INTRODUCTION TO HOTEL OPERATIONS
INTRODUCTION TO HOTEL OPERATIONS
Hotel Ownership
Running a hotel requires a diverse variety of skills and resources. Many hotels use various entities to manage different operational aspects to maximize profitability and performance and meet the owner's preferences. Large hotel companies usually do not manage their hotels. A single property may be owned by one party, managed by another, or carry the brand flag of a third party. Below are four basic types of hotel ownership and management:
Franchised - A franchise hotel operation has clear benefits and disadvantages. While the hotel benefits from recognition of the brand name by consumers, an established business model, and national marketing, the owner depends on that brand name for its business. If the brand loses its reputation with consumers, the business also suffers. Additionally, since a franchise is generally limited to its market territory, its growth options are limited to purchasing additional franchises.
Privately Owned and Operated - This hotel ownership gives an owner the most freedom but with the biggest risk. The hotel owner can make all decisions on staffing, operational structure, and growth but does not benefit from a brand like a franchise. All marketing research and efforts must be developed and built from scratch.
Leased - These hotels are privately owned, but the physical hotel building belongs to another. This type of lease arrangement is generally long-term. The lessor will specify a minimum rent for the premises and may also include a sliding scale of fees based on total hotel revenue for ongoing rent.
Managed - While the trend for new hotels is to open as franchises, existing hotels frequently go the managed route. It is where an existing privately owned hotel partners with a recognized brand name or a smaller, more experienced hotel. The hotel continues to be privately owned, but the managing hotel takes over the business's day-to-day operations and frequently lends its brand name. The managing hotel charges royalties based on the hotel's total revenues.
A hotel owner is primarily concerned with the continued success of their hotel or guest accommodation, but this does mean that owners have many different responsibilities. They will typically employ department managers to handle specific tasks. On a strategic level, owners must compete with rival properties and may need to run marketing efforts or hire marketing professionals to manage advertising and distribution. It is usually the general manager who reports directly to owners. With this approach in place, the role of the general manager is essential to oversee all the activities within a hotel and ensure things run smoothly and may need to handle strategic decisions, assist with marketing or distribution efforts, and help to deliver customer service quality.
Approaches to Hotel Management
Approaches to Hotel Management
There are selected modern management approaches for the hotel industry, which open opportunities to accelerate development and increase competitiveness among establishments. Management approaches are predefined activities and procedures designed to help managers in different business areas achieve predetermined goals. Below are some of the most used management approaches in the industry:
Strategic Planning. It involves implementing a well-defined enterprise strategy into key business goals. Strategic planning helps a company identify early changes in the external business environment and adapt the necessary measures in its future direction and corporate governance. It is a tool for managers to learn how to respond to constantly changing conditions in the business environment.
Customer Relationship Management. The basis of this management practice is to understand the customers' needs and desires and simultaneously satisfy them adequately by collecting relevant data for an enterprise to understand the customers. An enterprise can create sales strategies for its products, segment customers into different groups according to predefined criteria, and use this information to develop strategy, product innovations, and internal processes, plan future earnings, create a training program for employees, price formation, design of product distribution channels for individual segments, and create loyalty programs.
Six Sigma. It is a set of management tools and techniques designed to improve the capability of the business process by reducing the likelihood of error. It is a data-driven approach that uses a statistical methodology for eliminating defects, defect reduction, and profit improvement through Define, Measure, Analyze, Improve, Control steps applied in the product or delivery of a service.
Benchmarking. It has been a management approach in common practice for a long time. It is a continuous process of measuring the company's systems, processes, and products and comparing them with successful competitors or establishments in the same field. All establishments must monitor each competitor to increase efficiency and market share constantly. Such comparison aims to adopt new practices and procedures and to obtain information that may lead to improved business performance.
Re-engineering Business Processes. It represents a radical change in the business process system to achieve a significant increase in productivity and quality and in shortening the length of the production process or provision of services. This change aims to increase the customer's end value and satisfaction as a prerequisite for increasing the productivity and performance of the business.
Outsourcing. Outsourcing is a popular and most-used management approach in different sectors. Its essence is using external suppliers or subcontracts to improve production, increase revenues, reduce operating costs, reduce risks, and meet service needs. The common outsourcing services in hotel accommodations are transport rentals, manpower services for housekeeping, kitchen, and security, information technology for hotel systems, and administrative services.
Supplier Relationship Management. This management approach aims to harmonize all factors involved in producing goods or providing services - suppliers, manufacturers, distributors, dealers, and customers - emphasizing timely, complete, and effective satisfaction of their needs. This approach is based on a sophisticated information system that ensures a close relationship between input factors and makes the value chain of goods or services more efficient.
Controlling as a Management Tool. Controlling is currently a relatively well-used management approach. It is a system whose purpose is to improve the management of an enterprise based on objective evidence and evaluation of all economic events in the enterprise. Controlling provides a financial expression of the processes and their optimization, which supports management decisions in an enterprise.
These approaches are not mutually exclusive. It means that one approach builds on another, and quality programs often combine all these approaches. Although hospitality organizations can develop quality systems, many find these recognized systems helpful as frameworks that can be worked on.