went on to
specify ways by which leaders can minimize the extent to which unethical behavior occurs within
the company:

• Install procedures and controls - and make sure there are warnings.
• Recruit experienced personnel for ethically sensitive positions; inexperienced personnel
may cross the ethics line not because they're unethical, but out of sheer ignorance (advertising
hype vs. outright lying is a common example).
• Hire some people with non-technical training, so that you tap the broader view these
employees so often have.
• Screen out people who have the wrong attitudes, such as extreme ambition or a record
of violating the law. This may seem like a no-brainer - then again, you'd be surprised how many
companies fail to take this step.
Our company has had an ethics policy for a long time. Let me share it with you as it appears in
our employee handbook.

It is our company's policy to manage its own business and those of its clients in an ethical
manner. The following 'Ethics Check' questions may be helpful when you are faced with making
a decision:

• Is it legal? Will I be violating either civil law or company policy?

• Is it balanced? Is it fair to all concerned in the short term as well as the long-term? Does
it promote win-win relationships?
• How will it make me feel about myself? Will it make me proud? Would I feel good if my
decision were published in the newspaper? Would I feel good if my family knew about it?
Our ethics policy is based on suggestions found in one of my favorite business books, The
Power of Ethical Management by Kenneth Blanchard (co-author of The One Minute Manager)
and on the writings of Norman Vincent Peale, author of The Power of Positive Thinking. These
are not new ideas, but like all great ideas they're timeless and always appropriate.

We encourage each of our general managers to buy The Power of Ethical

Management and The One Minute Manager for his or her property, and we encourage them to
share these books and Peale's ideas with supervisors and key staff. I encourage you to do the
same—it's a good way to help you and your people remember the old saying, "There is no right
way to do the wrong thing."