3 Room Division Operations

Chapter Objectives After reading and studying this chapter you should be able to: Outline the duties and responsibilities of key executives and department heads. Draw an organizational chart of the rooms division of a hotel and identify the Executive Committee members. Describe the main functions of the rooms division departments. continued on next slide

Chapter Objectives After reading and studying this chapter you should be able to: Describe property management systems and discuss yield management. Calculate occupancy percentages, average daily rates, and actual percentage of potential rooms revenue. continued on next slide

Chapter Objectives After reading and studying this chapter you should be able to: Outline the importance of the reservations and guest services functions. List the complexities and challenges of the concierge, housekeeping, and security/loss prevention departments.

The Functions and Departments of a Hotel The primary function of a hotel is to provide lodging accommodations. A hotel is comprised of several business or revenue centers and cost centers. Hotels exist to provide a service and to generate a profit for the owners.

Management Structure Management structure differs among larger, midscale, and smaller properties. The midscale and smaller properties are less complex in their management structures than are the larger ones. continued on next slide

Management Structure A small property may not have a director of human resources, but each department head will have general day-to-day operating responsibilities for the human resources function.

Role of the Hotel General Manager (GM) The hotel GM must ensure a reasonable return on investment, keep guests satisfied, and keep employees happy. The GM not only focuses on leading and operating the hotel departments but also on aspects of the infrastructure, from room atmosphere to security. continued on next slide

Role of the Hotel General Manager (GM) The GM is ultimately responsible for the performance of the hotel and the employees. The GM is the leader of the hotel. As such, she or he is held accountable for the hotel’s level of profitability by the corporation or owners. continued on next slide

Role of the Hotel General Manager (GM) Effective GMs hire the best people and set the tone—a structure of excellence. GMs must also be familiar with the cultures of guests staying in the hotel and the employees working in the hotel.

The Executive Committee The Executive Committee is comprised of directors of the following departments: Human resources Food and beverage Rooms division Marketing and sales Engineering, and Accounting. continued on next slide

The Executive Committee Executive Committee meetings usually last 1 to 2 hours, once a week. Typical topics of discussion will focus on occupancy percentage, Total Quality Management, forecasts, guest and employee satisfaction, training, etc.

Rooms Division The rooms division director is held responsible by the GM for the efficient and effective leadership and operation of all the rooms division departments. The rooms division is comprised of the front office, reservations, housekeeping, concierge, guest service, security, and communications. continued on next slide

Rooms Division Main concerns of the department are financial performance, employee satisfaction, guest satisfaction, guest services, guest relations, security, and gift shop.

Front Office The main duty of the front office manager is to enhance guest service by developing services to meet guests’ needs. He/she supervises Guest Service Associates (GSAs), who interact directly with the guests during check-in, check-out, etc. continued on next slide

Front Office Often, the front office is described as the hub or nerve center of the hotel. In selling rooms, the front office attempts to achieve 100% occupancy. Upselling and yield management can help increase room sales. The interaction of supply and demand also impacts the ability to sell rooms. continued on next slide

Front Office Maintaining balanced guest accounts begins with advanced deposits and opening the guest account, called a folio. As appropriate, charges from the various departments of the hotel are posted to the guest folio. continued on next slide

Front Office Payment is either received on guest check-out or transferred to the city ledger. Because the front office is staffed 24 hours a day, it is the logical center to handle guest information needs such as mail, faxes, messages, and local and hotel information.

Night Auditor A hotel must balance its accounts on a daily basis. At approximately 1:00 a.m., when the hotel has “quieted” down, the night auditor begins the task of balancing the guest accounts receivable. The daily report contains a key operation ratio—Room Occupancy Percentage (ROP). continued on next slide

Night Auditor This is calculated by dividing the number of rooms occupied by the number of rooms available. The Average Daily Rate (ADR) is, together with the ROP, one of the key operating ratios that indicates the hotel’s performance. continued on next slide

Night Auditor ADR is calculated by dividing the total of room revenue by the total number of rooms sold.

Revenue Management Revenue management is used to maximize room revenue at the hotel. It is based on the economics of supply and demand, which means that prices rise when demand is strong and drop when demand is weak. Although management would like to sell every room at the highest rack rate, this is not possible. continued on next slide

Revenue Management Conventions, groups, and organizations are often granted a reduced room rate as an incentive to stay at a particular property. continued on next slide

Revenue Management Revenue management will monitor reservations and based on previous trends and current demand, will determine the number and type of rooms to sell at what price to obtain the maximum possible revenue. continued on next slide

Revenue Management Revenue per available room, or REV PAR, was developed by Smith Travel Research. It is calculated by dividing room revenue by the number of rooms available. continued on next slide

Revenue Management Revenue per available room, or REV PAR, was developed by Smith Travel Research. For example, if room sales are $50,000 in one day for a hotel with 400 available rooms, then the REV PAR formula is $50,000 divided by 400, or a REV PAR of $125. continued on next slide

Revenue Management Hotels use REV PAR to see how they are doing compared to their competitive set of hotels. Hotel operators use REV PAR as an indicator of a hotel’s revenue management program.

Energy Management Systems Passive infrared motion sensors and door switches can reduce energy consumption by 30 percent or more by automatically switching off lights and air-conditioning, thus saving energy when the guest is out of the room. continued on next slide

Energy Management Systems They also can keep tabs on room occupancy, lighting, minibar, smoke detectors, locks, and guest amenities. Some software programs cut out non-essential equipment during peak billing times.

Call Accounting Systems Call accounting systems (CASs) are systems that can track guest room phone charges, working in conjunction with private branch exchange (PBX) and product management systems (PMS). They can be used to offer different rates for guest calls.

Guest Reservation Systems Airlines were the first industry to start using global distribution systems (GDSs) for reservations. GDSs are electronic markets for travel, hotel, car rental, and attraction bookings. A central reservation system (CRS) houses the electronic database in the central reservation office (CRO). continued on next slide

Guest Reservation Systems Hotels provide rates and availability information to the CRO, usually by data communication lines automatically updating the CRS. With such a system, hotels can avoid overselling rooms by too large a margin. continued on next slide

Guest Reservation Systems The CRS database can also be used as a chain or individual property marketing tool because guest information can easily be stored. A CRS can also provide yield management information for a hotel. A CRS can be used in several areas of a hotel. continued on next slide

Guest Reservation Systems If a hotel has a reservations department, the terminals or personal computers in that department can be connected to the CRS. Another form of technology is an application service provider (ASP), delivering a booking system tied to hotel inventory in real time via the Internet.

Billing Guests Billing guests has become much easier with the aid of computers. Billing guests can be a long process if information technologies are not used to complete transactions. continued on next slide

Billing Guests PMSs aid large hotels to make transactions faster and provide a more efficient service to their guests. These systems help the hospitality associates bill their guests within seconds.

Security Peace of mind that the hotel or restaurant is secure is a key factor in increasing guest satisfaction. Security is one of the highest concerns of guests who visit hospitality businesses. continued on next slide

Security Hospitality information technology systems include surveillance systems, electronic door locking systems, and in-room safes, some using biometric technology.

Guest Comfort and Convenience In order to provide a homey and convenient experience for the guest, hotels provide services and amenities such as dining, televisions, telephones, Internet connections, minibars, hygiene products, pools, meeting spaces, and business and concierge services.

Reservations The reservations manager is the head of the reservations department and reports directly to the rooms division manager. The reservations department is responsible for selling hotel rooms for the maximum dollar amount while exceeding guest expectations. continued on next slide

Reservations Reservations may originate from a telephone call to the property, corporate 1-800 numbers, travel agents, the Internet, meeting planners, tour operators, referrals, airport telephones, and walk-ins. continued on next slide

Reservations The corporate CRS interfaces with hotel inventory and allows reservations by individual hotel reservations personnel. Once a reservation has been made, the room is immediately deducted from the inventory of rooms for the duration of the guest’s stay. continued on next slide

Reservations Important details are recorded when the reservation is made, such as name, billing information, duration of stay, special requests, etc. Guaranteed reservations are made when the person making the reservation wants to ensure the room will be held until arrival. continued on next slide

Reservations This usually occurs when the guest will be arriving late and the room is held until the guest arrives. In the event that the guest does not show, the credit card is charged for one night’s room and tax.

Communications Connect Business Exchange (CBX) or PBX The CBX or PBX includes in-house communications, guest communications, voice mail, messages, and emergency centers. It is a profit center for the hotel because hotels generally add a fee of 50% to all long distance calls and may charge fees as high as $1.25 for local calls.

Guest Services/Uniformed Services First impressions are very important. The guest service staff has the unique opportunity to make or break that first image of the hotel and the experience the guest will have. The staff of this department consists of door attendants, bell persons, and the concierge. continued on next slide

Guest Services/Uniformed Services Door attendants are the hotel’s unofficial greeters. Their job requires them to greet guests, assist with the opening and closing of doors, handling luggage, and providing information. continued on next slide

Guest Services/Uniformed Services The bell person is responsible for escorting the guests and transporting luggage to their rooms. He/she must have knowledge about the area, as well as the hotel and its services.

Concierge Some of the ways the concierge may assist guests are by arranging tickets to popular events/shows in town, making reservations at restaurants, providing advice on local activities, reserving airline tickets and reconfirming of flights, and fulfilling special requests such as shopping. continued on next slide

Concierge It is important that the concierge has excellent knowledge of the hotel, the city, and international details. It is a definite strength if the concierge is able to speak several foreign languages.

Housekeeping The housekeeping department employs the largest number of employees in the hotel. The executive housekeeper is the head of the department. continued on next slide

Housekeeping It is necessary for the executive housekeeper to have exceptional leadership, organizational, and motivational skills, as well as a high level of commitment to maintaining high standards. By far, the greatest challenge for the executive housekeeper is the leadership of the department. continued on next slide

Housekeeping Often the employees in this department are of different nationalities. The executive housekeeper is responsible for a substantial amount of record keeping. continued on next slide

Housekeeping In addition to the scheduling and evaluation of employees, an inventory of all guest rooms and public area furnishings must be accurately maintained with the record of refurbishment. Most of the hotel’s maintenance work orders are initiated by the housekeepers. continued on next slide

Housekeeping Productivity in the housekeeping department is measured by person hours per occupied room. The labor cost per person hour for a full-service hotel ranges from $2.66 to $5.3 per occupied room. Labor cost is expected to be 5.1% of room sales.

Spas The spa business has four mantras: decompression, revitalization, beauty, and spiritual uplift—not necessarily in that order. The objective is to achieve maximum relaxation, renewal, and recreation for the client. continued on next slide

Spas Many people, perhaps most, see the spa as a time of renewal or decompression and for pampering and mental adjustment, increase in physical strength, and intellectual and spiritual enrichment.

Laundry Nowadays, more hotels are operating their own laundry services. Modern laundry operates computerized washing/drying machines and presses. Some smaller hotels contract out their laundry services.

Green Hotel Initiatives This sub-department generally reports to the executive housekeeper. Environmentally conscious companies are helping to avoid environmental degradation and are saving money, while being good corporate citizens. continued on next slide

Green Hotel Initiatives Ecoefficiency, also generally termed “green,” is based on the concept of creating more goods and services while using fewer resources and creating less waste and pollution. continued on next slide

Green Hotel Initiatives Ecoefficiency helps hotels provide better service with fewer resources; reducing the materials and energy-intensity of goods and services lowers the hotel’s ecological impact and improves the bottom line.

Security/Loss Prevention Hotels are responsible for the safety of their guests. Protection of guests and their property is a key element of hotel operations. Security/loss division is responsible for maintaining security alarm systems and implementing procedures aimed at protecting the property of guests, employees, and the hotel itself.

Trends in Hotel and Rooms Division Operations Some trends include diversity in the workforce, increases in the use of technology, security, and diversity of guests.