DESIGNING A MANAGEMENT CONTROL SYSTEM FOR A STAR HOTEL

Home Assignment for management control system

Faculty
Prof. Pradeepta Kumar Samanta

Submitted by
Saurabh Singh Enroll No- 08BS0003021

INTRODUCTION Running a hotel is a high contact service business. The success of any hotel depends on the quality of service it renders to its customers. T his quality of service includes neatness, protein and tasty food (if it is a boarding), proper treatment of customers, in time supply etc. the quality of service depends on the attitude and performance of the hotel employees whom interact with the customers. Hence the attitude and performance of the employees can be improved through training, establishment of norms of behavior, establishment of objective standards of performance and enforcement of standards, proper career plan for employees and appropriate incentive and motivational system. In one word we can say that good human resource management helps in proper management of hotels. Motivation and incentive systems are generally stronger than in most service industries. Apart from pay rise and promotions, tips for services provided are a direct incentive to workers in a hotel. In some big hotel tips provided as much earning to an employee as his direct pay. This system enables quality of service to be maintained to great extent. Management control system in hotel industry is to be designed to monitor the above aspects, when quality of service is improved it leads to better financial results Control Systems Sources and Storage of Information, Creating and Maintaining Information, Creating and Maintaining Control Systems, Types of Control, Production Control, Quality Control, Sales Control, Labor Utilization Control, Materials Control, Maintenance Control, Financial Control, Setting Standards and Corrective Action, Work Study, Organization and Methods.

Characteristic of services

Intangibility Unlike products services cannot be counted, measured, or felt. It is difficult to explain to the customer what a specific feature in the service will give to the customer. As services are intangible, the perceptions of customers regarding the service may differ at any given amount in time. Each customer will have a different perception and experience about the same service. But in a hotel the quality of service is not only dependent on the courteousness of the server (intangible), but also on the food and beverages that are served (tangible). Heterogeneity It is easier to as the quality of a product as it is tangible and also because there are specific characteristics associated with every product. But in the case of services, there are different characteristics and different people may rate these characteristics differently. Also as the service provided involve human interaction (service personnel, customer), it is not possible to ensure that all customers receive or perceive the same level of quality every time. Heterogeneity has an effect on three areas- service encounter, productivity, and service quality. Management control of service organizations has to grapple with all these implication of heterogeneity of services. Inseparability Irrespective whether a service is provided by a person or by a machine, the production and consumption of the service cannot be separated from the source that provides it. Services involve the customer in the production process and they generally first get sold , the produced and then consumed. Thus inseparability is a general attribute of services and it has a major bearing on the service delivery. Perishability In case of a product, the, manufacturing and the utilization of product occur as two separate actions, with a time differential. Hence, it is easier for manufacturing organizations to control productions cost and monitor product quality. On the other hand services are utilized as soon as they are produced. That is they are perishable.

Generic techniques for control of services in a Star Hotel ➢ Service blueprinting A service blue print is a map or a diagrammatic representation of the service delivery process, the associated tangible evidence, and the employees involved in the service delivery process. The nature of service decides the extent of participation that is required between the consumer and the service provider. For doing service blueprinting for a Star Hotel First of all we will proceed along the following stepsFirstly, all the activities that are involved in the service (catering the customers) to be blue printed have to be a identified. Once all the activities are identified, those activities that may create problem in the delivery process are identified. The next process involves deciding on the time that the service process delivery will take. This allocation of time should be such that the service provider makes the maximum profit in that time and yet maintains a desirable quantity of service and in turn, the reputation of the hotel. The blue print helps the human resource department in identifying recruitment, training and development needs and the need to redefine the performance standards. Any Star Hotel should try to prune their basket of services in such a way that only the best services are given and the time required for catering to the needs of the customers is optimized. This help the employees catering the customers to gain a better focus on the services delivered. ➢ Capacity management Capacity management deals with managing the demand of supply and services too the customers. As holding inventory id not feasible in service industry, therefore managing demand and supply becomes a crucial factor. This is especially true in professional services such as that of a Star Hotel because as the capacity once lost cannot be reused and it is this capacity that forms a major component of the profits that accrue. So for a Star Hotel capacity management is a important aspect to manage as other factors like service quality and productivity are closely associated with it. Capacity management and the service quality determine how effectively the employees can cater the customers. The interaction between capacity management, service quality, and productivity is the basis on which service operation in a Star Hotel is planned and controlled.

Different strategies towards capacity management
➢ Customer development In this Star Hotel should try to gain the loyalty of the customers through loyalty programs. For example loyalty programs for regular customers should be separately dealt with, membership cards may be given to the customers, which can make them eligible for discounts. ➢ Bundling In bundling two or more services are marketed together and the customer is given a discount. As such Star Hotel may bundle its premium lodging services with other facilities such as massage parlor or spa. Similar bundling may be done on feedings along with discounts.
➢ Differentiation

In this some capacity is kept idle, as such a Star Hotel can can keep some idle capacity to handle some exceptional situation such as for catering to customer who are loyal and regular to the hotel. ➢ Yield management It is a process which helps a organization to sell the right inventory unit to the right type of customers, at the right time, and for the right price. Yield management can be put in use in different situations faced by a Star Hotel as given below.
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As the capacity of a Star Hotel cannot be modified, as such the number of available seats. When the demand can be classified into groups, as leisure customers are more price conscious while business travelers are more concerned about on time performance. As booking of rooms or tables can be done even months in advance or on the day of arrival. Costs involved in modifying the capacity are higher than sales cost for a Star Hotel, such as adding more rooms or suites to the hotel or adding more hotels to the hotel chain.

Control through yield management
➢ Economic based model A typical scenario in hospitality industry is allowing booking of rooms inn advance at concessional rates. Generally the demand for concessional booking of rooms comes much before the demand of premium rate services by the hotel. This trend makes it necessary for organization to decide on a ceiling on the number of services that can be sold at concessional rates because setting a high ceiling may result in loss of premium customers and a low ceiling may result to idle inventory. This can be reached to by using the Marginal revenue model. ➢ Threshold curve

The threshold curve can be drawn using past data available on room bookings. A trend of bookings made in the past is collected and threshold curves are constructed keeping in the historical aggregates demand patterns. Once these curves are drawn, the present booking trends are plotted against the forecast. ➢ Service quality management Quality in Star Hotel primarily depends upon how a customer perceives what he/she gets and whether it meets his/her expectations. The three main components of service quality in a Star Hotel are○ (Physical facilities & processes) These two components include place of operations, the ambience, types of services offered, and the process. People action It includes punctuality, way of interaction with the customers of the hotel, and problem resolving capacity.

Determinants of service quality for a Star Hotel
Determinant reliability Responsiveness competence Access description Dependability-consistency and accuracy Promptness of service delivery and service Employees have the required skills and knowledge required for service delivery. Easy to contact – convenience both in timing and location

Credibility Courtesy Communication

Trustworthiness, honesty Politeness, respect, friendliness Demonstrated ability to explain the attributes service(features, cost) effectively to the customers of the

Security

Freedom from danger and risk or doubt :include physical and financial security, data confidentiality Understanding the needs of the customers, providing individualized attention and also recognizing the regular customer

Understanding/knowing The customer

tangibles

Physical facilities tools, ambience, appearance of the service providing personnel

Evaluation of service quality given to the customers of the hotel
➢ Service quality audit It is an independent evaluation of service quality to determine its fitness for use and conformance to specification. ➢ Customer feedback A customer feedback system should be used to gather information regarding customer satisfaction levels. This will help the hotel to understand whether the customers are satisfied or dissatisfied in their stay or transaction with the organization and also the satisfaction levels regarding each service that they have experienced. ➢ Service recovery Service failures occur when there is a mismatch between the customer’s perception of the service they receive and their expectation. Service recovery refers to actions taken by the hotel to rectify a situation of service failure. Some of the instances of service failure may be absence of service personnel when a customer’s needs him, or a delay in the service delivery, and the service being wrongly administered. Service in a hotel can be evaluated in two ways – one depending on the results obtained and the other based on the method of service delivery.

Categories of Service Organizations
Degree of variation*

Low Relative Low throughput time ** Service Factory

High Service Shop

High

Mass Services

Professional Services

*degree of variation – Customization for and interaction with the customers. **Relative Throughput Time– Throughput time measured for a service compared to others in the industry. transaction as

As Star Hotel would fall in the category of professional service organizations so the controls can be as follows –

Control
As the degree of variations and the relative throughput time is high. The employees of Star Hotel will be skilled or educated and empowered to take decisions independently. So the high dependency of professional organization i.e. Star Hotel here on the service providing personnel makes it important for it to focus on human resource management. It becomes necessary for Star Hotel to be careful and choosy about the people it hires; in other words, there is a greater emphasis on personal control than on behavioral control. Activities like training programs and welfare programs become important. Since its customers have varied expectations from it hence it is important for Star Hotel to hire people who are highly skilled and who have decision- making capabilities. It needs to give its employees the authority to use at their discretion in handling customers, Star Hotel should strive minimize mistakes and to give better services to customers.

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