1. Slide Nr. 1 Destination Management Lecture 9 University of Applied Sciences Stralsund Leisure and Tourism Management WS 2009/2010

2. Slide Nr. 2 Part Three Considers the challenges involved in managing attractions such as marketing, financial management, operations management and human resource management

3. Slide Nr. 3 Human Resource Management

4. Slide Nr. 4 Considered to be the most important aspect of management Attitudes and abilities of staff have a crucial impact on the visitors experience Labour costs are likely to be the largest single items on the attractions budget Human Resource Management Part Three \ Human Resource Management

5. Slide Nr. 5 Tourism industry suffers from bad reputation in HRM High turnover of staff Seasonality of demand Poor status of jobs Lack of career structures Unusually demanding jobs lack of management expertise Lack of widely recognized qualification and training schemes Problems of HRM at visitor attractions Part Three \ Human Resource Management \ Problems

6. Slide Nr. 6 Problems of public sector attractions are often in direct contrast to the problems mentioned before Low turnover of staff Inflexible working practices Fixed-wage rages Standardized recruitment and disciplinary procedures Problems of HRM at visitor attractions cont. Part Three \ Human Resource Management \ Problems

7. Slide Nr. 7 Benefits for organisation of good HRM Improves performance of staff Provides a competitive advantage to the organization Contented staff provide better service to customers, encouraging repeat visitation Reputation for good staff will lead to increased first- time visitation HRM plays a part in determining the success or failure of any organisation. Part Three \ Human Resource Management

8. Slide Nr. 8 Case study Can the notion of service be fully implemented?

9. Slide Nr. 9 International benchmarking and best practice Case study “New Horizons” Page 63 et seq. Part Three \ Human Resource Management

10. Slide Nr. 10 Financial Management

11. Slide Nr. 11 Financial Management Is at the core of corporate strategy at most attractions Is concerned with ensuring liquidity for operations Covers a number of separate functions: - financial planning - financial control - management accounting - cost accounting - financial reporting Part Three \ Financial Management

12. Slide Nr. 12 Financial management functions financial planning - how will the financial resources utilized in the future financial control - ensuring most efficient way of using, security issues management accounting - providing data for decision-making cost accounting - analysing cost structure, fixed/variable costs financial reporting - presenting financial performance to stakeholders Part Three \ Financial Management

13. Slide Nr. 13 Budgeting The budget is the financial management framework with the following functions: - guide everyday financial management - basis for evaluating performance and taking decisions on corrective actions - impress stakeholders such as banks and grant-making bodies Part Three \ Financial Management \ Budgeting

14. Slide Nr. 14 Budgeting There exist two types of budget - capital budget(expenditure) salaries, marketing, maintenance, taxes, depreciation, … - revenue budget(income) entrance charges, rents, franchises, consultancy services Profit centres and Cost centres - monitoring financial performance on an individual basis Attraction budgets should include a cash flow statement Part Three \ Financial Management \ Budgeting

15. Slide Nr. 15 The budgetary process (flowchart) Evaluating the existing budget Discussion with departments on required changes Approval of the budget Implementation of the budget through budgetary control Monitoring the performance against the budget - identify variances, corrective actions, modify budget Part Three \ Financial Management \ Budgeting

16. Slide Nr. 16 Problems with budgeting at attractions Basing budgets on past experiences is critical in rapidly changing attraction business Forecasting is very difficult - use contingency plans to cope with variances Many influencing factors are outside the control - legislation, reducing market size or increasing costs Zero budgeting is a common answer in practice - starting with a clean sheet each year Part Three \ Financial Management \ Budgeting

17. Slide Nr. 17 Management information systems Designed to provide information for decision making - visitor numbers in total and by type - visitor expenditures and place of spending - other income - staff costs - major unexpected bills - credit situation - stock levels - budget variances Some of the data need to be delivered daily Reporting procedures need to be established Part Three \ Financial Management

18. Slide Nr. 18 Corrective actions Revenue generation - Attracting more visitors - Pricing - Increase visitor expenditures - Obtaining revenue from other sources - Maximizing use of people and financial resources Cost control and reduction - Staffing - Goods purchases Part Three \ Financial Management \ Corrective actions

19. Slide Nr. 19 Revenue generation Attracting more visitors - increased promotional activity to raise awareness requires corrective actions in marketing plan and budget ! requires financial resources to pre-finance activities - sales promotion such as season tickets designed to increase more frequent use should be connected with communicative activities - Arranging special events to attract new customers aimed to win regular visitors Part Three \ Financial Management \ Corrective actions

20. Slide Nr. 20 Revenue generation Increased visitor expenditures entrance charges often represent a minority of income! - Shops (merchandising) suit the taste and pocket of every market segment - Catering outlets need to be tailored to the desires of the specific market - Guided tours personal, guide books, walkman tours - corporate users seminars, conferences, exhibitions Part Three \ Financial Management \ Corrective actions

21. Slide Nr. 21 Revenue generation Obtaining revenue from other sources - Rents and tenancies usually fixed income from service facilities - Franchises and concessions usually income based on financial performance of partner - Consultancy services may include advice in training, retailing, … - Grants mainly for public operated attractions - Sponsorship mainly used for special events Part Three \ Financial Management \ Corrective actions

22. Slide Nr. 22 Cost control and reduction Is rather more complicated than income generation - Staffing simply employ fewer people employing casual- rather than permanent staff spending less on training reducing wage rates contracting out jobs Results in demoralized and demotivated staff !!!!! Is in stark contrast to what we identified as good HRM !!!!! Part Three \ Financial Management \ Corrective actions

23. Slide Nr. 23 Cost control and reduction Is rather more complicated than income generation - Goods purchases bulk purchase of fast moving items regular review of suppliers use „sale or return“ whenever possible operating „just-in-time“ delivery systems delaying payments until the last possible moment pilfering must be minimized through security measures reducing food wastage Part Three \ Financial Management \ Corrective actions

24. Slide Nr. 24 Cost control and reduction Is rather more complicated than income generation - further measures tackling administrative costs reducing costs of utilities (water, gas, energy) selling off unproductive assets contracting out services reducing opening hours Quality of service must never be adversely affected !!!!!!!!!!!! Part Three \ Financial Management \ Corrective actions

25. Slide Nr. 25 International benchmarking and best practice Case study “New Horizons” Page 54 et seq. Part Three \ Financial Management