Book-Hotel Operation Management

Online Instructor’s Manual
to accompany
Hotel Operations Management

Third Edition
David K. Hayes
Jack D. Ninemeier
Allisha A. Miller
___________________________________________________________________________________________
Copyright © 2017 Pearson Education, Inc. or its affiliates. All rights reserved. Manufactured in the United States of
America. This publication is protected by Copyright, and permission should be obtained from the publisher prior to
any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic,
mechanical, photocopying, recording, or likewise. To obtain permission(s) to use material from this work, please
submit a written request to Pearson Education, Inc., Permissions Department, 330 Hudson Street, New York, New
York.
Many of the designations by manufacturers and seller to distinguish their products are claimed as trademarks. Where
those designations appear in this book, and the publisher was aware of a trademark claim, the designations have been
printed in initial caps or all caps.
10 9 8 7 6 5 4 3 2 1
ISBN-13: 978-0-13-433762-3
ISBN-10: 0-13-433762-X
TABLE OF CONTENTS
CHAPTER 1. Overview of the Hotel Industry 1

CHAPTER 2. The Guest Service Imperative 21
CHAPTER 3. The Hotel General Manager 42
CHAPTER 4. General Managers are Leaders 65
CHAPTER 5. Human Resources 88
CHAPTER 6. Accounting 113
CHAPTER 7. Revenue Management 141
CHAPTER 8. Sales and Marketing 173
CHAPTER 9. The Front Office 198
CHAPTER 10. Housekeeping 231
CHAPTER 11. Food and Beverage 260
CHAPTER 12. Property Operation and Maintenance 287
CHAPTER 13. Personal Safety and Property Security 313
CHAPTER 14. Franchise Agreements and Management Contracts 340
CHAPTER 15. Managing in the Global Hotel Industry 366
Chapter 1 - Overview of the Hotel Industry
CHAPTER 1 OUTLINE
Lodging Is Part of the Tourism Industry Hotel Departments

Overview of the Tourism Industry Line and Staff Departments
The Lodging (Hotel) Sector Revenue and Cost Centers
Close Look at Lodging Organizations Current Industry Challenges
Lodging Properties Management and Operating
Lodging Guests Challenges
Lodging Industry Characteristics Labor Shortages
Hotel Ownership, Management, and Cost Containment
Organizational Alternatives Increased Competition
Who Owns and Manages Hotels? Legal Aspects of the Labor
Hotel Organizational Structures Force
Small Hotels Marketing and Sales Challenges
Large Hotels Technology Challenges
Mega Hotels Economic Challenges
Professional Lodging Career Opportunities
Management Positions
Get Started with Career Planning
Chapter Overview
This chapter helps students understand how the hotel industry fits within the larger hospitality
industry. It directly addresses how hotels of different sizes and types are classified, owned, and
managed. It concludes by examining challenges in today’s hotel industry, as well as the
opportunities available for those who seek professional careers in hotel management.
Chapter Objectives
1. Define components of the tourism industry and its lodging (hotel) sector.
2. Examine lodging industry properties, guests, and characteristics.
3. Describe lodging property ownership, management, and organizational alternatives.
4. Identify current lodging industry challenges.
5. Review typical lodging industry career opportunities and effective career planning
principles.
1
Lecture Outline
LODGING IS PART OF THE TOURISM INDUSTRY
Overview of the Tourism Industry
Hoteliers are those professionals who work in the hotel and lodging business.
The tourism industry includes all businesses that cater to the needs of the traveling
public.
It is one of the top 10 largest industries in 49 of the 50 states.
Figure 1.1: Segments in the Tourism Industry
The Lodging (Hotel) Sector

Lodging properties are a segment within the tourism industry.
Lodging properties include:

 Destination Resorts
 Full-Service Hotels
 Select-Service Hotels
 Hostels
Other types of lodging properties offering sleeping accommodations to the traveling

public can include:
 Private clubs
 Casinos
 Cruise ships
 Time-share condominiums
 Campground lodges
 All-suites hotels
 Extended-stay hotels
 Bed and Breakfast (B&B)
CLOSE LOOK AT LODGING ORGANIZATIONS

Lodging Properties
Common terms used to classify hotels include:
 Upscale
 Mid-price
 Economy
 Budget
2
Lodging Guests
A guest is defined as a person who rents rooms and/or purchases food or beverages at a
lodging property.
41% of the typical lodging guests are business travelers
59% of the typical lodging guests are leisure travelers
Lodging Industry Characteristics

Emphasis on Safety, Cleanliness, and Service
 Guests also consider “intangible” aspects of the purchase decision
Inseparability of Manufacture and Sales

 A room exists and is sold at the same site
Perishability
 If a guest room is not rented on a specific date, the revenue is lost forever
 Revenue: Money the hotel collects from guests for the rental of rooms as well as
the purchase of hotel goods and services
Repetitiveness
 Some operating procedures are routine
Labor Intensive
 Much of a hotel’s daily work involves employees providing services
HOTEL OWNERSHIP, MANAGEMENT, AND ORGANIZATIONAL ALTERNATIVES

Who Owns and Manages Hotels?
A brand is the name of a hotel chain; sometimes referred to as a flag
A Franchisor is a company who owns the right to manage a brand and who sells the use
of the brand’s name and/or business model
A Franchisee is a person or entity that purchases the right to use a brand name and
business model for a fixed period of time and at an agreed-upon price
3
Figure 1.2 is a summary of the complex ownership/management arrangements possible
today. These include:
 Single-unit property not affiliated with any brand
 Single-unit properties affiliated with a brand
 Multiunit properties affiliated with the same brand
 Multiunit properties affiliated with different brands
 Multiunit properties operated by the brand or others
 Multiunit properties owned by the brand
Hotel Organizational Structures

The primary functions of hotel personnel remain the same regardless of property size.
As the number of rooms in a hotel increase, the number of employees increases as well,
and they perform tasks in increasingly more specialized positions.
Small Hotels
Figure 1.3: Organization Chart for Small (75-Room), Limited-Service Hotel
The property owner may be the GM and have someone responsible for maintenance
and staff, an executive housekeeper and staff, and a front-office manager and staff.
Large Hotels
Figure 1.4 Organization Chart for Large (350-Room), Full-Service Hotel
With increased size, department heads are hired by the GM to perform accounting,
revenue management, sales and marketing, front office, housekeeping, food and
beverage, safety and security, engineering and maintenance, and other important tasks.
Instructor Note: Please refer to text for a complete list of departments.
Mega Hotels
Figure 1.5 Organization Chart for Mega (3,000-Room) Hotel
In a mega hotel, a resident manager assists the GM with the direct supervision and
coordination of several operating departments.
The food and beverage department contain many highly specialized positions.
Instructor Note: Please refer to text for a complete list of departments.
4
Hotel Departments
Line and Staff Departments
Line departments are hotel divisions in the “chain of command” that are directly
responsible for revenues or for property operations
Staff departments are hotel divisions that provide technical, supportive assistance to
line departments. Examples departments are:
 Purchasing
 Human resources
 Accounting
Revenue and Cost Centers

Hotel departments can also be classified by whether they generate revenue or incur
costs to support revenue-generating departments
A revenue center is a hotel department that generates revenue. Examples are:

 Front-office
 Food and beverage departments (e.g. dining rooms, lounges, room service, and
banquet areas)
A cost center is a hotel department that incurs costs in support of a revenue center.
Examples are:
 Sales and marketing
 Property operation and maintenance
 Accounting
 Human resources
 Security departments
CURRENT INDUSTRY CHALLENGES

Management and Operating Challenges
Labor Shortages
Managers should implement procedures to
 reduce turnover levels
 increase productivity levels
 recruit from nontraditional employee labor markets
Cost Containment
Hoteliers should examine ways to reduce costs without impacting quality
An excessive emphasis on cutting service or product quality will ultimately result in

reduced hotel revenue
5
Increased Competition
Hoteliers in many geographic areas in the United States indicate there are too many
hotel rooms for the number of guests wanting to rent them
Legal Aspects of the Labor Force

Laws and regulations are sometimes complex without specialized knowledge
GMs should learn from specialists who know the laws that affect their specific
properties and the required responses to comply with those laws
Some specialists include hospitality and community business associations, and qualified
attorneys, as well as human resources specialists
Marketing and Sales Challenges

Increased Market Segmentation
Efforts to focus on a highly defined, smaller group of travelers
Brands Overlap
The more the number of brands increase, the harder consumers may find it to
differentiate among them
Increased Sophistication of Guests

Results in a more competitive selling environment for hoteliers (i.e., online room
booking)
Increased Amenities
Various amenities (i.e., business centers) increase costs for hotel owners yet
sometimes appeal to only a small segment of the hotel’s market
Increased Guests’ Demands for Value

The concept of value considers the guests’ perception of price relative to quality
Technology Challenges
Interactive Reservation Systems
Rise in online travel websites and smart devices allows travelers to become their
own travel agent
Data Mining Technology

Analyzing guest (and other) related data to make better marketing decisions
Room-rate management
Matching guest demand with room rates
6
Social media technology
Using social media to better connect with guests and potential guests
Cloud Computing
The process of storing and accessing data and programs over the Internet
instead of a computer’s hard drive
Economic Challenges
Hoteliers are affected by the impact of globalization
“As goes the economy, so goes the lodging industry”
Hoteliers know that their businesses can be affected by pandemics or the fear of them.
Examples include:
 swine flu
 bird flu
 severe acute respiratory syndrome (SARS)
 Ebola
Economies of the world, the country, the state, and the community have a significant
influence on the financial success of a lodging organization and the individual properties
that comprise it
PROFESSIONAL LODGING CAREER OPPORTUNITIES

Management Positions
The lodging industry is vast, and so are the many rewarding alternative management
positions available within it
Regardless of your vocational/professional preferences, there are likely to be rewarding

positions available for you in the fast-paced and exciting lodging industry
Get Started with Career Planning

How does one start to plan for a career in the lodging industry?
Many secondary and postsecondary schools offer hospitality-related educational and

training programs
Work in a variety of lodging positions (including educational internships)
Develop a career ladder for professional development
Talk with other GMs, industry leaders, and educators nearby to obtain suggestions
7
Real World Hotel Challenges: Suggested Answers
Real World Hotel Challenges: 1.1
1. Numerous issues can be of concern when a high-level manager in an independently-owned

hotel considers a move to a large hotel management company. These issues are generic
including the “pros and cons” of working for an independent versus a multi-unit company.
Note: these are addressed in questions two and three below. There are other issues
relevant to the personal situation described in the case study. The specific positive factors
include the (a) close location of family and friends, (b) familiarity with the work situation
including no surprises, (c) a reasonable assurance of “fair” compensation increases, and a
stable location if, for example, a manager’s family includes children of school age and/or
spouse with a job in the area. Disadvantages are that a manager would lose the above-cited
positive aspects of the present position.
2. A manager might accept employment with a hotel management company to learn more
about business operations in different hotels while remaining with the same company,
potential compensation increases, and opportunities to move to different locations are
among them. Other advantages may include increasing responsibilities and challenges and
the opportunity to become the general manager for properties of increasing size. A
manager might even become a multi-unit district or regional manager. Another advantage:
the manager will have a large network of unit manager peers to consult with as special
problems arise. The disadvantages of the present position (see question one) would also be
factors in a move to the new position.
3. When one has a good job and enjoys it there is less reason to seek a new position than if
the current position is only acceptable until a better position is found. When the status quo
is good (or even great!), a person is “taking a chance” that another position is better and
that the employment benefits cited by the potential employer are, in fact, correct. The
advantages of the present position (see question one) would also be factors in a decision to
seek a new position.
8
1. Hopefully, the response to this challenge is not determined only on the basis of this
conversation between the front desk manager and the new general manager. Qualified
high-level managers should be empowered to make these types of decisions with the
approval and support of their own manager. Situations are almost always best resolved
when the manager is able to tell a guest, “Here is what we can do,” instead of “I will check
on this and then get back to you.”
The proper contract for the present occupants of the room should specify that the room
rental ends on the day in question, and the agreement for the arriving guests specifies that
the room rental begins on the same day. The front desk manager should inform the present
guest room occupants about the problem and offer them the best available complementary
room. He or she can also indicate that a hotel employee can assist with the move to the
new room and, perhaps, personally deliver a bottle of wine or champagne to the
complementary room. Alternatively, the manager can offer to (a) determine if any
similarly-rated hotel in the area has an unoccupied suite and (b) explain the situation with a
request that a rate lower than rack rate be offered.
2. If the above tactics are successful, the arriving couple will have access to their suite at the
time specified on the contract, and no other compensation or adjustments will be
necessary.
3. The general manager should use this challenge as a real opportunity to show trust in and
respect for the front desk manager. Perhaps, because the relationship between the two
professionals is just now being formed, the general manager could provide feedback to the
manager as the situation is described, and then suggest that the manager consider all
alternatives and then make the decision.
9
Your Opinion Counts: Suggested Answers
Your Opinion Counts
1. This question asks about the types of hotels in which students would like to work. Answers
will vary, and some students may say they want to work in different hospitality industry
segments.
Instructors may emphasize that the average property is located in non-urban zones, is
relatively small, and sells rooms for a modest price. Therefore, students need to have
realistic expectations about their employment opportunities.
Career advancement in limited-service hotels can occur more rapidly while career
advancement in large, full-service hotels will likely take longer. There are greater operating
cost challenges in full service hotels than in smaller limited-service properties. Also,
because there are more departments and employees, general managers and departmental
heads must efficiently coordinate and control of activities within and between various
departments, and it typically takes some time and experience to develop these leadership
traits.
The last part of Question 1 relates to other management concerns that may impact
employment decisions. Instructors may want to preview management basics in Chapter 4
that include planning, decision making, organizing principles, delegation, flow of
communication, motivation, leadership, and discipline. The needs of leisure travelers are
different from those of business travelers. Depending on the hotel’s target market, hoteliers
must provide the products and services that targeted guests most likely will desire. At the
same time, selected aspects (guest safety, cleanliness of facility, and service, for example)
are common guest concerns regardless of the segment in which a hotel operates. Also,
guests are concerned about "value" (perceptions about what they receive for what they
pay), and the extent to which value is received relates to the level of the guests' satisfaction
with a lodging experience.
2. Question 2 reinforces the importance of consistently delivering guest service. Guest

relations training should begin at orientation for new employees by emphasizing that guests
are buying service. Department heads must design specific guest-relations training
applicable to their departments' own needs and systems. It is important to anticipate the
specific needs of guests to be addressed by each department. For example, the concierge at
a resort hotel will need to know about local attractions. Front-desk personnel must be
trained to effectively and efficiently exceed guests’ needs as they check guests in and out of
the property.
10
Guest-relations training is also needed for non-guest contact employees. For example, if
housekeeping employees notice that several guests frequently move furniture in the guest
room to make it more convenient; the issue of room re-arrangement should be reported to
the executive housekeeper. Delivering quality service by recognizing guest preferences is
everyone's job in the hotel!
Training is absolutely critical to the hotel’s success. However, ensuring consistent delivery
of guest service at the hotel will not likely be achieved by training alone. For example, it is
easy to train employees how to make beds, but it may be more difficult to train employees
how to anticipate guests' needs and meet them. Make guest service the heart of the hotel's
culture by create a service culture which helps all employees at all organizational levels to
be alert to the concept of service while they are at work. The hotel can reward employees
who provide high-quality service; this recognizes their efforts and also encourages others to
do the same. Also, empowering line-level employees can help to consistently deliver
greater quality service. Remember that a property's guests judge the quality of service
based in large measure on their encounters with front-line employees.
3. Answers to this question will vary, and excellent career opportunities exist in all types of
properties of all sizes in almost all locations if one is well prepared. The instructor may
suggest that the decision about location, at least at the beginning of one’s career may relate
to long-term career goals.
While personal preferences may be affected by numerous concerns including family,

educational opportunities, healthcare availability, cost of living, weather, and off-job activity
preferences, the ability to learn about the hospitality business should be concern as early
career opportunities are evaluated.
4. This question addresses the labor shortage problem in the lodging industry and asks
students about tactics to retain current employees and to recruit new employees. Specific
activities can include creating a culturally diverse workforce, strictly enforcing a zero-
tolerance harassment policy, and making employee safety a top priority. As a tactic to
recruit new employees, the hotel can make an effort to boost the company's image so
potential employees can feel proud of working there. Networking with internship
coordinators at hospitality programs is also important. Furthermore, during interviews,
managers can share the success of their business and the future direction of the company
with potential employees.
The question also asks for examples of recruitment tactics. Students may note the use of
social media for recruitment, alerting friends and relatives of current employees (internal
recruiting), job fairs, executive search firms, recruiting at schools, and appropriate use of
"help wanted" signs.
11
Lastly, to be considered as an "employer of choice" within the community, an organization
can (1) create career opportunities for staff and allow them to grow professionally and
personally, (2) develop a systematic mentoring program, (3) show that the organization
encourages transfers within company operations, and (4) offer good retirement plans.
5. Career opportunities in the lodging industry are diverse. Numerous types of management
positions are available. Since basic management principles can be utilized in all types of
lodging segments, experience and skills gained in one type of hotel can be transferred to
another. Students can begin to prepare for successful and responsible management
positions by attending a hospitality program, working in a variety of lodging positions,
developing a career ladder for professional development, and talking with hotel managers.
These suggestions emphasize that students should learn as much as they can about the
industry from diverse individuals.
Ask students to develop their own career ladders and to evaluate their own strengths to
market themselves, and their weaknesses to find ways to improve themselves. Identify
career goals and make progress every day towards those career goals. Career planning is an
ongoing process and career plans change as personal lives and circumstances evolve.
12
Exam Bank: Questions and Answers
Choose the letter of the best answer to the questions listed below.
1. Which segment of the tourism industry includes lodging operations?

a. Hospitality
b. Retail
c. Transportation
d. Destination sites
Answer: a
Learning Objective: 1.1. Define components of the tourism industry and its lodging (hotel) sector.
Difficulty Level: Easy
2. Which type of lodging operation offers its guests sleeping rooms, meeting space and complete food
and beverage services?
a. Select-service
b. Full-service
c. Limited-service
d. Hostel
Answer: b
3. An ala carte menu is one in which the menu items offered are individually
a. described.
b. portioned.
c. served.
d. priced.
Answer: d
Difficulty Level: Medium
13
4. Which type of hotel is typically operated out of a converted home?
a. Hostel
b. Full-service
c. Select-service
d. Bed and Breakfast
Answer: d
5. The U.S. tourism industry is one of the top ten largest industries in
a. 50 of the 50 states.
b. 49 of the 50 states.
c. 40 of the 50 states.
d. 39 of the 50 states.
Answer: b
Difficulty Level: Hard
6. What is the approximate size of the “average” hotel in the United States? management process?
a. 50 rooms
b. 100 rooms
c. 200 rooms
d. 300 rooms
Answer: b
Learning Objective: 1.2. Examine lodging industry properties, guests, and characteristics.
7. About what percentage of hotel guests travel for pleasure, rather than travelling for business?
a. 19%
b. 39%
c. 79%
d. 59%
Answer: d
14
8. Which lodging industry characteristic recognizes the fact that, if a guest room is not rented on a
specific day, the room revenue that would have been achieved for that room, on that day, is lost
forever?
a. Inseparability of manufacture and sales
b. Perishability
c. Repetitiveness
d. Labor intensive
Answer: b
9. Which lodging industry characteristic recognizes the fact that a hotel’s ability to attract and retain
qualified staff members who consistently deliver excellent service is a key to the success or failure
of a hotel?
b. Perishability
c. Repetitiveness
d. Labor intensive
Answer: d
10. Which lodging industry characteristic recognizes the fact that, in most cases, a hotel’s GM must
have expertise in one or more areas beyond that of merely selling hotel rooms?
b. Perishability
c. Repetitiveness
d. Labor intensive
Answer: a
15
11. What is another name for a management company that operates hotels for a fee?
a. Brand manager
b. Franchisee
c. Contract company
d. Franchisor
Answer: c
Learning Objective: 1.3. Describe lodging property ownership, management, and organizational
alternatives.
12. Which is a staff department in a lodging operation?

a. Human resources
b. Front office
c. Food and beverage
d. Housekeeping
Answer: a
alternatives.
13. Which is a revenue center in a hotel?

a. Human resources department
b. Security department
c. Front office department
d. Accounting department
Answer: c
alternatives.
16
14. Which is a cost center in a lodging operation?
a. Human resources department
b. Front office department
c. Food and beverage department
d. Parking garage
Answer: a
alternatives.
15. How is “market share” typically determined in the lodging industry?

a. By the percentage of dollars spent
b. By the number of guest rooms sold
a. By the number of guest rooms available for sale
b. By the number of hotels in a market
Answer: a
alternatives.
16. Significantly reducing the number of staff members in an organization for cost containment
purposes is a process generally referred to as
a. abasing.
b. attrition.
c. downsizing.
d. erosion.
Answer: c
Learning Objective: 1.4. Identify current lodging industry challenges.
17. The focusing of marketing efforts on highly-defined groups of travelers is a process known in the
lodging industry as
a. merchandising.
b. revenue management.
c. shotgun marketing.
d. market segmentation.
Answer: d
17
18. What is the formula lodging managers use to calculate a hotel’s occupancy %?
a. Total Rooms Sold + Total Rooms Available = Occupancy Percent (%)
b. Total Rooms Sold - Total Rooms Available = Occupancy Percent (%)
c. Total Rooms Sold  Total Rooms Available = Occupancy Percent (%)
d. Total Rooms Sold x Total Rooms Available = Occupancy Percent (%)
Answer: c
19. A hotel had 353 rooms available for sale on a Saturday night. The hotel sold 300 rooms that night.
What was the hotel’s occupancy % for that Saturday?
a. 8.5%
b. 85.0%
c. 11.6%
d. 116.6%
Answer: b
20. The use of technology to analyze guest-related data to make better marketing decisions is known as
data
a. mining.
b. management.
c. segmenting.
d. selection.
Answer: a
21. A career ladder is

a. a series of promotions that can occur within a single hotel department.
b. a plan identifying successively responsible positons within an organization or industry.
c. the collective methods used by employees to gain promotions.
d. the manner in which employees seek raises for accepting new positions.
Answer: b
Learning Objective: 1.5. Review typical lodging industry career opportunities and effective career
planning principles.
18
22. A senior member of management who provides advice and counsel to less-experienced staff
members about matters relating to a job, organization, or profession is known as
a. a coach.
b. a mentor.
c. an advocate.
d. a counsellor.
Answer: d
23. Enrollment in a formal two-year or four-year hospitality management training program is

a. absolutely critical to a successful hospitality career.
b. not absolutely critical to a successful hospitality career.
c. absolutely critical to a successful multi-unit hospitality career.
d. irrelevant to a manager’s lodging career.
Answer: b
24. Which is a graphic “road map” that indicates possible career progression through a lodging
organization?
a. Mentorship
b. Career ladder
c. Internships
d. Professional development programs
Answer: a
19
25. Which would be a position in a multi-unit hotel management company?
a. Convention services manager
b. Director of Sales
c. Director of Marketing
d. Regional Director of Sales and Marketing
Answer: d
20
Chapter 2 - The Guest Service Imperative
CHAPTER 2 OUTLINE
Guest Service Overview Service and Moments of Truth
Importance of Guest Service Management Tactics for Superior Guest
Emphasis on Service Culture Service
Core Values Remember That Service Is Delivered by
Vision Employees
Mission Managers Cannot Delegate
Managers’ Role in Quality Service Responsibility for Superior Service
Service: The Guests’ Perspectives Managers Must Recruit and Select
Steps to Deliver Quality Guest Service Service-Minded Staff
Consider the Guests Being Served Provide Effective Orientation and
Determine What the Guests Desire Training
Develop Procedures to Deliver What the Supervise with a Service Emphasis
Guests Desire Empower Staff with Service Authority
Train and Empower Staff Emphasize Continuous Quality
Implement Revised Systems Improvement
Evaluate and Modify Service Delivery Effective Service Recovery Can “Save
Systems the Day”
21
Chapter Overview
In this chapter students learn the importance of providing outstanding service to hotel guests.
It defines Moments of Truth are defined as those instances in which guests form positive, or
negative, impressions of a hotel. The chapter concludes by addressing the strategies and tactics
hospitality professionals use to ensure the consistent delivery of high quality guest service in
the hotels they manage.
Chapter Objectives
1. Explain three aspects of guest service: its importance, the need for service to be an
integral part of the hotel’s culture, and the role of managers in quality service.
2. Discuss the need to role model guest service as a core value as service processes are
developed, implemented, and maintained.
3. Emphasize the importance of considering the needs of hotel guests from their own
perspectives.
4. Describe six steps important in the consistent delivery of quality guest services.
5. Define the concept of moments of truth and discuss how they can help guests confirm
they are receiving exemplary levels of service.
6. Review tactics that can help hotel managers consistently achieve superior levels of guest
service.
22
Lecture Outline
GUEST SERVICE OVERVIEW
An on-going emphasis on the importance of guest service is important and, as is true in
many other areas of lodging management, “it all begins with the manager.”
Importance of Guest Service

The guests’ perceptions about the level of service quality are an important factor in
their total experience that determines whether they receive value from the hospitality
operation.
Quality means the consistent delivery of products and services according to expected
standards.
Service is the process of helping guests by addressing their wants and needs with
genuine respect and dignity in a timely manner.
Value can be described as a guest’s perception of the relationship between what was
paid for a hospitality product or service relative to what was received for the payment.
Emphasis on Service Culture

An emphasis on guests must be an integral part of the hotel’s corporate culture: a
collection of understandings shared by the employees that influence organizational
decision-making.
Core Values
Core values are the foundations of a corporate culture that describe how people in the
organization intend to act.
They guide the planning, decision-making, problem solving, and prioritizing of actions
that hotel managers use to transform plans into reality.
Vision
A hotel’s vision is a picture of a hotel’s ideal future and answers the question: “What do
we want to create?”
Hotel managers maximize efforts to attain a shared vision when they consistently
consider their core values, including a genuine concern for guest service, as decisions
are made
23
Mission
The mission clarifies how a hotel will add value for guests, employees, and others that it
impacts
In many cases, missions recognize that a hotel can only be successful through the efforts
of its staff members to consistently deliver quality products and services, and then the
needs of other stakeholders are identified and considered.
MANAGERS’ ROLE IN QUALITY SERVICE

Hotel managers are the primary impact on corporate culture. They do so by:
 Motivating employees to achieve service goals
 Recognizing and rewarded employees who achieve those goals
 Develop and implement the processes used for:
o Employee recruitment
o Selection
o Orientation
o Training
Managers empower employees by granting them the authority (power) to make key
decisions within their areas of responsibility.
SERVICE: THE GUESTS’ PERSPECTIVES

Hotel managers must consider the needs of their guests and develop service delivery
processes and procedures to address those needs.
Examples include the guests’ need for a clean room and the process and procedures are
met by an effectively staffed, trained, and equipped housekeeping department.
Consider you own service expectations while checking in to a hotel. You probably
expect:
• Minimal waiting time to check-in
• A friendly welcome, including eye contact, a genuine smile, and acknowledgment
of your name
• Accurate and confirming information about your reservation
• The proper type of room immediately available
• Answers to your questions about the hotel and its services
• Directions to your room
Planners must consider and often combine the needs of different guest demographics
(e.g., business travelers vs. family travelers) when planning for areas (e.g., business
center and playground) that contribute to the experience of the guests during their
hotel stays.
24
STEPS TO DELIVER QUALITY GUEST SERVICE
Competitive Edge is a tactic, process, or program used by a hotel that is desired by
guests but not offered by the hotel’s competitors
FIGURE 2.1: Six Components of Quality in the Hospitality Industry

Ingredient 1: Consider the guests being served
Ingredient 2: Determine what the guests desire
Ingredient 3: Develop procedures to deliver what guests want
Ingredient 4: Train and empower staff
Ingredient 5: Implement revised systems
Ingredient 6: Evaluate and modify service delivery systems
Consider the Guests Being Served

Hotel managers must understand what their guests want
Determine What the Guests Desire

A questioning process is a good way to determine guests’ wants and needs
Develop Procedures to Deliver What the Guests Desire

Two good ways to make procedures more guest-friendly are to benchmark and to utilize
cross-functional teams of employees
Benchmark: The search for best practices and an understanding about how they are
achieved in efforts to determine how well a hospitality organization is doing.
Cross-Functional Teams: A group of employees from each department within the

hospitality operation who work together to resolve operating problems
Train and Empower Staff

When procedures are implemented to meet or improve the guests’ service
expectations, employees must learn work methods
After staff members are trained, they should also be empowered to make decisions
about their guests’ unique needs
Implement Revised Systems

Employees work together to develop improved procedures
Evaluate and Modify Service Delivery Systems

Due to the frequent changes in guests’ preferences, technologies, and work methods,
there is a constant need to evaluate and, if necessary, modify procedures
Hotel managers cannot address problems unless they are aware of them
25
Comment cards are a useful way to address concerns of current guests
Prompt attention dramatically increases the likelihood of repeat business
SERVICE AND MOMENTS OF TRUTH

Moments of truth involve any opportunities for guests to form an impression about a
hotel
Moments of truth can be positive or negative
Positive moments of truth can be turned into a wow factor at any moment
A wow factor is the feeling guests have when they experience an
unanticipated and positive “extra” as they interact with a hospitality
operation
Hotel managers plan many aspects of a guest’s experience at their properties
The best hotel managers attempt to ensure that effective plans are in place to minimize
the number of service failures and to correct those that do arise
Some hotel managers’ goal is to have zero defects or to never have any guest-related
complaints after guest service processes are implemented
Figure 2.3 illustrates how a decline in defects can be measured
26
MANAGEMENT TACTICS FOR SUPERIOR GUEST SERVICE
Remember That Service Is Delivered by Employees
• Provide a hospitable greeting
• Practice the “art and science” of suggestive up-selling to provide a guest with a
wider awareness of the property’s products and services
• Utilize product knowledge to answer all of a guest’s questions
• Help other employees when they became especially busy during the work shift
• Consistently meet or exceed the guests’ service expectations
Managers Cannot Delegate Responsibility for Superior Service

The manager recruits, trains, and empowers staff members to serve the guests
The manager serves as a role model to emphasize the importance of guest service
Managers are held accountable or responsible for the extent to which the property is
successful
Accountability: An obligation created to complete an assignment that has been

delegated by someone in a higher level of management
Service is an essential ingredient in the success of managers
Managers Must Recruit and Select Service-Minded Staff

An employer-of-choice refers to the concept that the hotel is a preferred place of
employment in the community for applicants who have alternative employment
opportunities
Employee turnover rate is a measure of the proportion of a work force that is replaced
during a designated time period (month, quarter, or year)
In the selection process, some managers ask open-ended questions, such as “What
would you do if a guest waiting behind other guests to check in came to the front of the
check-in line to ask a question?”
Managers should discuss and share the property’s core values, vision, and mission with
their service focus
27
Emphasize the importance of service and review how the position for which an
applicant is applying directly relates to serving guests
Provide Effective Orientation and Training

Introduce to the property’s core values, vision, and mission with emphasis on guest
service
During the orientation process, train employee in guest-friendly procedures
Thoroughly deliver the knowledge and skills required before new staff members have
contact with guests
Supervise with a Service Emphasis

Employees normally do what they are rewarded to do
Managers should always thank their staff members when exceptional guest service is
rendered
Effective managers practice the delivery of superior service by “Walk to talk”
Empower Staff with Service Authority

Hotel managers empower their staff as they
 Share their service mission
 Provide the training and other resources required to meet the needs of the
majority of guests
 Encourage staff members to help guests with out-of-the-ordinary service
requests
Emphasize Continuous Quality Improvement

CQI are on-going efforts within a hotel to better meet (or exceed) guests’ expectations
and to define ways to perform work with better, less costly, and faster methods
Address with employees both the largest and smallest problems and then put
procedures in place to resolve those issues
28
Effective Service Recovery Can “Save the Day”
The best employees with the most positive guest service attitudes using “proven”
service delivery processes will appeal to most of the guests most of the time
When negative feedback arises, staff should to use an appropriate service recovery
tactic
Step 1: Introduce yourself by name and position.
Step 2: Discover necessary information
Step 3: Empathize with the guest
Step 4: Fix the problem and apologize on behalf of the hotel
Step 5: Thank the guest for bringing the matter to your attention
29

1. Hotel general managers must recruit, select, and facilitate the work of employees who care
about their jobs, their peers, and the hotel’s guests. However, this is much easier to say
than it is to accomplish. Employees who do care are less likely to set non-essential priorities
higher than work responsibilities.
There are numerous factors that can enhance the preferred employee-supervisor
relationship. One way to identify them is to ask students to think about the very best boss
they ever had and to answer the question, “Why was he or she my best boss?” Their
answers to this question suggest what managers should do and what might have been done
to reduce the current challenges to providing exemplary service to the guests who will be
checking in.
2. There may be several tactics to reduce the guest service consequences of an under-staffed
front desk department when many guests will be checking in. Examples include calling staff
that are off for the day to come in and asking those working now to please remain a few
hours longer. If other employees are scheduled for a late night shift (audit), one of them
might also be called.
Employees scheduled to work the next day (especially morning) could be asked to work this
afternoon and early evening because there will be fewer guests checking out tomorrow
morning. Another possibility: a “pre-check-in” reception might be quickly planned in an
available public area. Guests awaiting check-in could be invited to the area for
complimentary wine and cheese or other easy-to-prepare food items while awaiting check
in.
3. Meeting planners and guests do not generally care about the challenges that confront hotel
employees as they provide products and services. Instead, their perspectives focus on
receiving value in return for the costs they have incurred. Therefore, an interesting class
discussion can evolve between students. One group will likely suggest the importance of
being “transparent” and informing the meeting planner about the issue and what is being
done to manage it. A second group may believe it best to wait to see if the planned
corrective actions will be effective and not inform the meeting planner unless it is
absolutely necessary to do so.
30
1. General managers must understand that their employees have a critical role to play in the
success of their hotels. There is no “quick fix” in efforts to establish and maintain a culture
that emphasizes guest service. Hopefully, hotel owners realize this as they retain general
managers to “turn around” the business.
General managers and their top management teams must agree on the core values that will
drive the property’s culture. These core values must include genuine employee respect and
an emphasis on guests, quality, and value. They must recognize that profits result from the
strategies implemented in concert with these core values. A long range plan is needed, and
it should be developed by the management team.
2. Each manager should work with employees in their department to determine what they can
do to help the property move ahead and accomplish their long range plan. When
employees are involved in the planning process, they are much more likely to help ensure
that it is successful. Employee input can include making suggestions about planning
priorities and in suggesting tactics to address them. Employee input to new and revised
work processes driven by the plan will also be helpful.
3. Owners and their general managers should agree on factors used to evaluate improvements
in hotel operations. While profitability is important and obvious, owners should realize that
long-term, not short-term, profitability should be the goal. This in turn, involves much more
than cutting costs.
Time is needed to plan and implement marketing efforts to determine guests’ needs and
desires and to train staff to deliver them. Costs incurred for technology, equipment,
renovation, and human resources improvements may also be needed.
With the above in mind, the success of a general manager’s efforts should be evaluated by
factors including profitability, adherence to agreed-upon operating and capital budgets,
employee turnover rates, guest comments, and market share.
31
Your Opinion Counts

1. Excellent service is defined by the guests who are the recipients of the service. Some
perceptions will be the same, and many others will differ for those who visit a highway
motel and a five star property. For example, all persons will appreciate a genuine welcome
and direct answers to their questions. All will desire a clean and safe room, a positive
correlation between what was promised and what was received, and confirmation that they
received product and service value based on what they paid.
Many of the differences in service expectations for the two types of properties noted above
relate to the value concern. Higher prices are need to pay for greater levels of service, finer
and larger guest room accommodations, and more significant public space ambiance,
among numerous other amenities. Other factors including reputation and prestige are also
important. Hoteliers in both types of properties, however, must consistently provide what
their guests want at a value to the guests.
2. Moments of truth relate to anything, regardless of how seemingly minor they may be, that
form an impression for the guests. Some persons may notice how clean—or dirty—the
restrooms are. Others might notice the “little extras” in guest service or miss them because
they were not provided. The concept of value was noted in the Question 1 response above,
and it applies here as well.
Many guests, who received only what they expected, obtain the minimum required value
and, therefore, have no reason to complain. Other guests who receive a “Wow” positive
moment of truth experience are delighted with the extra value. Unfortunately, still other
guests who are recipients of more-than-expected negative moments of truth are turned off
and away from the hospitality operation. The best hoteliers know that, in fact, the “little
things” do count.
3. A basic management fact is that a person cannot delegate accountability. Therefore, it is

correct that managers are responsible (because they cannot delegate accountability) for the
problems that occur in the hospitality operation. They—not the employees—have the
authority (power) to correct the causes of problems through process revisions, and
increased training, supervision, and motivation activities, among many other tactics.
32
4. A well-thought-out training program on guest service would address numerous issues
including:
 The importance of guest training
 The role of employees in delivering guest service
 Emphasis on the fact that guest service is important for front-and-back-of-house
staff
 Explanation of the concept of moments of truth
 Looking at the operating from the guests’ perspectives
 Empowerment to enable employees to meet unusual but reasonable guest
expectations
 Complaint resolution
 Common guest service errors
 Learning from guest service mistakes
5. Managers should explain, justify, and defend why process changes are needed. They can
enable employees to make suggestions about process revision changes during their
planning, implementation, and revision. If employee suggestions can be used, they should
be. If they cannot be used, managers should explain why they cannot be used.
Managers who have a history of emphasizing employee participation tactics generally have
fewer change-related management challenges, and tactics to overcome employee
resistance to change can then become less necessary.
33
1. A guest’s perception of the relationship between what was paid for a hospitality product or
service relative to what was received for the payment is called
a. value.
b. service.
c. quality.
d. Moment of truth.
Answer: a
Learning Objective: 2.1. Explain three aspects of guest service: its importance, the need for
service to be an integral part of the hotel’s culture, and the role of managers in quality
service.
2. An integral part of a hotel’s corporate culture must be an emphasis on

a. staff.
b. guests.
c. image.
d. profits.
Answer: b
service.
3. Which answers the question “What do we want to create?

a. Service level
b. Values
c. Culture
d. Vision
Answer: d
service.
34
4. Which is the act of granting employees the authority (power) to make key decisions within
their areas of responsibility.
a. Supervising
b. Mentoring
c. Coaching
d. Empowering
Answer: d
service.
5. Which tool clarifies how a hotel will add value for guests, employees and others?
a. Service level
b. Culture
c. Vision
d. Mission
Answer: d
service.
6. To best anticipate and develop service delivery processes and procedures to address them
managers must consider the needs of their
a. property owners.
b. guests.
c. supervisors.
d. vendors.
Answer: b
Learning Objective: 2.2. Emphasize the importance of considering the needs of hotel guests
from their own perspectives.
35
7. Which is a universal need of all hotel guests?
a. Wi-Fi access
b. Mini-bars
c. Clean drinking water
d. In-room safes
Answer: c
8. Employee guest ratio is typically calculated as the number of hotel employees relative to
the
a. room revenue achieved by a hotel.
b. number of rooms in a hotel.
c. number of rooms sold in a hotel.
d. supervision levels in a hotel.
Answer: b
9. As hotel guest expectations increase, hotels can typically

a. decrease the number of rooms they sell.
b. increase the number of rooms they sell.
c. decrease their prices.
d. increase their prices.
Answer: d
36
10. A 150-room hotel employs 30 workers. What is this hotel’s employee to guest ratio?
a. 1:3
b. 1:4
c. 1:5
d. 1:6
Answer: b
11. Which is a tactic, process, or program used by a hotel that is desired by guests but not
offered by the hotel’s competitors?
a. Span of control
b. Empowerment
c. Quality service
d. Competitive edge
Answer: d
Learning Objective: 2.3. Describe six steps important in the consistent delivery of quality
guest services.
12. Which is the initial step hotel managers take in developing and implementing a quality
service system in a hotel?
a. Train and empower staff
b. Implement revised systems
c. Consider the guest being served
d. Develop procedures to deliver what guests desire
Answer: c
guest services.
37
13. Cross-functional teams are made up of hotel employees
a. from different departments.
b. of different ages.
c. with different years of experience.
d. who are paid different hourly amounts.
Answer: a
guest services.
14. When they engage in benchmarking hotel managers seek to find

a. new customers.
b. cost cutting techniques.
c. best industry practices.
d. high-quality employees.
Answer: c
guest services.
15. Which is the final step in ensuring the consistent delivery of quality service?
a. Train and empower staff
b. Implement revised systems
c. Consider the guest being served
d. Evaluate and modify service delivery systems
Answer: d
guest services.
16. Moments of truth are impressions formed by hotel

a. managers.
b. staff.
c. guests.
d. owners.
Answer: c
Learning Objective: 2.4. Define the concept of moments of truth and discuss how they can
help guests confirm they are receiving exemplary levels of service.
38
17. Hotel owners want their guests to have
a. as many moments of truth as possible.
b. as few moments of truth as possible.
c. as few positive moments of truth as possible.
d. as many positive moments of truth as possible.
Answer: d
18. Word-of-mouth advertising originates from a hotel’s

a. managers.
b. staff.
c. guests.
d. owners.
Answer: c
19. What is true about word of mouth advertising?

a. It is neither positive nor negative.
b. It can be positive or negative.
c. It is always positive.
d. It is always negative.
Answer: b
20. A goal of no guest-related complaints established after guest service processes are
implemented is referred to as
a. positive reinforcement.
b. zero defects.
c. a mission statement.
d. corporate culture.
Answer: b
39
21. “Employer of choice” refers to the concept that a hotel is the preferred place of
employment in the community for applicants
a. with little chance of finding a job.
b. who have alternative employment opportunities.
c. with extensive industry experience.
d. who have minimal industry experience.
Answer: b
Learning Objective: 2.5. Summarize information about five basic leadership tactics:
decision-making, delegation, communication, motivation, and discipline.
22. Which is the formula managers use to calculate their employee turnover rate?
a. Number of Employees Separated ( ÷ ) Number of Employees in the Workforce
b. Number of Employees Separated ( x ) Number of Employees in the Workforce
c. Number of Employees Separated ( + ) Number of Employees in the Workforce
d. Number of Employees Separated ( - ) Number of Employees in the Workforce
Answer: b
23. Service recovery tactics are used when a guest

a. experiences high quality service levels.
b. provides negative feedback during a current visit to a hotel.
c. provides positive feedback during a current visit to a hotel.
d. experiences a positive moment of truth.
Answer: b
40
24. When is the ideal time to address service-related concerns of a guest with the goal of
identifying problems and resolving them?
a. Before the guest checks in.
b. While the guest is still on the property.
c. Within 24 hours of the guest’s departure.
d. Within 1 week of the guest’s departure.
Answer: b
25. A hotel has 50 employees. In a specific time period the hotel experienced the separation of
15 employees. What was the hotel’s employee turnover rate for this time period?
a. 5%
b. 15%
c. 30%
d. 50%
Answer: c
41
Chapter 3 - The Hotel General Manager
CHAPTER 3 OUTLINE
GM Responsibilities GM Skills Development

Investor Relations Formal Education
Executive Committee Facilitation Two-Year Degree Programs
Property Management Four-Year Degree Programs
Planning Advanced Degree Programs
Organizing On-Property Training
Staffing/Directing Professional Development
Controlling and Evaluating Business Associations
Standards Modeling Professional Trade
Brand Affiliation Management Associations
Community Relations Trade Publications
GM Job Descriptions
Select-Service Hotels
Full-Service Hotels
Chapter Overview
This chapter helps students better understand the major tasks for which hotel general
managers are held accountable. The chapter focuses on the skills needed by successful general
managers as well as how these skills are most often acquired. The chapter concludes by
addressing the many similarities that exist between the roles of general managers in full-
service, and in select-service, hotels.
Chapter Objectives
1. Identify the major areas of responsibility for which hotel GMs are held accountable.
2. Describe the alternatives available to hospitality professionals seeking to acquire the skills
needed to become effective hotel GMs.
3. Recognize the key similarities that exist between the jobs of select-service and full-service
hotel GMs.
42
Lecture Outline
GM RESPONSIBILITIES
The traditional title of General Manager (GM) is used to identify the individual at a hotel
property who is responsible for final decision making regarding property-specific
operating policies and procedures
The GM is also the leader of the hotel’s management team.
Property GMs “wear many hats” in the fulfillment of their duties.
GMs will be held accountable for their efforts in the following important areas:
 Investor relations
 Executive committee facilitation
 Property management
 Standards modeling
 Brand affiliation management
 Community relations
Investor Relations
GMs’ must have the ability to communicate to investors and owners about current
performance and future needs of their hotel(s).
To manage owner/investor relations successfully, GMs must have:

 Financial analysis ability
 Proficiency in written communication
 Effective public speaking/presentation skills
Executive Committee Facilitation

The Executive Operating Committee (EOC) are members of the hotel’s management
team (generally department heads) responsible for departmental leadership and overall
property administration.
Figure 3.1 displays a typical mid-sized, full-service hotel property’s management team
members that would be supervised by the GM and their key areas of responsibility.
43
Management Team Member Responsible For
Assistant GM (AGM) Tasks as assigned by the GM
Controller Accounting for hotel assets and liabilities
Human Resource Manager Hotel staffing needs
Director of Sales and Marketing (DOSM) Revenue production and hotel promotions
Front-Office Manager (FOM) Guest services and sales
Revenue Manager (RM) Rooms pricing and rooms inventory allotment
Executive Housekeeper Property cleanliness
Chief Engineer Upkeep of the hotel’s physical facility
Food and Beverage Director (F&B Food and beverage production and service
Director)
Director of Security Guest, employee, and property safety and
security
To provide effective direction and consultation, GMs do not have to be an expert in the
specific day-to-day operation of each department, but must be familiar with current
trends, issues, and technology in each department.
“The most successful managers can point to one or more individuals in their lives who
took the time to ‘show them the ropes.”
To manage the EOC facilitation successfully, GMs must exhibit:

 good listening skills
 an ability to evaluate and implement managerial training and development
programs
 assistance in professional improvement and growth of the EOC team
Property Management
GM should be able to direct overall management of the property.
Management refers to the process of planning, organizing, staffing, directing,

controlling, and evaluating human, financial, and physical resources for the purpose of
achieving organizational goals.
Functional Area Purpose

Planning To establish goals and objectives
Organizing To maximize deployment of resources
Staffing/directing To provide leadership
Controlling/evaluating To measure and evaluate results
44
Figure 3.2 presents the relationship between these functional areas.
Planning
Planning is the process of creating goals and objectives and then designing action plans,
strategies, and tactics to achieve those goals and objectives.
GMs engage in the planning function when they establish the philosophical and
operational direction of their hotels.
Organizing
The organizing function of management relates to arranging and deploying resources in
a manner that most efficiently helps achieve an organization’s goals.
If a decision is made to implement a goal, all the hotel’s resources must be organized
and deployed to best achieve that goal.
Staffing/Directing
This concept relates to the GM’s recruiting, motivational, and leadership characteristics.
Common terms used in place of directing are “coach” or “leader.”
The GM demonstrates real leadership, and motivates a hotel staff to achieve tasks that
were never before considered possible.
Controlling and Evaluating

This concept relates to measuring and assessing results.
45
GMs assess the effectiveness of his or her own actions, as well as that of their
management team.
GMs will work closely with their accounting department to answer such questions as:
A. Were the hotel’s ADR targets achieved?
ADR: The average price at which a hotel sells its guest rooms.
Total
Total
Number of
Rooms ADR
Rooms
Revenue
Sold
B. Were its RevPAR targets achieved?
RevPAR: The average amount of revenue generated by each of a hotel’s

available hotel rooms in a specified accounting period.
Total
Number of
Total Rooms
Rooms RevPAR
Revenue
Available
for Sale
The required talents of the GM in this area of management are:

 organizational and coaching skills
 analytical and financial analysis skills
 an ability to anticipate guest needs
 competitive spirit
 tremendous attention to detail
 physical stamina
Standards Modeling
The best GMs ensure their own actions and attitudes are consistently in line with the
actions and attitudes they seek from their hotels’ staff members.
Every hotel GM’s behavior reflects the standards they hold for themselves and for their
properties.
The talents required to perform successfully the standards modeling area of the GM’s
job include:
 High personal standards of ethical behavior
 Even temperament
46
 Real commitment to guest service
Brand Affiliation Management

Property-level brand management includes:
 Continually monitor operational standards set by the brand to ensure property
performance
 Communicate effectively with franchise brand officials about marketing and
sales programs
 Improve profitable operation of hotel by using services and programs offered by
the brand
Quality inspection scores or Quality Assurance (QA) scores are the result of annual (or
more frequent) inspections conducted by a franchise company to ensure that
franchisor-mandated standards are being met by a franchisee.
QA scores are used in property ratings, marketing efforts, and, even, by owners to
partially determine GMs’ and other hotel managers’ compensation/bonuses.
To manage their brand affiliations successfully, GMs must have:

 Well-developed interpersonal skills
 Persuasive ability
 Listening skills
 Effective writing ability
Community Relations
Opportunities to assist the local community include:
 Attracting new businesses
 Expanding tourism opportunities
 Providing input regarding local business community needs
 Holding charity events and fundraisers at the hotel
To perform successfully the area of community relations managers must have:

 An outgoing personality
 Well-developed social skills
 Effective public speaking & presentation skills
GM SKILLS DEVELOPMENT
Formal education, regardless of degree, will not make a person a qualified hotel GM;
however, formal education can provide the tools with which to perform the job of GM
after a person attains this position.
47
Formal Education
Program titles are not standard in hospitality education so it may be possible to find
relevant programs under any of the following names (or variations of them):
 Hotel Administration
 Hospitality Business
 Hotel and Restaurant Management
 Hospitality Administration
 Restaurant, Hotel, and Institutional Management
 Hospitality Management
 Tourism Administration
 Culinary Arts
Two-Year Degree Programs

Designed for
 both traditional college students and nontraditional working students
 those wish to terminate their formal education after several years of study
 those who have a BA, or BS, degree in another subject and wish to gain
knowledge of the hospitality industry
Benefits
 Highly practical and current
 Practicing professional instructors may be well-connected in the community and
provide assistance in job placement)
Four-Year Degree Programs

Designed for individuals who
 Wish to complete a more advanced study
 Seek to learn from a larger number of quality faculty
 Wish for a “more advanced” degree than two-year
Benefits
 Have diverse faculty and quality facilities
 Offer an excellent learning environment
48
Advanced Degree Programs
Typically, entrance to a Master’s degree in hospitality administration is highly
competitive and generally is 1 to 2 years of study beyond a Bachelor’s degree.
Admission requirements:
 Undergraduate degree
 Excellent grades
To achieve a Master’s degree, students must demonstrate an achieved mastery of the

required subject matter and the ability to communicate effectively before the degree is
granted.
On-Property Training
On-the-Job Training (OJT) is learning activities designed to enhance the skills of current
employees.
Typically, OJT is offered by management to improve guest service and employee

performance at no charge to employee.
For hotel GMs, OJT trends are essential due to the impact of:
 Advancing technology
 Changing guest expectations
Professional Development
There are many resources available to a GM for professional development. Some
examples include:
 Business Associations
 Professional Trade Associations
 Trade Publications
Business Associations
Membership benefits/activities of local business associations (e.g., local chambers of
commerce):
 Business/skills enhancement programs
 Networking opportunities
 Timely publications and seminars that include:
 local economic data
 best management practices
 Providing low- or no-cost training for entry-level workers
 Lobbying for business interests
 Facilitating public-private employment initiatives
 Updating recent business concepts and methods
49
Professional Trade Associations
Serve certification, educational, social, and legislative needs of their members.
 Hold monthly and annual gatherings
 Offers educational seminars and workshops
 Hold trade shows:
 View new product and service offerings from a large number of vendors in a
short time
Examples of Professional Trade Associations in the hotel industry include:

 American Hotel and Lodging Association (AH&LA)
 Asian American Hotel Owners Association (AAHOA)
 International Hotel & Restaurant Association (IH&RA)
 National Restaurant Association (NRA)
 American Culinary Federation (ACF)
 Hotel Sales and Marketing Association International (HSMA)
 Hospitality Financial and Technology Professionals (HFTP)
 Professional Convention Management Association (PCMA)
Trade Publications
Focuses on industry-related news, trends, and practices
Help readers stay up-to-date on current information
GM JOB DESCRIPTIONS
Because the actual job duties performed by GMs can be varied, job descriptions are
essential because it details the responsibilities and requirements for each position in the
hotel, including that of the GM.
Select-Service Hotels
Job Descriptions for a GM at a select-service hotel may include:
Summary of the position, such as:

 Responsible for generating profit to meet or exceed budget expectations,
while maintaining operational and guest service standards.
Specific Duties, such as:
 Develop, administer, and control the hotel revenue and expense budgets.
 Analyze balance sheet, statement of cash flows, and income statement.
Qualifications, such as:
 Must have at least three years of experience as GM of a select-service hotel
with a minimum of 75 rooms.
 Must have had P&L, budgeting, and forecasting responsibilities.
50
Full-Service Hotels
The positon description for a GM of a full-service hotel may be written more broadly
and in terms that are more general. These position descriptions may include:
Summary of the position, such as:

 The GM is the key individual in the organization’s chain of command with
complete responsibility for all activities at the hotel. The GM takes charge of
all components of the property’s business, serving as a positive role model
for all subordinates while aggressively protecting the owner’s financial
interests.
Specific Duties, such as:
 Generate maximum financial and operational performance within the
framework of the corporation’s guidelines, specific direction, and established
policies and procedures.
Minimum Qualifications, such as:
 Strong interpersonal/leadership skills and caring behavior toward both
guests and team members.
Desirable Qualifications, such as:
 Bachelor of Science or Bachelor of Arts degree in hotel administration from
an accredited college.
 Two or more years’ experience as a GM at a like-sized and like-branded
property.
51
Figure 3.3 Areas of Responsibility per Job Descriptions
GM Area of Select-Service Manager Job Full-Service Manager Similarity
Responsibility Description Job Description
Investor Relations Submit P&L variance reports Generate maximum Emphasis on
in a timely manner. financial and operational managing the
performance within the property per the
framework of the instructions of
corporation’s guidelines, ownership
specific direction,
established policies, and
procedures.
Executive Hire, train, counsel, and Develop and nurture a team Emphasis on EOC
Committee motivate management team of management and line team development
Facilitation members. staff members that are
directed toward the
achievement of the hotel's
goals and priorities.
Property Ensure effective guest and Lead the revenue effort of Manage quality
Management property safety and security the entire property with an sales and service
programs are in place and emphasis on increasing efforts designed to
are documented. market share and optimizing optimize revenue
revenues.
Standards Must be neat and courteous Maintain and support the Maintain high levels
Modeling with a pleasing personality. organization's professional of personal and
image and high ethics. professional
standards
Brand Affiliation Inspect rooms according to General Manager for two or Operate in a manner
Management franchise brand quality more years at a like-sized consistent with
standards for cleanliness and like-branded property. franchise brand
and proper preventive standards
maintenance.
Community Maintain an active and Represent the hotel in the Represent the
Relations visible position in the local local and professional property to external
community and industry. communities. communities
52

1. Students need to understand that complying with franchise requirements is primarily the
responsibility of owners. However, general managers are often placed in a position where
they need to explain to owners the advantages of that compliance. In this situation the
general manager must explain to the owners the advantages to hotel profitability of
installing the new televisions.
2. To help the general manager make the case for the mandated improvement, information
related to guest preferences for the larger sets would be helpful. In addition, the general
manager may want to inform owners about the steps taken by those directly competitive
hotels in the area to upgrade the television sets in their own guest rooms.
3. In most cases, general manager communicate information to owners either verbally or in

writing. As a result, excellent verbal skills and/or strong writing skills will be necessary.
4. The general manager may have obtained the skills referred to in the previous question by
years of industry experience or through formal education.

1. Managers of select-service hotels often deal directly with guests and certainly must develop
close relationships with other property managers. Professional skills that would be
important in the select-service hotel job include verbal skills, training skills, and coaching
skills.
2. Those hospitality professionals holding positions in large full-service or convention hotels

most often find that excellent planning and organizing skills are very important. General
managers of very large hotels have less direct guest contact, and in most cases, spend
greater amounts of their time helping to develop the skills of the members of their
executive operating committees (EOCs).
3. In many, but not all cases, select-service hotels are not located in the downtown areas of
large metropolitan communities. This is especially true when compared to convention
hotels, which are often located in downtown areas. As a result, the consideration of
personal lifestyle-related issues may involve addressing cost-of-living issues, issues related
to commuting to and from work, and even personal housing.
53
Your Opinion Counts

1. The chapter clearly indicates that a GM performs multi-functional tasks, and often has a
liaison role among guests, employees, and owners. This question allows students to think
about a situation in which those three roles may conflict with each other, and how an
effective GM would need to respond. The question essentially asks, "In times of potential
conflict, whose interests are most important, and why.”
Some students may contend that the GM should always focus on the interests of guests.
Ideally, this is true. An effective GM should place high priority on understanding, meeting
and satisfying guest needs. However, the GM also has to serve the needs of owners and
employees, and these reasons may restrict somewhat how a manager addresses guest
needs. Furthermore, it is certainly the case that guests are not “right” all of the time, so it
is important that the GM should not misjudge his or her own employees' job performance.
For example, think of a situation dealing with intoxicated guests in a hotel's bar or
belligerent guests with unreasonable requests. Students ought to remember that
employees are also internal customers, who actually play a vital role in maintaining
efficient operations and providing excellent service to guests.
Instructors can discuss with students the owners' (investors') perspectives on this
question. The owners' major expectation of the GM is that the GM should maintain and
enhance a hotel's profitability (those owners want the GM to generate the best return on
their investment!). No hotel can exist without owner investment. However, at the same
time, the GM should effectively communicate with owners to convey not only a
recognition of the hotel's short-term profitability but also the property's long-term
success, when performance is discussed. For example, improving guest services and/or
meeting needs of employees obviously involve costs, which investors may resist. Ideally,
neither the guests nor the employees should have to suffer due to any aspects of short-
term profitability actions. Thus, the ability to balance short-term profitability with other
factors (i.e., satisfying employees' needs and maintaining and improving standards of
service quality) is an important attribute of all effective GMs.
54
2. This question asks about departmental areas that students believe have been affected most
by technological advancements during the past decade. Students' answers will vary, since
their working experience and academic interests are likely diverse. For example, technology
advances at the Front Office such as offering in-room high-speed Internet service has served
to improve guest services. Similarly, as related to room sales, smart phone technology now
allows guests to book their rooms directly. These topics will be best recognized by students
who are now working, or have previously worked, in a front office or have used smart
phone technology to book their own hotel rooms when traveling.
As the chapter emphasizes, the GM is not expected to be a technological expert in the daily
operations of each hotel department, but he or she should have sufficient overall
knowledge to direct and coach departmental managers.
It will typically be the case that students will recognize their lack of knowledge about a
specific area limits their ability to understand the technological changes occurring in that
area. The solution for most professionals in the hospitality industry is undertaken extensive
reading, continuing education, and activities that involve interaction with other industry
professionals. These activities are all important in preventing blind spots in relation to
technological advancements in the hospitality industry.
3. The equation presented in this question suggests that 10% of a manager’s time should be
spent on preparing themselves for the next higher level job, 80% of their time doing their
current job, and 10% of their time helping individuals a level below them to prepare for
advancement to the next level job. However, this certainly may not be true for all
managers, or for all GMs. For example, if a young and inexperienced manager recently
graduated from a college’s hospitality management program, and begins a new career, he
or she may not invest 10% of their time helping other individuals advance. Similarly, if
managers are totally satisfied with their current job placement and position, they might not
invest any time preparing for the next higher level job.
Instructors can ask their students how they would modify the equation in their own
situations. It is important to remember that many departmental managers look up to the
GM as a role model. It is one of the GM's responsibilities to help departmental managers
develop skills necessary to be effective managers. By the same token, effective managers
also should assist their own subordinates' career plans to prepare for advancement rather
than feel threatened by their subordinates’ rapid career advancement. To address this,
some companies encourage their GMs to develop mentor relationships between
themselves and their subordinates.
55
4. The chapter addresses three different ways to develop skills needed to become a GM.
These include 1) formal education offered by two-year programs, four-year programs, and
advanced degrees; 2) on-the-job training offered by hotel companies; 3) continued
professional development offered by business associations, trade associations, and trade
publications. This question asks about some of the advantages and potential disadvantages
when a practicing GM pursues a degree from a four-year program (or an even higher
degree) as a career advancement strategy.
Many four-year (and some two-year) hospitality programs require their students to have
field experience as part of graduate requirements. Thus, four-year program graduates or
advanced degree graduates should normally be able to begin their careers in entry or mid-
management positions while high school graduates are typically expected to start in entry-
level hourly positions. By the same token, the expectation of four-year program graduates
or advanced degree graduates is most often higher than of high school graduates.
Four-year program graduates or advanced degree graduates typically have better

advancement (promotion) possibilities than high school (only) graduates. The decided
advantages of four-year level or higher degrees as a career advancement strategy is that the
programs teach them the necessary skills (i.e., mathematical skills, computer technology
skills, writing skills, and the like) for general hotel operations, and specific departmental
oriented topics (e.g., hospitality accounting, hospitality sales and marketing, and hospitality
human resources). On the other hand, the text notes that regardless of the degree students
may wish to pursue, formal education alone will not make them a qualified hotel GM.
Formal education can; however, provide excellent tools with which to perform the job of
the GM when students do obtain this position.
It is important to recognize that GMs must also make efforts to improve their practical
operations skills by on-the-job training in their properties, and they should also continue to
keep abreast of current hospitality issues and trends by participating in professional
development programs throughout their careers.
Despite the distinct advantages of attending traditional campus-based four-year or

advanced hospitality programs, some people may not able to take advantage of such a
career strategy due to geographic constraints. Furthermore, those who already work in the
hospitality industry might not be able to pursue advanced degrees due to current job
commitments. Recently, many trade organizations (such as AH&LA.), and some hospitality
management schools, have begun offering distance-learning programs via online
enrollment. These programs are varied in terms of types of degrees and/or certificates and
length of the programs. In many cases, managers and potential managers can continue to
work on a career path opportunity by continuing professional development via such flexible
and convenient methods.
56
5. Student answers to this question may vary but it is important for students to recognize that
the Educational Institute of the American Hotel & Lodging Association (EI) certifies all levels
of hotel employees, including entry-level, supervisory, and management. The Certified
Hotel Administrator (CHA) is one of the highest level certificates because it was created for
GMs and other and other higher-level hospitality professionals.
Achieving the CHA designation is valuable because it communicates to others that the
designation holder is supporting a recognized national trade association, and that he or she
has required knowledge and technical skills as benchmarked by the highest hospitality
industry standards. Also, it demonstrates that those who have achieved the CHA
designation are proud of their career path and industry choice.
E.I.'s Web site offers extensive information about the CHA designation. The CHA is the
premier symbol of professional achievement for lodging industry executives because it is
awarded only to professionals whose leadership and managerial abilities have been
objectively measured and affirmed.
57
1. Which describes the formal communication between a hotel’s GM and those who own the hotel?
a. Investor relations
b. Standards modeling
c. Brand management
d. Property management
Answer: a
Learning Objective: 3.1. Identify the major areas of responsibility for which hotel GMs are held
accountable.
2. The term FF&E refers to furniture, fixtures and

a. electricity.
b. equipment.
c. engineering.
d. environment.
Answer: b
accountable.
3. Who would most likely be a member of a hotel’s EOC?

a. Room attendant
b. Guest service agent
c. Franchise brand manager
d. Food and beverage director
Answer: d
accountable.
58
4. Which area of management most requires GMs to work with their hotels’ accounting staff?
a. Planning
b. Organizing
c. Staffing/ Directing
d. Controlling/Evaluating
Answer: d
accountable.
5. When GMs participate in charity events and fundraisers held at their hotels they are primarily
working in the area of
a. investor relations.
b. community relations.
c. property management.
d. brand affiliation management.
Answer: b
accountable.
6. Which is the first step in the management process?

a. Planning
b. Organizing
c. Staffing/Directing
Answer: a
accountable.
7. Who would most likely assign a hotel its quality inspection score?
a. The hotel’s GM
b. The hotel’s EOC
c. The hotel’s owners
d. The hotel’s brand managers
Answer: d
accountable.
59
8. Which management processes directly relates to arranging and deploying resources in ways that
most efficiently achieve a hotel’s goals?
a. Planning
b. Organizing
Answer: b
accountable.
9. Which management processes would be utilized to assess the effectiveness of a new marketing
program recently implemented in a hotel?
a. Planning
b. Organizing
Answer: d
accountable.
10. In which academic program would students earn an associate degree in hospitality management?
a. OJT
b. Two-year
c. Four-year
d. Graduate
Answer: b
Learning Objective: 3.2. Describe the alternatives available to hospitality professionals seeking to
acquire the skills needed to become effective hotel GMs.
60
11. According to the U.S. Department of Education 59 percent of first-time, full-time students who
begin a bachelor’s degree complete the degree within
a. 4 years
b. 5 years
c. 6 years
d. 7years
Answer: c
12. Which industry certification is most often sought after, and acquired, by hotel GMs?
a. CHA
b. CFBE
c. CLSS
d. CHRM
Answer: a
13. OJT in the hotel industry has most recently focused on changes in guest preferences and
a. hotel financing.
b. brand management.
c. advancing technology.
d. employee relations management.
Answer: c
14. Attendance at association-sponsored trade shows allows GMs to interact with potential
a. vendors.
b. employers.
c. employees.
d. brand managers.
Answer: a
61
15. Which hospitality industry trade association operates the Educational Institute (E.I.)?
a. PCMA
b. HSMA
c. AH&LA
d. AAHOA
Answer: c
16. Which organization was developed specifically to meet the training needs of the hotel industry?
a. PCMA
b. HSMA
c. AHLEI
d. AAHOA
Answer: c
17. The primary purpose of professional certification in the hospitality industry is to

a. reduce training costs.
b. replace OJT programs.
c. earn advanced degrees.
d. demonstrate competency.
Answer: d
18. Who most often creates the job description for an individual hotel’s GM?
a. EOC
b. Franchisor
c. Hotel owner
d. Brand manager
Answer: c
Learning Objective: 3.3. Recognize the key similarities that exist between the jobs of select-service
and full-service hotel GMs.
62
19. A common use of GM job descriptions is to
a. establish pay rates.
b. advertise job vacancies.
c. identify training needs.
d. make EOC assignments.
Answer: b
20. Which statement most accurately reflects the daily work assignments of select-service and full-
service hotel GMs?
a. They have much in common, but their daily activities vary greatly.
b. They have little in common, but their daily activities are identical.
a. They have little in common, and their daily activities vary greatly.
b. They have much in common, and their daily activities are identical.
Answer: a
21. Which task would more likely be undertaken by a select-service hotel GM than a full-service hotel
GM?
a. Community relations
b. Guest room inspections
c. Attendance at EOC meetings
d. Brand affiliation management
Answer: b
22. Which task would more likely be undertaken by a full-service hotel GM than a select-service hotel
GM?
a. Interview candidates for DOSM vacancy
b. Interview candidates for Executive Chef vacancy
c. Interview candidates for Front Office Manager vacancy
d. Interview candidates for Executive Housekeeper vacancy
Answer: d
63
23. Which industry certification would be of most importance to a hotel owner whose property offered
extensive banquet facilities and catering space?
a. CHA
b. CFBE
c. CLSS
d. CHRM
Answer: b
24. When compared to the job description of a select-service hotel GM, the job description for a full-
service hotel GM can be written in more
c. general terms.
d. detailed terms.
e. complex language.
f. simplified language.
Answer: a
25. Which industry certification would most likely be listed as a preferred qualification on an
advertisement for a select-service hotel’s GM vacancy?
a. CHA
b. CFBE
c. CLSS
d. CHRM
Answer: a
64
Chapter 4 - General Managers Are Leaders
CHAPTER 4 OUTLINE
The GM Sets the Pace Leadership Basics

GMs Manage in Times of Change Decision-Making
The GM and the Work Environment Factors Affecting Decisions
Developing the Organizational Team Decision-Making
Culture Delegation
Core Values Communication
Vision Motivation
Mission Discipline
GM’s Role in Organizational Culture The GM and Team Building
On-Boarding and Off-Boarding Tactics GM Interactions
On-Boarding and Recruitment GM’s Monthly “Diary”
After-Selection On-Boarding Employee and Guest Relationships
Off-Boarding
Chapter Overview
In this chapter, students learn how hotel managers establish an organizational culture that
leads to operational success. It also addresses how managers apply their leadership skills during
times of change. The chapter concludes by examining how effective decision-making,
delegation, communication, motivation, and discipline positively shape a hotel’s organizational
culture.
Chapter Objectives
1. Explain how hotel GMs influence their employees’ attitudes toward the organization and its guests
to influence the ultimate success (or failure) of the property.
2. Describe the need for hotel GMs to effectively manage during times of change.
3. Discuss three important planning tools that help GMs establish an organizational culture that
promotes success.
4. Review procedures to ensure that the employees’ initial and last experiences with the hotel reflect
its organizational culture.
5. Summarize information about five basic leadership tactics: decision-making, delegation,
communication, motivation, and discipline. 6. State examples of routine activities performed by
hotel GMs.
65
Lecture Outline
THE GM SETS THE PACE
GMs’ feelings and actions about issues will likely impact hotel staff attitudes about these
same issues.
A focus in the hotel must be on human relations; the skills needed to understand and
effectively interact with other people.
The hospitality industry is labor intensive, meaning it takes many staff members to
produce the services and products hotel guests’ desire.
GMs’ interactions with department heads directly impact how the department heads
interact with their own staff. Because of this, GMs influence:
 Level of Morale
 Employee Turnover Rates
 Desired Product & Service Quality
Effective hotel GMs regularly apply four basic types of skills:

• Conceptual Skills. The ability to collect, interpret, and use information in a logical
way. How a GM makes marketing decisions when a competing hotel opens is an
example of using this skill.
• Interpersonal Skills. The ability to understand and interact well with people,
including guests, employees, owners, and vendors. Examples include “meeting
and greeting” guests, interacting with owners, resolving employee-related
problems, and negotiating with vendors.
• Administrative Skills. The ability to organize and direct required work efforts
including the development of policies and operating procedures.
• Technical Skills. The ability to perform hotel management-specific aspects of the
job. Examples include forecasting guest room demand, establishing room rates,
and helping to check in guests during an exceptionally busy period.
66
GMs MANAGE IN TIMES OF CHANGE
Figure 4.1 lists some of the numerous changes in approaches and viewpoints that
traditional and contemporary hotel GMs use when they interact with their employees.
Traditional Contemporary
Manager-focused work unit Team-focused work unit
Manager is dominant Manager is supportive
Emphasis on technical skills Emphasis on employee facilitation skills
Manager seeks stability Manager encourages change
Manager tells and sells their own views Manager listens
Manager personally responsible for results Manager shares responsibility for results
Manager personally solves problems Team problem-solving is employed
Fear and pressure used to motivate staff Pride, recognition, and growth are used to
motivate staff
Autocratic (dictatorial) decision style Participative decision style
Individual behavior Team behavior
GM forces compliance GM earns the team’s support
What one says is inconsistent with what What one says is consistent with what one does
one does
Inconsistent “moments of truth” Consistent “moments of truth”
Reactive management/supervision style Proactive management/supervision style
Bureaucratic “rituals” Flexible routines
Top down—one-way communication Multidirectional communication
Hierarchy of control Empowerment
Power Consensus
Short-term HR strategies Long-term HR strategies
THE GM AND THE WORK ENVIRONMENT

Effective leadership begins with the development and maintenance of the
organizational culture that drives decision-making at all levels.
If a unified culture is not established and maintained, people in higher-level positions

will establish their own boundaries based on “what’s best” for their own departments
and not the entire property.
67
Developing the Organizational Culture
Organizational culture is a collection of understandings shared by the hotel’s staff
members that influence decision-making and is passed on to new employees. These
common understandings are used to create:
 Long-Term Plans
 Policies And Procedures
 Operating Plans
 Guest-Focused service
Core Values
Describe how hotel employees intend to act. It also forms the foundation of the hotel’s
vision and mission.
Examples are:
 Genuine concern for guests and employees
 Emphasis on quality
 Credibility
 Loyalty
 Personal development
 Continuous professional improvement
Vision
A hotel’s vision is a picture of its ideal future and answers the question: “What do we
want to create?”
A unified vision will be stronger than the sum of each employee’s and leader’s personal
visions.
Mission
Defines the hotel’s purpose, tells why it exists, and identifies what the hotel intends to
contribute to society and the world.
A mission typically states the purpose for

 Guests
 Employees
 Stakeholders (including owners, vendors, and the community)
 Financial expectations
68
GM’s Role in Organizational Culture
Hotel GMs must support, talk about, and role model the property’s core values, vision,
and mission.
Effective GMs:
 Seek input from employees regarding their own position’s obstacles and
suggestions to fix the processes
 Show appreciation for work well done
 Bonuses, wage increases, and promotions
 Welcoming employees to work
 A genuine “thank you” for a job well done
 The earnest request for employees’ ideas
Staff members are encouraged to trust each other and to place the needs, wants, and
expectations of others first.
ON-BOARDING AND OFF-BOARDING TACTICS

On-boarding is the process by which a new employee is welcomed by and integrated
into the hotel.
This process includes the recruitment, selection, orientation, induction, and training.
On-Boarding and Recruitment

Here are some best practices helpful during the employee recruitment process:
• Be Truthful. Ensure that job descriptions accurately identify the tasks an

employee in the position must perform.
• Pay Attention to the Applicant. Don’t allow interruptions (such as phone calls
or text messages) that may suggest the person or the position is
unimportant.
• Make Introductions, If Appropriate. Provide introductions when you see
employees completing recruitment or selection activities with an applicant.
• Lay the Groundwork.
 Describe the organization’s core values and culture.
 Emphasis on orientation, induction, and training.
 Communicate on-going professional development opportunities.
69
After-Selection On-Boarding
Examples of on-boarding activities that can occur after a new employee is selected:
 Calling and welcoming the new employee with an expressed interest in
helping him or her to be successful.
 Ensuring all paperwork, tools, and other necessities are available before the
employee’s start date.
 Answering all questions and concerns and do not rush the new employee as
he or she becomes oriented to the new job.
 Scheduling regular conversations with the new employee to clarify
expectations, provide feedback, and establish and evaluate goals.
 Discussing opportunities for the employee to learn new knowledge and skills
after becoming successful in their current position.
Off-Boarding
Examples of off-boarding processes used when an employee leaves the hotel include:
 Exit interviews
 Finalizing paperwork
 Returning hotel property
 Ensuring proper benefits are explained
Former employees can assist hotels by:

 Being hotel advocates to friends and family
 Providing referrals
 Returning for employment
Showing concern and respect for departing employees helps reinforce the notion that
the hotel does care about its employees.
LEADERSHIP BASICS
Five important leadership skills are:
1. Decision-Making
2. Delegation
3. Communication
4. Motivation
5. Discipline
Decision-Making
GMs make decisions about how to best use the resources to attain their planned
objectives. There are programmed decisions and nonprogrammed decisions.
Programmed Decisions: Routine or repetitive decisions made after considering policies,

procedures, and rules. (e.g. employee handbook)
70
Nonprogrammed Decisions: Decisions that occur infrequently and require creative and
unique decision-making abilities. (e.g. extending hours of operation)
Factors Affecting Decisions

1. Who is the correct person to make the decision?
2. Will a decision about a specific issue bring the hotel closer to attaining its objectives
and goals?
3. How will the decision affect guests? Often decisions made to “improve” the hotel do
so at the expense of guests.
4. Is there only one acceptable alternative?
5. Should the decision be based upon objective facts and analysis alone, or
alternatively, can some subjective (“common sense”) issues be addressed?
6. How much time and effort can be spent on the decision?
7. How does my experience help with decision-making?
8. Must the decision please everyone?
9. What, if any, are the ethical aspects related to the decisions being made? Ethics:
Standards used to judge the “right” and “wrong” (or “fairness”) of one’s actions
when dealing with others.
Team Decision-Making
Figure 4.2 illustrates the continuum of decision-making.
Advantages to group decision-making:

 A broader range of information and perspectives. “two (or more) heads are
better than one”
 More creative alternatives can be generated.
 The entire team becomes aware of issues and problems to be addressed. Builds
support of the final decision.
 Higher morale because team members are involved in decision-making
appreciate that their ideas are considered to have merit.
 The decision will be easier to implement because the team helped to develop it.
71
Disadvantages to group decision-making:
 The GM is accountable for the group’s decisions even if it conflicts with his/her
own ideas.
 Team members spend time on decision-making that could be used for other
purposes.
 The GM may be forced to “choose sides” if alternative opinions are expressed.
 The strongest personalities may dominate the decision-making process.
 Strong leadership skills are needed to facilitate the process.
 Time-consuming and may not be applicable when fast decisions are needed.
Delegation
Delegation is the process of assigning authority to others to enable subordinates to do
work that a manager at a higher organizational level would otherwise do.
Benefits of delegation are that:

 It allows the most important tasks to be done first.
 It can train employees for grow in their jobs.
 It allows more work to be accomplished.
 It improves control because delegation focuses on results confirmed through
feedback rather than input alone.
Figure 4.3 demonstrates how delegation should be undertaken.
72
Communication
Policies, rules, and procedures applicable to all staff members flow through the hotel
organization from the GM and department heads to all employees at all organizational
levels as shown below.
Different types of communication include:

 Vertical Communication is communication between individuals that flows up and
down throughout the organization.
 Horizontal Communication is communication between individuals at the same
organizational level.
 Grapevine communication is informal communication that flows throughout a
property.
 Jargon relates to specialized job-related terms, such a food server saying “86” to
imply an item is not available.
Motivation
Motivation is an inner drive to attain a goal.
A respectful approach along with supportive rules, policies, and procedures, helps to
recognize the worth and dignity of employees and encourages their active participation
Tactics helps to motivate staff and retain them. Examples include:
73
Discipline
Discipline is to reinforce desired performance (positive discipline) or to correct
undesired performance (negative discipline). It should be viewed as a several-step
coaching process.
74
The GM and Team Building
A team is a group of individuals who place the goals of the group above their own. A
good team leader must:
• Maintain high standards and expectations.
• Support individual team members and maintain relationships of trust and
respect.
• Practice participative management and solicit input from team members as goals
and objectives are established and as plans to achieve them are implemented.
• Demonstrate that their own personal goals should not be placed before the
team’s goals.
• Share credit for the successes that the team achieves.
GM Interactions
A GM’s daily activities vary from day-to-day and month-to-month as well as from
property-to-property.
Let’s explore examples of a monthly professional “diary”.
GM’s Monthly “Diary”

A GM’s daily involvement can be highly visible (e.g. guest relations) or much less
noticeable (e.g. supporting a department head implementing an unpopular hotel
policy).
A sample few of the many activities of a GM include:

• Conduct an all-employee meeting
• Submit a 90-day room revenue reforecast to the hotel’s owner
• Attend franchiser’s co-op advertising meeting
• Attend the property’s safety committee meeting
Employee and Guest Relationships

Possible Interactions with Employees: Positive Examples
Daily conversations with long-term staff members
Learning employees’ suggestions about possible operating improvements
Welcoming new staff members to the team
Congratulating personnel about significant events in their or their families’
lives
Mentoring younger workers
Following employees’ careers as they are promoted within the organization
Providing non-job-related advice when requested
Observing employees enjoying themselves at a company picnic
Observing staff members who participate in community
organizations/activities
75
Possible Interactions with Employees: Negative Examples
Disciplining or terminating staff members
Confronting staff members who are known to be stealing
Learning about illegal acts committed off-property by staff members
Assigning work responsibilities to cover “no-show” employees
Discovering employee “sabotage”
Supervising staff members who violate hotel policies, requirements, and
rules
Comforting an employee whose child has passed away
Observing an intoxicated employee attempting to come to work
Explaining to staff members why they did not get promotions they sought
Possible Interactions with Guests: Positive Examples

Interacting with frequent guests
Receiving spontaneous “thank-you notes” from happy guests
Observing guests celebrate significant family/professional occasions at the
hotel
Providing service/assistance to guests who require it
Receiving input from guests who genuinely want the hotel to be successful
Interacting with guests as peers at community/professional meetings
Providing accommodations to guests stranded by adverse travel conditions
Receiving guest input about hospitable staff members
Possible Interactions with Guests: Negative Examples

Interacting with police called to hotel for disturbances and/or illegal guest
activities
Guest deaths in sleeping rooms or in the hotel’s public spaces
Dealing with visibly intoxicated guests
Preventing on-site prostitution
Preventing guest theft of money, products, and/or services from the hotel
Preventing property vandalism
Calming irate guests stranded by adverse travel conditions
Discovering overt guest room damage
76

1. General managers must ensure there is consistently effective coordination and
communication between hotel departments. When there is not, the immediate problem
must first be addressed, and then the problem will become an opportunity to improve
interactions between departments.
The priority decision in this scenario is to determine the best (fastest) way to help the
guests. The sales manager had the original conversation with the complaining guest, so he
or she should take ownership of the problem. Ideally, this manager would inform Luka that
he or she will go to the kitchen, request the guest amenity, and take it to the guests’ room.
If the two managers (sales and food and beverage) do not cooperate, the general manager
must contact the appropriate food and beverage manager to indicate the guest amenity is
needed. (Since it is part of the sales package, the items should be available.)
2. The general manager should schedule a follow-up meeting (more than one may be
needed!) with the sales manager, the front desk manager, and the F/B manager to identify
applicable operational problems, and address them. As importantly, if there are
interpersonal problems between department heads, a longer term and\or strategic process
to build team work is critical.
3. The lack of concern for the guests exhibited by an food and beverage employee who was
“too busy” to help guests suggests that employees in that department, if not the entire
hotel, will benefit from an organized guest service training program planned and delivered
by human resources staff. It should be endorsed and emphasized by the general manager.
Note: since the general manager and all managers should role model the desired guest
service philosophy, an observer might think that the general manager might be creating, by
what he does or doesn’t do, the negative attitudes about interdepartmental cooperation
and guest service shown in this scenario.
77
1. The general manager’s actions should not depend on whether a guest who has potentially
stolen hotel property is a first-time or frequent guest. The hotel manager does not want to
risk the possibility of future thefts from a frequent guest any more than does a restaurant
manager desire the repeat business from a frequent guest who sometimes “dines and runs”
without paying the dinner bill. In fact, the actions available to the general manager in this
scenario are relatively few regardless of the amount of money a guest has spent or is likely
to spend at the property. The reason: the tactics that might be used are not likely to be
cost-effective—they will cost more than they save relative to the value of the stolen items.
2. Unless the amount involved for theft (or room damage) is significant, it is not generally
helpful for general managers to contact the police about “problem” guests. Doing so may
result in a “He said- She said” situation in which the hotel risks the possibility of a guest
lawsuit that will require excessive time for its defense, and a great deal of money for
attorney’s fees.
3. Employees can sue the hotel for alleged false accusations as well as guests can, so the
general manager must be careful as the alternative of employee theft is considered. If there
have not been recurrent thefts, the possibility of employee theft may be lessened.
However, if there have been numerous thefts while the same attendant is on duty, there is
a greater possibility, and then the general manager might contact an attorney for advice.
Surveillance cameras may also help to discover employee thefts.
Careful reading of the case suggests the items were stolen from a room being cleaned. It is
not known whether it was a multi-room suite (the room attendant may have been cleaning
in another room of the suite while the theft occurred) or if the attendant left the room
during the cleaning process and left it open to allow access by the thief.
Operating policies relating to leaving guest room doors open when no employee is in the
room may need to be initiated or re-examined. Also, instructors should point out to their
students that the entry-level employee did the correct thing by not making a personal effort
to confront the guest, and, instead performed properly by alerting a manager about the
incident in process.
78
Your Opinion Counts

1. General managers need four basic types of skills (conceptual, interpersonal, administrative,
and technical) to manage an organization effectively. They use conceptual skills to
investigate problems and devise solutions so these skills are highly related to the general
manager's ability to make important decisions affecting employees' and guests' needs.
Examples of conceptual skills include (1) developing a mentoring program for employees,
(2) re-evaluating training programs to increase employees' job performance, and (3)
devising surveys to increase guest satisfaction.
Interpersonal skills relate to interacting with, and understanding, the hotel’s guests,
employees, suppliers, and other stakeholders. Examples include (1) providing employees
with positive and negative feedback to improve their performance and job satisfaction, (2)
active listening and responding to others appropriately (listening is of critical importance to
successful oral communication), and (3) understanding the value of cultural diversity in the
workplace.
Administrative skills are those enabling the general manager to organize and direct work
effectively. Examples include (1) effective planning when interacting with the executive
committee, (2) completing franchising reports for the franchiser, and 3) working with tax
authorities.
The general manager needs competent technical skills to recognize whether employees'
jobs are done correctly and according to established standards. Examples are (1) forecasting
sales volumes, (2) determining total labor hours to be utilized by each department, and (3)
estimating labor expenses.
The general manager should delegate tasks that are not a priority. Depending on the size
and characteristics of the property, the necessary conceptual, interpersonal, administrative,
and technical skills for the general manager may vary. However, effective interpersonal
skills are necessary for managers of all hotels to ensure success.
2. There are significant differences between traditional and contemporary viewpoints about
human resources practices. Contemporary human resources practices focus on supportive
management which stresses a facilitator and team leader approach as compared to the
historical tactic of telling employees what to do. Reasons for this evolution include the
demographics of the new workforce. Today, employees want to be involved and don’t want
to be unilaterally told what to do. The diversity of the modern workforce also supports the
view that problem solving and decision making activities will be better when employee
input is solicited and utilized. A third reason: The contemporary approach enables managers
to show their genuine respect for employees and this, in turn can reduce employee
turnover and save time and expense that would otherwise be spent on recruiting and
selection activities.
79
3. Top management team members should be involved in developing key planning tools
including the core values, vision and mission of a hotel. These concepts should be talked
about frequently, should be considered as operating and all other decisions are made, and
they should be emphasized during new employee orientation and training programs.
General managers should also role model preferred behaviors, and reward employees
whose behavior is in line with the goals produced by using the planning tools.
4. Delegation is one of the most important activities performed by general managers within
the management function of "directing." When they delegate properly, general managers
show that they have trust in the judgments of the employees to whom they delegate so
these staff members can establish confidence in themselves and reflect positive attitudes
toward the general managers and other managers. General managers should also recognize
the employees’ efforts regarding delegated tasks, and discuss possible rewards including
professional development activities. A general manager should not normally expect
subordinates to do the newly delegated work in addition to their current work, and without
reward, because doing so provides a disincentive for great employees to excel.
5. Employees who can meet their own personal needs while on the job will be motivated to do
so. General managers must find ways that employees can meet these needs while, at the
same time, the staff members help the property. Examples of employee motivators include
(1) pay, (2) incentives/reward programs, (3) working conditions, (4) job security, (5) job
advancement, (6) recognition of achievement, (7) relationships with others, (8) interesting
work, (9) increased participation in decision making, and (10) challenging goals.
If employees can address the above and other motivating factors on the job, they are less
likely to become a turnover statistic than employees who are not motivated. A highly
motivated employee is also one who is more likely to experience overall job satisfaction,
which can also help to reduce the turnover rates of other employees.
80
1. Human relations in business refers to the skills needed to understand and effectively
a. interact with other people.
b. service hotel guests.
c. manage staff.
d. generate a profit.
Answer: a
Learning Objective: 4.1. Explain how hotel GMs influence their employees’ attitudes toward
the organization and its guests to influence the ultimate success (or failure) of the property.
2. The ability to forecast future demand for guest rooms is an example of a GM’s
a. conceptual skills.
b. technical skills.
c. administrative skills.
d. interpersonal skills.
Answer: b
3. Which skills must be used in almost all management and supervisory positions?
a. Administrative skills
b. Conceptual skills
c. Technical skills
d. Interpersonal skills
Answer: d
81
4. Effectively negotiating with vendors and suppliers is an example of a GM’s
a. administrative skills.
b. conceptual skills.
c. technical skills.
d. interpersonal skills.
Answer: d
5. The hospitality industry is labor intensive. That means that businesses in the industry
a. will find it difficult to make a profit.
b. require many staff members to operate properly.
c. will find it easy to make a profit.
d. require few staff members to operate properly.
Answer: b
6. Reorganizing hotel departments or work sections within departments is a process referred

to as
a. downsizing.
b. mentoring.
c. reengineering.
d. administration.
Answer: c
Learning Objective: 4.2. Describe the need for hotel GMs to effectively manage during
times of change.
7. Most hotel GMs face change-related challenges caused by

a. a decrease in business volume.
b. an increase in business volume.
c. a decreasingly diverse workforce.
d. an increasingly diverse workforce.
Answer: d
times of change.
82
8. One task of general managers is to improve quality while, at the same time,
a. decreasing productivity.
b. increasing productivity.
c. encouraging downsizing.
d. discouraging downsizing.
Answer: b
times of change.
9. Which is a contemporary, rather than a traditional, managerial approach or viewpoint?

a. Manager-focused work units
b. Strict hierarchy of control
c. Short-term human resource strategies
d. Empowerment of workers
Answer: d
times of change.
10. Which is a front-of-house employee?

a. Baker
b. Dishwasher
c. Server
d. Cook
Answer: c
Learning Objective: 4.3. Discuss three important planning tools that help GMs establish an
organizational culture that promotes success.
11. Which is a collection of understandings shared by the hotel’s staff members that influence
decision-making and is passed on to new employees?
a. Empowerment
b. Mission statement
c. Organizational culture
d. Organization chart
Answer: c
83
12. Which describes how hotel employees are intended to act?
a. Core values
b. Mission statement
c. Organizational culture
d. Moment of truth
Answer: a
13. The best GM s provide their employees with direction and control
a. when they have time.
b. when their properties are busy.
c. only when needed.
d. at all times.
Answer: c
14. The process by which a new employee is welcomed and integrated into the hotel is called
a. recruitment.
b. on-boarding.
c. orientation
d. induction.
Answer: b
Learning Objective: 4.4. Review procedures to ensure that the employees’ initial and last
experiences with the hotel reflect its organizational culture.
15. During which hotel-initiated activity would a new employee be told where to park her car
when she comes at work?
a. Recruitment
b. On-boarding
c. Orientation
d. Induction
Answer: c
84
16. Off-boarding refers to the process used when an employee
a. requests time off.
b. is cross-trained.
c. leaves the employment of the hotel.
d. is selected for a cross-functional team.
Answer: c
17. Which activity would first be undertaken if a hotel manager were seeking new employees
to fill current staff vacancies?
a. Recruitment
b. On-boarding
c. Orientation
d. Induction
Answer: a
18. What is true about nonprogrammed decisions that require creativity?

a. They are most often made by line-level employees
b. They are repetitive
c. They are made infrequently
d. They are routinely made
Answer: c
19. The standards used to judge fairness in a person’s dealing with others is referred to as
a. morals.
b. ethics.
c. integrity.
d. justice.
Answer: b
85
20. Which is an example of horizontal communication?
a. A department head talks to a supervisor
b. A department head talks to another department head
c. A supervisor talks to one of her employees
d. A general manager talks to a front office manager
Answer: b
21. Specific management actions designed to reinforce desired performance and eliminate
undesired performance are referred to as
a. coaching.
b. discipline.
c. tutoring.
d. instruction.
Answer: b
22. In most cases, today’s hotel general managers work

a. a longer work week than did their counterparts in the past.
b. a shorter work week than did their counterparts in the past.
c. the same amount of time each week as did their counterparts in the past.
d. twice as many hours per week as do a hotel’s hourly paid workers.
Answer: b
Learning Objective: 4.6. State examples of routine activities performed by hotel GMs.
23. Which is an example of a GM’s positive interactions with hotel employees?

a. Taking disciplinary action against an employee
b. Mentoring younger workers
c. Terminating a staff member
d. Assigning extra work to cover-no-show employees
Answer: b
86
24. Which is an example of a GM’s negative interaction with hotel employees?
a. Welcoming new staff members during orientation programs
b. Providing non-job-related advice when requested
c. Confronting staff members known to be stealing
d. Mentoring younger workers
Answer: c
25. GMs demonstrate a lack of managerial ability or reflect unrealistic expectations on the part
of the hotel’s ownership when they
a. work 5 to 6 days per week.
b. interact with line-level employees.
c. work an excessive number of hours per week.
d. interact with guests.
Answer: c
87
Chapter 5 - Human Resources
CHAPTER 5 OUTLINE
The Role of Human Resources Human Resources in Action

Staffing the Human Resources Department Employee Recruitment
Legal Aspects of Human Resources Employee Selection
Employee Selection Orientation
Selection Tools Training
Selection Issues Performance Evaluation
The Employment Relationship Compensation (Salaries and Wages)
The Law in the Workplace Other Compensation (Benefits)
Sexual Harassment Employee Retention
Family and Medical Leave Termination
Act (FMLA) Other Human Resources Activities
Compensation Employee Safety and Health
Employee Performance Workforce and Work Quality
Unemployment Issues Improvement
Employment Records Succession Planning
Chapter Overview
This chapter helps students understand the role human resources professionals play in the
operation of a successful hotel. It addresses current laws relating to employee selection and the
employee-employer relationship. The chapter also reviews the key role of human resources
personnel in protecting the safety and health of current hotel employees, as well as planning
for future staffing needs.
Chapter Objectives
1. Explain how the work of human resources specialists and their responsibilities relate to that
of other hotel managers and employees.
2. Describe typical responsibilities of human resource personnel.
3. Discuss employment laws relating to selection, employment relationships, and the
workplace.
4. Explain effective human resources activities helpful during operational aspects of the
employment cycle.
5. Review the role of HR in protecting the safety and health of hotel employees, improving the
quality of work, and planning future staffing needs.
88
Lecture Outline
THE ROLE OF HUMAN RESOURCES
The role of Human resources is to assist departmental managers with issues related to:
• Recruitment
• Selection
• Orientation
• Training
• Performance evaluation
• Compensation
• Labor relations
• Safety and health
• Legal compliance
Larger hotels separate HR activities into two groups: operating line managers and HR
specialist(s)
Activities of line managers include:

• Determining position requirements for each job
• Making final employee-selection decisions
• Providing departmental- specific orientation
• Initiating on-going training
• Performance evaluation
• Scheduling
• Discipline
HR specialists assist line managers to ensure activities are performed properly and
legally
HR personnel serve in a staff position, or employees who are technical specialists who
provide advice to but do not make decisions for persons in line positions.
Examples of how HR personnel assist in overall hotel operation include:

• Implementing legal policies and tactics to effectively recruit, select, motivate,
and retain the most qualified management and nonmanagement staff members
• Developing and delivering orientation, safety, security, supervisory, and some
departmental-specific training programs
• Developing and communicating equitable and fair HR policies to all employees
while protecting the rights of the hotel
• Interpreting, implementing, and enforcing the ever-increasing body of laws and
regulations that affect people at work
• Helping to maintain appropriate standards of work-life quality and ethical
business policies and practices
89
STAFFING THE HUMAN RESOURCES DEPARTMENT
When staffing for any position, it is essential to include the job’s description and
specification to all potential applicants.
Job descriptions are a list of tasks that an employee working in a specific position must
be able to effectively perform.
Job specifications are a list of personal qualities judged necessary for successful
performance of the tasks required by the job description
LEGAL ASPECTS OF HUMAN RESOURCES

The role of human resources includes assisting line managers in addressing laws related
to employee selection, the employment relationship, and to the workplace in general.
Employee Selection
Numerous selection tools and processes are impacted by employment laws.
Selection Tools
Bona Fide Occupational Qualifications (BOQs) are qualifications to perform a job that
are judged reasonably necessary to safely or adequately perform all tasks within the job.
Legitimate BOQs can include:

• Education or certification requirements
• Language skills
• Previous experience
• Minimum age requirements (for example, positions that serve liquor)
• Physical attributes needed, such as:
o amounts to be lifted and carried
o the need to stand for long periods
o walk long distances
• Licensing
Tools to screen employee applicants include:

• Employment Applications
o Only provide info directly relating to the job
o Demographic info, employment history, educational background, criminal
history, employment status, references, drug testing
• Employment Interviews
o Questions about race, religion, and physical traits should not be asked
o Questions about age may be asked only for the purpose of meeting legal
requirements
• Employment Testing
o Follow strict state guidelines and requirements for pre-employment drug
testing
90
• Background Checks
o Obtain applicant’s permission in writing
• References
o Obtain applicant’s permission in writing
Selection Issues
Numerous laws and regulations affect a hotel’s employee selection process. Some
examples include:
• Civil Rights Act of 1964
o Prohibits discrimination based on race, color, sex (e.g. gender identity),
religion, national origin, age, disability, and genetic information
• Americans with Disabilities Act(ADA)
o Prohibits discrimination against job candidates with disabilities
• Age Discrimination in Employment Act (ADEA)
o Protects individuals age 40 and older
o Applies to employers with 20 or more staff members
• Immigration Reform and Control Act (IRCA)
o Prohibits hiring illegal immigrants
o Form I-9 developed by INS must be completed
• Fair Labor Standards Act (FLSA)
o Protects young workers from employment interfering with education or
that is potentially hazardous to their health
The Employment Relationship

At-will employment is a relationship that exists when employers can hire any employee
as they choose and dismiss that employee with or without cause at any time.
The employee can also elect to work for the employer or terminate the work
relationship any time that he or she chooses.
An employment agreement is a document specifying the terms of the work relationship

between the employer and employee that indicates the rights and obligations of both
parties.
The employment agreement often takes the form of an official written offer
letter.
The Law in the Workplace

Significant legal issues related to employment include:
 Sexual Harassment
 Family and Medical Leave Act (FMLA)
 Compensation
 Employee Performance
 Unemployment Issues
 Employment Records
91
Sexual Harassment
Sexual harassment occurs when an employee experiences unwelcomed sexual
advances, requests for sexual favors, and/or verbal or physical conduct that is sexual in
nature.
One cannot ask favors of a subordinate in exchange for employment benefits; neither
can one punish an employee if an offer is rejected.
A GM should follow strict zero tolerance (total absence of behavior that is potentially
discriminatory, harassing, or objectionable) by:
• Issuing of appropriate policies and procedures
• Conducting applicable workshops
• Developing procedures to obtain relief for alleging employee
• Developing written protocols for:
• Reporting
• Investigating
• Resolving
Family and Medical Leave Act (FMLA)

Hotels employing 50 or more staff must provide up to 12 weeks of unpaid leave to an
employee for:
• the birth of a child
• adoption of a child
• foster care of a child
• serious illness of an employee
• serious illness of an immediate family member
Compensation
The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime work rates,
and equal pay regardless of gender.
Minimum Wage is the lowest amount of compensation that an employer may pay to an
employee covered by the FLSA or applicable state law.
Exceptions can include younger employees being paid a training wage for the
first 90 days of employment, as well as some tipped employees.
Overtime is the number of hours of work after which an employee must receive a
premium pay rate.
This premium rate is generally one and one-half times the employee’s basic
hourly rate.
An exception from minimum wage and overtime pay for staff employed as bonafide
executive and administrative employees (among others)
92
Executive employee:
 Primary duty must be managing the enterprise or managing one of its
department’s subdivisions
 Must direct the work of at least two or more other full-time employees or their
equivalent
 Must have the authority to hire or fire other employees.
Administrative employee:
 Primary duty must involve office or nonmanual work directly related to the
management or general business operations of the employer or the employer’s
customers
 Primary duty involves discretion and independent judgment on significant
matters
FLSA also requires equal pay for the same job regardless of gender
Laws related to taxes include:

Income Tax
 State, federal, and sometimes local income taxes must be withheld from
employees’ paychecks.
Federal Insurance Contribution Act (FICA)
 Taxes must be contributed by both employers and employees to fund the federal
Social Security and Medicare programs.
Federal Unemployment Tax Act (FUTA)
 This mandates that employers contribute a tax that is based on the employer’s
total payroll to help care for persons who are out of work through no fault of
their own.
Earned Income Credit (EIC)
 This is a refundable credit for employees whose incomes fall below pre-
established levels.
Work Opportunity Tax Credit (WOTC)
 This provides employers with tax credits for hiring disadvantaged workers.
Employee Performance
Laws relating to the management of employee performance include those addressing:
Employee evaluation
 Assuring work performance [and nothing else] forms the basis for employee
evaluations
Discipline
 Effectively communicating and consistently enforcing workplace rules and
policies
Dress and Grooming
 Allowance of legitimate religious dress and grooming practices
93
Termination
 Preventing unacceptable termination of employees
Unemployment Issues
Unemployment insurance requires employers to pay different costs to maintain the
state’s share of funds used to assist workers who have temporarily lost jobs.
An unemployment claim is a claim made by an unemployed worker asserting the worker

is eligible for unemployment benefits.
Employment Records
Federal and state agencies require that employee records be maintained, and penalties
for noncompliance can be severe. Examples include:
From the Department of Labor:

 Name
 Address
 Gender
 Job title
 Work schedule
 Hourly rate
 Regular and overtime earnings
 Wage deductions
 Dates of pay days
 Any deductions from
o Wages for meals
o Uniforms
o Lodging
 Amount of tips reported
 FMLA covered leave and the amount of leave (hours, days, weeks)
IRCA requires Employment Eligibility Verification (I-9) Form retained for each
employee
ADEA requires records for personnel matters and benefit plans
HUMAN RESOURCES IN ACTION

Employee Recruitment
The need to recruit for vacant positions is directly related to the hotel’s turnover rate.
It is tough to recruit in areas that have a low unemployment rate because of
stereotypes suggesting entry-level positions in hotels are undesirable
94
Unemployment rate is defined as the number (usually a percentage) of employable
persons who are out of work and looking for jobs
Internal Recruiting are tactics to identify and attract currently employed staff members
for job vacancies that represent promotions or lateral transfers to similar positions.
These can include:
• “Promotion from within”
• Alerting friends and relatives of current employees
• Recruitment is not solely the job of HR department
• Current staff can impact hotel’s turnover rate
External Recruiting are tactics designed to attract persons who are not current hotel
employees for vacant positions. These can include:
• Hiring from outside sources
• Newspaper and other media advertisements, job fairs, executive search firms,
recruiting at schools, “help wanted” signs
• Attracting external candidates
Employee Selection
Employee selection involves evaluating applicants to determine those most likely to
succeed. It includes:
• Preliminary screening including reviewing the candidate’s application
• Employment interviews
• Employment tests are given when specific experience is required. For example:
o a paper and pencil test addressing the arithmetic for cashiering related
duties
o Spelling and grammar skills test required for word processing
o Skills test for an “experienced” cook to prepare a specialized sauce
• Reference checks to confirm employment dates and positions held
• Drug screening (if used by the hotel)
Orientation
Orientation is the process of providing information about the hotel that should be
known by all of its employees.
Orientation goals:
• To reduce anxiety
• To improve morale and reduce turnover
• To provide consistency
• To develop realistic expectations
95
Orientation programs should address:
• An overview of the hotel
o Mission statement
o Effective guest service
o Emphasis on teamwork
• Important policies and procedures
o Many programs specifically address harassment policies at this time
• Compensation, fringe benefits, and pay periods
• Safety and security concerns
• Employee and union relations
• Property tours
• Specific topics related to the hotel
An employee handbook stating written policies and procedures are given at this time.
Training
Training is absolutely critical to the hotel’s success! Improve knowledge or skills of staff
• New employees and experienced staff need training
• Ongoing professional development can motivate staff and help employees’
advancement opportunities
• Implement “train the trainer” program
Individual Training:
• May include the use of a role-play (e.g., upselling training for front desk agents)
Group Training:
• Effective when several staff must learn the same thing
Performance Evaluation
Goals:
• Determine where staff can improve performance
• Assess eligibility for pay raises and promotions
• Improve morale
• Assure legal compliance
HR Department Roles:
• Develop policies & procedures for property-wide system
• Communicate policies & procedures to all staff
• Address and resolve employee concerns as they arise
• File performance evaluation results in employee records
96
Steps of Performance Appraisal System
Compensation (Salaries and Wages)

Compensation includes all financial and nonfinancial rewards given to managers and
non-management staff members in return for their work.
Types of direct financial compensation

 Salary is pay calculated on a weekly, monthly, or annual basis rather than at an
hourly rate.
 Wages can be defined as pay calculated on an hourly basis.
 Bonuses
 Commissions
Types of indirect financial compensation

 Benefits
o Health insurance
o Paid vacations
Effective compensation programs should be:

 Legal
 Fair
 Balanced
 Cost-effective
 Viewed as reasonable by staff
Managers should establish pay for specific positions based on:

 What other employers attempting to attract the same applicants pay
 What employees working on different jobs in the hotel are paid
97
 What other employees working on same jobs within the hotel are paid
Other Compensation (Benefits)

Figure 5.7 lists examples of benefits hotels offer employees to attract and retain
qualified employees.
98
Responsibilities of managing a benefits program include:
 Determining Objectives for the Benefits Programs
o Match the benefits competitive industries offer
 Facilitating Discussions with Employees About Desired Benefits
o Surveys
o Advisory committees
 Communicating the “Benefit” of Benefits
o A large and growing percentages of total compensation
 Monitoring Costs
o Assess costs such as labor and benefit-related cost (medical insurance), in
ways the can be reduced and effectively managed
Employee Retention
All members of the hotel’s management team must be concerned about employee
retention.
Employee retention is the use of organizational and supervisory policies and procedures
designed to encourage employees to remain with the property.
Traditionally, leadership style focused on directing (stern taskmaster approach).
Contemporary leadership involves facilitation and empowerment to create an

environment that employees at all levels feel comfortable.
Termination
Employee terminations (also called separations) can be voluntary or involuntary.
Voluntary terminations occur when the employee decides to leave for reasons that can
include retirement, illness, or going back to school.
Voluntary replacement staff costs:
o Recruiting
o Selecting
o Training
Involuntary terminations occur as the result of decisions made by managers for reasons
that include improper performance and downsizing.
Considerations:
o Poor selection decision
o Improper training
o Organizational culture lacking respect for employees
99
Those employees who remain will carefully question the termination process from their
unique perspectives.
• Was the process fair?
• Did it show respect for the affected employee?
• How will the tasks performed by the departing employee be incorporated into
the assignments of other staff members?
Exit interviews can help identify organizational and supervisory strengths and
weaknesses as suggested by departing employees.
OTHER HUMAN RESOURCES ACTIVITIES

Additional responsibilities of include:
• Protecting the safety and health of employees
• Improving work quality
• Succession planning
Employee Safety and Health

Work-related accidents and illnesses in hotels can relate to:
• The work to be done
• Working conditions
HR staff assistance for health-related activities can include:

• Developing and selecting programs to help employees cope with stress
• Developing procedures applicable to workplace violence
• Communicating updated info about HIV in the workplace
• Providing information about cumulative trauma disorders
Workforce and Work Quality Improvement

GM and HR tactics to improve its staff include:
• Professional Development Activities
• Cultural Diversity Initiatives
• Quality Improvement Programs
Succession Planning
The steps required for a successful succession planning process are:
Step 1
• Identifying positions to be addressed in the succession planning process
• Considering the hotel’s vision
• Assessing future requirements for meeting the guests’ needs
Step 2
• Determining competencies and other talents required over the long term
• Basing professional development decisions on talent needs
100
Step 3
• Determining current staff members for training to meet competencies
Step 4
• Recruitment of external staff and training them for the responsibilities of future
positions
Step 5
• Planning and implementing the necessary professional development programs
 Formal and project-based activities
 Mentoring assistance
• Develop plans for affected staff
 Including compensation
 Performance management
 Recognition
Step 6
• On-going monitoring and revisions in professional development plans
101

1. The GM has begun the training emphasis by discussing the need for training at the recent
executive operating committee meeting. An additional tactic is to meet with each
department head to explain and justify the need for training with examples applicable to
each specific department. Connor can also help each manager develop a departmental
business plan component focusing on training that supports the hotel’s overall business
plan.
The GM should consider ways to reward managers who develop and implement training
activities and the trainees who successfully complete them. Two tactics are to include
training activities in performance appraisal reviews and to work with the HR manager to
develop generic training programs applicable to all departments (examples: guest service
training and “train the trainer” programs). As these are developed, department managers
will have access to the programs without financial costs to their specific departments.
The issue of paying for training materials and the time required to plan and deliver training
must also be addressed. This might best be handled as the operating budget for the
subsequent fiscal year is planned. Managers are less likely to resist training if funds are
available for its implementation.
2. Few hotels can afford or have the expertise available to develop training programs
specifically for their departments. Topics applicable to several departments can be
addressed with purchase of “off-the-shelf” materials that can be customized for specific
properties.
The development of programs to teach basic job knowledge and skills to entry-level
employees in different positions in each department will require time and commitment to
do so. Supervisors can interact with experienced employees to develop required work
processes and to develop a list of activities necessary to perform them. These “job
breakdowns” can be used as to demonstrate and explain how to do each task during the
one-on-one training that will be provided to each new employee.
3. Department heads who do not “buy into” or support the hotel’s core values will not remain
at the property. They will be asked to leave or will feel uncomfortable remaining in their
position. The organization’s core values of emphasizing guest satisfaction, respecting
employees, and managing for quality all reflect the need for on-going training. As well, the
hotel’s reward process will require that training is important and is a “must” for success.
102
1. The GM and her team of managers will have a difficult time ahead of them if, for the first
time, they must now treat their employees fairly and with respect. The present challenge
will be much less significant if the staff are now aligned with the hotel’s vision and mission,
and if they mutually benefit when the property is successful. Some staff may be recruited
to the new competitor based on a slight pay increase and additional benefits, but some will
likely want to return to their present employer if their work experiences are negative. As
well, some employees will not leave if their present position is with an employer of choice
with a history of exemplary treatment of employees.
2. Many observers believe compensation is a “maintenance” factor in the motivation process.

This means that pay and benefits must be satisfactory to some personal extent before
employees can be motivated by other factors that are important to them (examples: being
treated fairly with respect and being able to provide input to matters that impact them). In
other words, employees expect fair compensation and then respond favorably when their
employers enable them to meet their inner ego, esteem, and/or other needs.
3. This question relates to question 2. If compensation is judged to be fair, many (most?)

employees will remain at their jobs if they are genuinely respected by their managers.
Examples of respect occur when supervisors show they appreciate the employees’ work,
and when employees receive help with problems. Other examples include when employees
are involved in matters that affect them and when they have job security.
103
Your Opinion Counts
1. Turnover is a major problem in the hotel industry, and costs related to on-going
recruitment, selection, orientation, and training, among other expenses, are high. There are
numerous practical and low-cost strategies to reduce turnover.
Among the most important is the need for supervisors and managers to show on-going and
genuine respect for their employees. This is done, in large measure, by treating employees
the same way one treats guests: in other words, by being hospitable. Examples include
recognizing and thanking employees for their contributions, understanding that willing
employees can significantly contribute to process improvements, and by providing effective
orientation and training activities to prepare employees for their jobs.
An additional strategy is to enable entry level staff members to find pride and joy in the
workplace. Tactics to do this include the use of on-going and two-way communication and
to provide a structured program for employee advancement (professional development) for
those who desire this challenge.
A third strategy to reduce turnover is to use a carefully developed selection process to

employ those who are best suited for the vacant position and, therefore, the ones who are
most likely to be successful. Examples of these tactics are addressed in the chapter and are
basically the opposite of the “warm body” approach in which the selection process is
minimized and the first applicants are chosen.
2. Question 2 is related to Question 1. Some motivation theories assume that adequate

compensation from the employees’ perspectives must be in place before a motivating
environment can be established. Persons may be attracted to the job because of
compensation, but they remain when they are treated respectfully. Employers should
provide positive first impressions including orientation and initial training and then continue
with the use of proper supervisory techniques, Alignment with the hotel’s vision, mission,
and core values, enabling employees to be “in on things” that affect them, and practicing
“employer of choice” tactics can separate effective managers and supervisors from their
less effective counterparts.
104
3. Job descriptions indicate what a position incumbent does by focusing on the duties and
responsibilities to be performed. If job descriptions are current and accurate, they are
highly useful because they help employees better understand their jobs. Also, while they do
not specify performance factors, they provide an important basis from which performance
appraisal factors can be developed. Job descriptions can also be used to organize content
for training materials and programs, and they can serve as a tool for ongoing supervision.
Students can be asked for examples of how the above advantages of job descriptions
assisted with their jobs. If job descriptions were not available, students can provide
examples of the challenges that occurred in their absence.
4. When a hotel advertises itself as being drug-free, i t uses pre-employment drug testing
for job applicants and random drug tests for current employees. When the employees
a r e randomly selected for drug testing, the organization must follow the state’s legal
requirements.
If job applicants fail pre-employment drug testing, the decision is simple: they are
disqualified from employment consideration. However, the situation becomes much more
complicated when one of a hotel's excellent employees was confirmed as a marijuana-user
as the employee received medical treatment for a workplace injury.
Your students' answers will likely vary regarding whether they would terminate the
employee or mandate treatment. Advantages of termination are that the hotel will
reinforce its culture of a drug-free workplace and the promotion of employee safety. It will
send a clear and strict message to other employees that drug abuse is not tolerated. Then,
hopefully, drug abuse among employees may be reduced.
However, simply firing that employee without any other consideration or assistance would
probably not be the best answer. The GM may decide to suspend the employee and require
him or her to participate in a 30-day, unpaid drug treatment program. The employee will
then be retested for drug abuse upon return to work. Concerns about this alternative
include determining who will replace the employee for 30 days and what will happen to this
new employee when the suspended employee returns after treatment. Nonetheless, this
option shows that the hotel and its managers care about the employees and will assist when
there are problems as long as affected employees commit to a 30-day, unpaid drug
treatment program.
5. In the hospitality industry, newly hired or promoted salaried employees do not always
make much more money than do hourly employees nor do employee benefits likely differ
significantly for them. The success of the organization depends upon the commitment of
salaried employees. The text reviews many benefits are available to all employees after the
hotel has employed them for a specified period of time. Compensation survey information
can help GMs determine what benefits their workforce competitors provide to salaried
employees, and this input can be very helpful when making compensation decisions.
105
1. HR responsibilities in larger hotels are split between the HR department and

a. operating managers in line departments.
b. operating managers in staff departments.
c. the general manager.
d. local governmental agencies.
Answer: a
Learning Objective: 5.1. Explain how the work of human resources specialists and their
responsibilities relate to that of other hotel managers and employees.
2. Which positions are filled by employees who are technical specialists that provide advice to but do
not make decisions for persons in line positions?
a. Staff
b. Supervisor
c. Manager
d. Back-of-house
Answer: a
3. Which would be considered a staff positon in a hotel?

a. General Manager
b. Director of Sales and Marketing
c. Food and Beverage Director
d. Director of Human Resources
Answer: d
106
4. Who would most typically serve as the Director of Human Resources in a small hotel?
a. General Manager
b. Director of Sales and Marketing
c. Food and Beverage Director
d. Front Office Manager
Answer: a
5. Which is a term that has historically been used in the hospitality industry to refer to human
resources management?
a. Employee management
b. Worker management
c. Staff management
d. Personnel management
Answer: d
6. Which is a list of tasks that an employee working in a specific position must be able to effectively
perform?
a. Job requirement
b. Job description
c. Job specification
d. Job rotation
Answer: b
Learning Objective: 5.2. Describe typical responsibilities of human resource personnel.
7. Which is a list of the personal qualities judged necessary for successful performance of the tasks
required in a job
a. Job requirement
b. Job specification
c. Job rotation
d. Job enhancement
Answer: b
107
8. HR Directors in a hotel typically report to the
a. hotel’s owners.
b. general manager.
c. rooms division manager.
d. controller.
Answer: b
9. Which is a task that would normally be performed by an HR professional working in a hotel?

a. Hire staff
b. Terminate staff
c. Promote staff members
d. Record changes in worker status
Answer: d
10. Which is true about the employment history of qualified HR Directors?

a. It will include an employment law background
b. It will include time served as a hotel department head
c. It will include a formal degree in HR management
d. There is no single best background for an HR Director
Answer: d
108
11. Which would be a legitimate BOQ for the job of a cocktail waitress?
a. Being at least five feet tall
b. Being attractive
c. Being female
d. Being of legal age to serve alcohol
Answer: d
Learning Objective: 5.3. Discuss employment laws relating to selection, employment relationships,
and the workplace.
12. Who must sign the consent form authoring a background check on an employee applying for a job
at a hotel?
a. The person interviewing the applicant
b. The owner of the hotel
c. The applicant
d. The hotel’s general manager
Answer: c
and the workplace.
13. At what age are workers protected from discrimination because of the provisions of the Age
Discrimination in Employment Act?
a. 35
b. 40
c. 45
d. 50
Answer: b
and the workplace.
109
14. The FLSA requires that most employees in the United States be paid at least the federal minimum
wage for all hours worked and overtime pay at time and one-half the regular rate of pay for all
hours worked over
a. 30 hours in a workweek.
b. 35 hours in a workweek.
c. 40 hours in a workweek.
d. 45 hours in a workweek.
Answer: c
and the workplace.
15. Which is NOT an employee characteristic for which discrimination in employment is prohibited by
the Civil Rights Act of 1963?
a. National origin
b. Religion
c. Race
d. Weight
Answer: d
and the workplace.
16. Employee recruitment in areas where unemployment is

a. high, can be very challenging.
b. high, means few potential workers are available.
c. low, can be very challenging.
d. low, means many potential workers are available.
Answer: c
Learning Objective: 5.4. Explain effective human resources activities helpful during operational
aspects of the employment cycle.
17. A hotel’s HR department is responsible for

a. turnover rates, and it will have a major influence over recruitment.
b. turnover rates, but will not have a major influence over recruitment.
c. recruitment, and it will have a major influence over turnover rates.
d. recruitment, but will not have a major influence over turnover rates.
Answer: d
110
18. What is the focus of external recruitment?
a. Identifying current workers who are deserving of raises.

b. Identifying current workers for promotion.
c. Attracting persons who are not current hotel employees for vacant positions.
d. Attracting persons who are current hotel employees for vacant positions.
Answer: c
19. Which is NOT a selection tool used by effective HR departments in a hotel?

a. Reference checks
b. Warm body hiring
c. Employment interviews
d. Employment tests
Answer: b
20. When should employees be given copies of a hotel’s employee handbook?

a. During employee recruitment
b. During employee orientation
c. During employee interviews
d. During employee termination
Answer: b
21. Educating managers and employees about the numerous professional, personal, and societal
advantages inherent in recognizing the worth of all employees without regard to gender or race is
goal of
a. professional development activities.
b. cultural diversity initiatives.
c. quality improvement programs.
d. succession planning.
Answer: b
Learning Objective: 5.5. Review the role of HR in protecting the safety and health of hotel
employees, improving the quality of work, and planning future staffing needs.
111
22. On-going efforts within the hotel to better meet (or exceed) guest expectations and to define ways
to perform work better, less costly, and with faster methods are the focus of
Answer: c
23. Carpal tunnel syndrome is a health hazard associated with

a. HIV.
b. repetitive motion injuries.
c. AIDS.
d. slips and falls.
Answer: b
24. Working with line managers to implement on-going programs that allow employees to gain
additional job-related knowledge and skills leading to more responsible and higher-paying jobs
within the hotel is an example of
Answer: a
25. Which is the first step in the development of a successful succession planning effort?
a. Recruitment of external staff that might fill current positions and participate in activities to
better prepare them for the responsibilities of future positions.
b. Determining currently employed persons who might be trained for and gain experience in
activities related to desired competencies.
c. Identification of positions to be addressed in the succession planning process.
d. Considering required competencies and other talents required over the long term.
Answer: c
112
Chapter 6 – Accounting
CHAPTER 6 OUTLINE
The Accounting Function Internal Controls and Reports

Generally Accepted Accounting Cash
Principles Accounts Receivable
Uniform System of Accounts for Accounts Payable
Lodging Industry Daily Operating Statistics
Accounting Systems Detailed Room Revenue
Centralized Accounting Systems Statistics
Decentralized Accounting Systems Financial Statements
Accounting Tasks Balance Sheet
Revenue Forecasts Income Statement
Budgets Statement of Cash Flows
Long-Range Budgets Audits
Annual Budgets Internal Audits
Monthly Budgets External Audits
Chapter Overview
In this chapter students learn about a controller’s role in the financial management of a hotel. It
describes generally accepted accounting principles (GAAP) and the Uniform System of Accounts
for Lodging Industry (USALI). The chapter concludes with an examination of budgeting, internal
financial controls, and the three financial statements prepared to communicate a hotel’s
financial condition.
Chapter Objectives
1. Describe the purposes of generally accepted accounting principles (GAAP) and the Uniform
System of Accounts for Lodging Industry (USALI).
2. Explain the difference between centralized and decentralized accounting systems.
3. Identify five major accounting-related tasks for which GMs and their controllers are
responsible.
113
Lecture Outline
THE ACCOUNTING FUNCTION
Successful businesses generate revenue (sales) and incur expenses (costs) as they do so.
When sales exceed revenues, profits are generated.
Profit Formula (in simple form)
Accounting is the process of summarizing, reporting, and analyzing financial

transactions.
Front-Office Accounting is the process of summarizing and reporting financial

transactions occurring at the front desk.
Back-Office Accounting is the process of summarizing and documenting the financial

activity of the entire hotel.
GMs do not need to be certified public accountants (CPAs) but do need to understand
the basic accounting principles used by a hotel’s controller.
A Certified Public Accountant (CPA) is a professional designation given to an individual

who has passed a national qualifying examination related to accounting practices and
principles.
CPA designations are granted and administered by state boards of accountancy.
A Controller in a hotel is an individual (or department) responsible for maintaining the

back-office accounting systems.
114
Generally Accepted Accounting Principles
Generally Accepted Accounting Principles (GAAP) are standards and procedures for
preparing business financial statements to ensure uniformity.
Financial
Analysis
Summary Accounting
Bookkeeping
Purpose of bookkeeping:
 Record and summarize financial data
o Example: the sale of an in-room movie
Uniform System of Accounts for Lodging Industry (USALI)

A recommended and standardized set of accounting procedures used to report a hotel’s
financial transactions and financial condition.
Accurate financial information ensures good decision-making
Sarbanes–Oxley Act is a law making it a criminal activity for a hotel (or any other)
company’s executives to knowingly provide investors with false financial information.
Technically known as the Public Company Accounting Reform and Investor Protection
Act.
ACCOUNTING SYSTEMS
The main responsibility of a controller is to oversee the bookkeeping and accounting
functions, which includes:
 Development of the systems needed to accurately collect and report financial
information
 Analyze financial information
 Make finance-related recommendations
115
Accounting systems can be classified as centralized or decentralized.
Centralized Accounting System

A financial management system that collects accounting data from an individual
hotel(s), then combines and analyzes the data at a different (central) site.
Prevalent in chain-operated or multiproperty hotel companies
The company, not the individual hotel, will likely employ CPA for data analysis
Decentralized Accounting System

A financial management system that collects accounting data from an individual hotel
site and combines and analyzes the data at the same site.
GM and controller take larger role in preparing financial documents
Likely hotel owners will employ the services of a CPA or qualified professional to review
the financial statements prepared by the controller or GM.
ACCOUNTING TASKS
The controller, working with the hotel GM and the EOC, will normally be responsibility
for managing:
• Revenue forecasts
• Budgets
• Internal controls and reports
• Financial statement preparation and analysis
• Audits
Revenue Forecasts
The terms revenue and sales are used interchangeably. Accurate revenue forecasting is
an important part of the controller’s job.
Hotels generate revenue from a variety of sources. Examples include:

• Transient guest rooms • Beverages
• Group guest rooms • Tennis/Pro shop
• In-room movies • Golf course/Pro shop
• Telecommunications • Health club/Spa
• Guest laundry • Casino/Gaming outlets
• Business centers • Retail outlets
• Meeting and conference • Salons (Barbershops/Beauty parlors)
room rentals • Parking garage
• Food
116
Accurate revenue estimates are essential for assisting GMs in the decision-making
process.
Budgets
A hotel’s budget is an estimate of its revenue and expense for a specific period.
The development of budgets assists hotels by:

1. Allowing management to anticipate and prepare for future business conditions.
2. Providing a communication channel whereby the hotel’s objectives are passed
along to its various departments.
3. Encouraging department managers in the preparation of the budget to establish
their own operating objectives and evaluation techniques and tools.
4. Providing the GM with reasonable estimates of future expense levels and serving
as a tool for determining future room rates and other price structures.
5. Helping the controller and GM to periodically carry out a self-evaluation of the
hotel and its progress toward achieving its financial objectives.
There are three basic types of budgets

1. Long-Range Budgets
Encompasses a relatively lengthy period, generally 2–5 years or more
Useful for long-term planning, considering wisdom of debt financing, refinancing,

and scheduling of capital expenditures
A capital expenditure is the purchase of equipment, land, buildings, or other

fixed assets necessary for the operation of the hotel
2. Annual Budgets
In large, multiunit companies, annual budgets are produced by individual hotels
and submitted to a central office for review
Developed to coincide with calendar year
Are more detailed than a long-term budget and are subject to less fluctuation
based on unforeseen events
117
3. Monthly Budgets
Helps determine whether a business is maintaining progress toward the goals
developed in its annual budget
Great for seasonal hotels or hotels whose revenue and expenditures vary greatly
depending on the time (season) of the year the hotel is operating
• Examples include hotels near ski resorts, beaches, theme parks, some
tourist areas, sporting venues, and the like.
• During their busiest periods, these type of hotels will sell most or all of
their rooms at rack rate
Rack Rate, commonly referred to as ‘rack,’ is the price at which a hotel sells its
guest rooms when no rate discounts of any kind are offered to guests.
Internal Controls and Reports

Good controllers help GMs by developing and implementing policies and procedures
designed to ensure the security of the hotel’s assets.
Cash
The loss of assets to theft, fraud, or outright carelessness always exists.
It is essential to enforce a system of checks, balances, and controls designed to ensure

the security of cash assets.
Some common payment card-related techniques used to defraud guests include:

 Giving, or selling, the credit or debit card numbers of guests to unauthorized
individuals outside the hotel (often referred to as skimming).
 Charging guest’s payment card for items not purchased, then keeping the money
from the erroneous charge.
 Changing the totals on credit card charges after the guest has left or imprinting
additional card charges and pocketing the cash difference.
 Incorrectly adding legitimate charges to create a higher-than-appropriate total,
with the intent of keeping the overcharge.
 Charging higher-than-authorized prices for products or services, recording the
proper price, and keeping the overcharge.
GMs should monitor the quality of the cashier-related security programs designed by
the controller.
Methods of evaluating cash control systems include:

 Cashier training programs
 Sales revenue recording systems
 Cash overage and shortage monitoring systems
118
 Disciplinary actions for noncompliance with approved procedures
Accounts Receivable
Guests or groups seeking credit would complete a Direct Bill Application. Refer to figure
6.3 of text
A Direct Bill is an arrangement that allows a guest to purchase hotel services and
products on credit terms.
When a hotel extends credit to guests, the dollar amount of outstanding charges owed
to the hotel by these guests is called the hotel’s accounts receivable.
Accounts Receivable (AR) is money owed to the hotel because of sales made on credit.
The controller’s job is to establish:

1. Which guests will be allowed to purchase goods and services on credit
2. How promptly, and frequently, those guests will receive copies of their bills
3. The total amount owed to the hotel and the length of time the money have been
owed
The creditworthiness of guests is a common debate issue between the marketing and
sales area and the controller’s office.
The controller’s office tends to take a conservative position, while the marketing and
sales office demands that the controller extend credit.
A controller and a GM establish credit policies to maximize the number of guests doing
business with hotel yet minimize the hotel’s risk of creating uncollectable accounts
receivable.
Figure 6.4 is an example of an accounts receivable aging report summary.
Accounts Payable
Suppliers and service companies provide goods and services on a credit basis, then
these vendors bill the hotel according to credit terms previously established.
119
Accounts Payable (AP) is the sum total of all current invoices owed by the hotel to its
vendors for credit purchases made by the hotel.
Four major concerns in AP systems are:

 Payment of proper amounts
 Payments made in a timely manner
 Payment records properly maintained
 Payment totals assigned to appropriate departments
Payment of proper amounts:

 Payment made to vendors only for goods/services actually received
 Payment withheld if services have not been performed/completed
 Before AP invoice is paid, check terms of sale, product prices quoted by vendor,
and list of products received against actual vendor’s invoices
Payments made in a timely manner:

 Maintain good relations with vendors by prompt payment of invoices
 Take advantage of discounts offered by vendors for prompt payment
Payment records properly maintained:

 Controllers must create and maintain a system where total payments made to
vendors match vendor billings exactly
Payment totals assigned to appropriate departments:

 Implement a coding system
o Coding is the process of assigning incurred costs to predetermined cost
centers or departmental expense categories.
Daily Operating Statistics

An accurate recap of the prior day’s rooms, Food and Beverage, and other departmental
revenues is often referred to as the Manager’s Daily Sales Report, or more simply, the
“Daily.”
This is usually prepared from data supplied by the PMS
Property Management System (PMS) refers to the computerized system used by the
hotel to manage its:
 rooms revenue
 room rates
 room assignments
 room reservations
 other selected guest service functions
120
Information contained in the Manager’s Daily typically includes:
For Rooms:
 Number of rooms available for sale
 Number of rooms sold
 Occupancy rate
 Average Daily Rate (ADR)
 RevPAR
 Other rooms revenue information desired by the GM
For Food and Beverage:
 Restaurant sales
 Bar/lounge sales
 Meeting rooms rentals
 Banquet or catering sales
 Other F&B revenue information desired by the GM
For Other Income:
 Telecommunications revenue
 Guest laundry
 In-room movie rentals
 No-show billings
 Other revenue-related information desired by the GM
Detailed Room Revenue Statistics

Documentation and verification of night auditor’s report is an important function of the
controller’s office.
The night audit report provides a wealth of information on room sales and related
transactions.
A Night Auditor is the individual who performs the daily review and summary of guest
transactions recorded at the front desk.
The night audit report is used by the controller to verify:

 Guests’ payment card charges
 The amount of cash on hand
 Revenue sales totals
 Detailed room revenue statistics
 Allowances and adjustments
Allowances and Adjustments are the reductions in sales revenue credited to guests
because of errors made when recording sales or to appease a guest for property
shortcomings.
121
Detailed room revenue report includes:
 Rooms available
 Total rooms occupied
 Rooms occupied by guest type
 Occupancy percent
 Total ADR
 ADR by guest type
 Total RevPar
Transient are guests that are neither part of a group booking or tour group.
Transient guests can be further subdivided by traveler demographic to gain more

detailed information about the type of guest staying in the property.
Financial Statements
The controller’s office is also responsible for preparing the financial documents that
summarize a hotel’s financial performance.
Key financial documents:

 Income statement
 Balance sheet
 Statement of cash flows
Balance Sheet
Balance sheets illustrate the value of a business.
Often described as a “snapshot” of the financial health
Balance sheet formula:
Balance Sheet is a report detailing the assets, liabilities, and owners’ equity of a
business.
Assets are the amount of cash and property owned by a business.
Liabilities are the amount a business owes to others.
122
Owners’ Equity is the amount remaining after liabilities have been subtracted from
assets.
Assets lists the value of the hotel’s property and equipment (fixed assets), less any
accumulated depreciation or amortization
 Depreciation is the process used to lower the value of a tangible asset during a
specific accounting period because it is assumed to have been “used up” during
that period.
 Amortization is the process used to lower the value of an intangible asset.
Liabilities includes current and long-term liabilities

 Current liabilities are debts paid within one year
 Long-term liabilities are debts typically paid longer than the next 12 months
Retained earnings are the accumulated amount of profits earned over the life of the
hotel which has not been distributed to its owners.
This is the final entry on the owners’ equity section of the balance sheet.
The balance sheet does not take into account the value of the staff operating the hotel
(because they are not “owned” by the hotel).
Income Statement
A financial report that records hotel revenues, expenses, and net income for a specific
time period.
 The income statement is also known as the “Statement of Income” or the “Profit
and Loss Statement” (P&L).
 In no case should this period exceed middle of next reporting period
123
Figure 6.10 Sample Hotel Statement of Income
Statement of Income January 20xx
Revenue
Rooms $1,200,000
Food and Beverage 840,000
Other Operational Departments 51,000
Miscellaneous Revenue 91,500
Total Revenue 2,182,500
Expenses
Rooms 247,200
Food and Beverage 456,750
Other Operational Departments 25,600
Administrative and General 113,100
Information and Telecommunication Systems 29,700
Sales and Marketing 148,600
Property Operations and Maintenance 99,750
Utilities 89,250
Management Fees 300,000
Nonoperating expenses 22,000
Interest Expense 85,000
Depreciation and Amortization 108,250
Loss or (Gain) on the Disposition of Assets 500
Total Expenses 1,725,700
Income Before Income Taxes 456,800
Income Taxes
Current 98,525
Deferred 15,400
Total Income Taxes 113,925
Net Income 342,875
124
Statement of Cash Flows (SCF)
A report detailing the impact on cash holdings of a business’s operating, investing, and
financing activities.
The SCF can answer the following:

 How much cash was provided by the hotel’s operation during the accounting
period?
 What was the hotel’s level of capital expenditure for the period?
 How much long-term debt did the hotel commit to during the period?
 Will cash be sufficient for the next few weeks or will short-term financing be
required?
 At what time(s) of the year does the business generate (or spend) the most
cash?
It is critical that a hotel is not only profitable, but also that it maintains solvency, or the
ability of a hotel to pay its debts as they come due.
A SCF shows the effects on cash from:

Operating activities
All business transactions and sales activities
Investing activities
Purchasing assets to increase future financial returns or income
Financing activities
Knowing the hotel’s cash holdings
Figure 6.11 Simplified Statement of Cash Flows Example

January 20xx Statement of Cash Flows
Cash Provided (Inflow) or Used (Outflow) By:
Cash Flows from Operating Activities $ 50,000
Cash Flows from Investing Activities $ 100,000
Cash Flows from Financing Activities $ (25,000)
Increase/Decrease in Cash and Temporary Cash Investments $ 125,000
Cash and Temporary Cash Investments Beginning of Period $ 250,000
Cash and Temporary Cash Investments End of Period $ 375,000
Supplemental Information Related to Noncash Investing and Financial Activities (Disclose
Significant Items Separately)
125
Audits
An auditor is the individual conducting independent verification of financial records.
An auditor does not examine every financial record produced by the controller’s office.
The auditor inspects a sample of records from a variety of areas to determine whether
consistent bookkeeping practices and standard accounting procedures are used.
Internal Audit
A verification of financial records performed by members of the organization that is
operating the hotel
Cost-effective in multiunit hotels
External Audit
An independent verification of a hotel’s financial records performed by those who are
not directly employed by the organization operating a hotel.
126

1. The proper management of a hotel’s accounts payable (AP) system is essential to safeguard
a hotel’s cash assets. In this example an invoice was paid for supplies that were not
delivered to the hotel. In a similar manner, instances where services were paid for, but not
received, would indicate problems in the AP system. Double payment of invoices is another
example of a potential problem area within an AP system. Any incident of cases such as
these is clues that a hotel’s AP system is in need of review.
2. A complete review of a hotel’s AP system must begin by involving those individuals who
initiate purchases of goods or services. Additional individuals who should be involved in the
review process of AP would include those actually who sign for services, or sign for
delivered products and supplies. As the chapter indicates, those individuals who approved
invoices for payment must be involved in any review of the AP process. Finally, those
individuals actually responsible for paying invoices must be involved. It is only through the
combined efforts of each of these groups that an effective AP system can be put into place.
3. If a hotel’s AP system is not effective the likely result is payment for goods and services not
actually received, double payment of legitimate invoices, or both.

1. In this scenario the manager has the advantage of having operated in the years previous to
the expansion. As a result, the manager will have historical data related to occupancy and
average daily rate in the market area in which the hotel operates. The manager would likely
begin processing a budget on a monthly basis, with the ultimate intention of adding the 12
monthly revenue and expense forecasts together to generate the first post-expansion year’s
operational budget.
2. Historical data related to business volume peaks and valleys, and especially periods in which
the hotel was previously sold out, will be especially helpful to this manager as a new budget
is prepared. In addition, the hotel’s sales and marketing department is likely to be able to
supply detailed information regarding advance bookings that will affect the use of the
additional hotel rooms and meeting space.
3. Additional capacity means the hotel will be able to take advantage of that capacity during
periods of high demand in the market area. As a result, knowledge about when large
groups, or large numbers of transient travelers, are in the area will be especially helpful for
this manager. In addition any knowledge related to the construction of new hotels in the
area, or the closing of any competitive hotels, will be especially useful as the post-expansion
year budget is prepared.
127
Your Opinion Counts

1. This question asked students to describe the strengths and weaknesses of ADR, occupancy
percentage, and RevPAR, three of the most important metrics used to assess the
performance of a hotel. Student answers will vary, however instructors can illustrate the
issue addressed in this question via the use of the following scenario: Assume the
Allentown hotel has recorded an occupancy rate of 70 percent and an ADR of $160 in June,
while its competitor located across town has yielded an occupancy rate of 50 percent and
an ADR of $170 during the same period. Which hotel has outperformed the other? If one
only considers occupancy rate, the Allentown hotel appears to outperform its
competitor. For ADR, the Allentown hotel appears to be underperforming, compared to its
competitor. Using each of these measures separately gives conflicting information. More
specifically, occupancy rate can be a measure to indicate how well the hotel's marketing
efforts work, but it does not indicate room rate. The ADR figure reflects the hotel's ability
to sell rooms at a competitive rate, but it does not indicate the number of rooms the
hotel sold. It is also important to note that room sales at very low ADRs may not be
profitable. It is for this reason that RevPAR is considered by most hotel managers to be
a superior performance metric. Based on this example, the Allentown hotel’s RevPAR is:
0.70 occupancy x $160 ADR = $112 RevPAR
Competitive hotel’s RevPAR would be calculated as
0.60 occupancy x $170 ADR = $102 RevPAR
Thus, in this example, the Allentown hotel has outperformed its competitor.
Part two of the question asks: "Would you, as a GM, use RevPAR as your exclusive measure
of effectiveness?" The answer can be either yes or no. Clearly the use of RevPAR compared
to the occupancy rate, or the ADR separately, yields certain advantages. However, use of
RevPAR also has limitations in evaluating the management team's performance because
RevPAR does not adjust for either current market conditions or for operational profitability.
128
2. The income statement, the balance sheet, and the statement of cash flow are three major
financial statements that show the status of a hotel’s financial performance and worth. As
the text notes, the income statement details the results of the operation, namely, financial
performance, for a period of time, whereas the balance sheet shows a picture of the
financial position of a business at a particular time. The statement of cash flows shows the
cash inflows and outflows in the hotel’s operating, investing, and financing activities. Each
of these financial statements has unique values as well as some limitations.
Because the income statement records total hotel revenues and expenses for a specific
time period (typically a month, fiscal quarter or year), the income statement reflects the
profitability of the hotel during that period. Questions that can be answered from the
income statement include:
1) How did the hotel perform during this period?
2) How did the hotel perform compared with budget?
3) Where did significant variation from budget occur?
4) How did the hotel perform compared with the same period last year?
5) Where were significant changes from last year evident?
In addition, it is possible for each operating department within a hotel to create its own
income statement. Thus the general manager can utilize these departmental income
statements to measure and evaluate the effectiveness of income-producing departments
and their leaders and staff.
The balance sheet provides a point-in-time summary of the overall financial position of a
hotel by showing the hotel's ability to pay debts on time (solvency). The balance sheet is
often described as a "snapshot" of the financial health of a hotel. It is important, however,
to understand the limitations of the balance sheet.
First, the balance sheet does not show the profitability of the hotel during any given period,
but rather reflects the overall financial condition of a hotel at one moment in time. In
addition, the value of a hotel’s human resources, one of the most important assets in the
hospitality industry, is not reflected on the balance sheet. Many managers would agree that
the "worth" of departments, or an entire hotel, is highly influenced by well-trained,
experienced, and skillful staff members (including the general manager), yet the balance
sheet does not incorporate this important human asset because, unlike physical assets, staff
members are not owned by the hotel’s owners. Lastly, some values entered on the balance
sheet (such as asset depreciation) are calculated based on somewhat subjective judgment
(various methods are available), so the actual values of some physical assets may not be
completely accurate.
129
The statement of cash flows shows the effects on cash of the hotel's operating (cash
transaction relative to revenues and expenses), investing and financing activities for a
specific accounting period. As a result, the statement of cash flows can answer important
questions that cannot be answered by the income statement or balance sheet. These
questions can include:
1) How much cash was provided by the hotel’s operation during the accounting
period?
2) What was the hotel's level of capital expenditure for the period?
3) How much long-term debt did the hotel commit to during the period?
4) Will cash be sufficient for the immediate operating period or will short-term
financing be required?
Effective general managers recognize both the value and limitations of each of these three
important financial statements.
3. This question addresses the difficulty involved in establishing credit policies for new clients.
As the chapter indicates, it is sometimes the case that conflicts are generated between the
sales and marketing department in the controller’s office on this issue. This is so because
the sales and marketing department is most likely to ask the controller to extend credit (to
ensure a sale is made) while the controller often tends to take a more conservative
approach. An effective controller must work together with the general manager to establish
credit policies that optimize business (sales) while at the same time will minimize the hotel’s
potential risk of accumulating uncollectible debt.
This question asks students to list five factors they believe would be important to determine
offering credit terms to new clients. Student answers will vary but they may include the
length of time a company being considered for credit has been in business. This is an
important factor because it relates to the stability of the potential client. A second factor
relates to whether a potential client is a governmental agency (local, state, or federal)
versus a private company. In nearly all cases there is less risk in collecting money from a
government agency than there is in collecting debts from a private sector company.
A third factor relates to potential clients history of paying bills, in a timely manner, to others
who have extended credit to the client. A fourth approach involves the use of an
independent rating system such as “Moodys”, or other entities that evaluate the credit
worthiness of companies and associations.
A fifth consideration that can be important is the actual location of the potential client. That
is, where is the company headquartered? In many cases, a hotel general manager will be
more comfortable extending credit to companies located in the near vicinity than they are
to companies located far away from the hotel. This is an especially important consideration
when a hotel contemplates extending credit to companies headquartered in other states or
countries.
130
4. Technology advancement has improved the efficiency of many departments in hotels.
Certainly, the controller's office (especially in large full-service properties) has greatly
benefited by such technological developments. This question asks what specific steps the
general manager should take to ensure his or her controller stays abreast of advances this
important area. Student answers will vary, but may include:
1) Participating in trade association meetings
2) Enrolling in continuing education programs at local community colleges
3) Reading the trade press with a focus on technological trends and on new
equipment and systems that affect the controller’s areas of responsibility
4) Attending technology-related trade shows, visiting booths, and talking with
technology-focused vendors
5) Discussing with controllers at other hotels the current and updated systems they
are employing.
When a hotel is affiliated with a brand, it may be possible for the controller to receive on-
site training support related to advanced technology systems. Most importantly, the
general manager should to devise an effective system to evaluate his or her controller’s
efforts on a regular basis.
5. One of the most important functions of the controller’s office is the development and
maintenance of an effective internal control system. In the hospitality business the internal
threat of employee theft or fraud is often greater than the potential for robbery by non-
employees.
As a result, a key characteristic of internal control is regular confirmation of staff honesty

and effectiveness. This is typically achieved via an audit; the independent verification of
financial records. Audits should be performed regularly to determine whether the controller
has practiced consistent bookkeeping and accounting procedures.
The auditor's role is to report his or her professional opinion fairly and accurately and to
directly address any deficiency found during the audit. This question asks what specific
criteria might be used to evaluate the controller's office if an independent audit reveals
multiple mistakes. Those lapses may be intentional fraud by employees, or they may be
simple mistakes resulting from a lack of training, skill, or knowledge.
To properly evaluate controllers general managers must first consider the experience of the
controller. New personnel, who might not understand procedures fully, are more prone to
error, than would be personnel who have more experience. In addition, the general
manager should carefully monitor where errors are occurring.
131
If a significant number of errors are related to new procures or newly acquired equipment
and systems, the general manager must ensure that his or her property’s controllers under
the proper training. However, if the errors that are detected relate to personal expenses
that provide direct benefit to controllers or others within the hotel, there is an increased
possibility of intentional fraud. The chapter emphasizes that frequent and in-depth auditing
of hotel records is vital because of the need to establish and maintain a sound system of
internal control. If employees know that the general manager and the controller are to
committed to continuing detailed monitoring of bookkeeping and accounting systems,
those employees are less likely to try to take advantage of weaknesses in accounting
systems that may allow them illegal access to hotel assets.
132
1. What is the formula used to calculate business profits?

a. Revenue (+) Expenses = Profits
b. Revenue (-) Expenses = Profits
c. Expenses (+) Revenue = Profits
d. Expenses (-) Revenue = Profits
Answer: b
Learning Objective: 6.1. Describe the purposes of GAAP and the USALI.
2. The bookkeeping and accounting tasks performed in a hotel’s front office are considered
a. property accounting.
b. back-office accounting.
c. front-office accounting.
d. managerial accounting.
Answer: c
3. What is the purpose of bookkeeping?

a. Record financial transactions
b. Analyze financial transactions
c. Record monthly financial statements
d. Analyze monthly financial statements
Answer: a
133
4. What is the name of the accounting procedures suggested for use in the hotel industry?
a. USR
b. USL
c. USAR
d. USALI
Answer: d
5. What is the purpose of GAAP?

a. Increase profits
b. Reduce expenses
c. Ensure uniformity
d. Provide flexibility
Answer: c
6. Which activity is a bookkeeping activity?

a. Calculate month-to-date ADR
b. Record the sale of a guest room
c. Assemble monthly P&L statements
d. Assess hotel cash flow from investing activities
Answer: b
7. What is the fundamental purpose of the Sarbanes-Oxley Act?

a. Reward innovation in accounting
b. Standardize accounting procedures
c. Standardize bookkeeping procedures
d. Penalize fraudulent accounting practices
Answer: d
134
8. What is the primary purpose of a hotel controller?
a. Serve as the chairperson of the EOC
b. Advise the GM on pricing decisions
c. Manage the hotel’s payroll and benefits costs
d. Oversee bookkeeping and accounting functions
Answer: d
Learning Objective: 6.2. Explain the difference between centralized and decentralized accounting
systems.
9. Who would most often decide if a hotel used a centralized or a decentralized accounting system?
a. Hotel GM
b. Hotel owner
c. Hotel controller
d. Hotel brand managers
Answer: b
systems.
10. Which property would most likely use a decentralized accounting system?
a. A single hotel owned and operated by a single individual
b. A hotel owned and operated by a single individual who owns 20 hotels
c. A hotel owned and operated by a real estate company that owns and operates 20 hotels
d. A hotel owned and operated by a franchise company that owns and operates 20 of its own
hotels
Answer: a
systems.
135
11. In a large hotel property utilizing a decentralized accounting system the hotel’s controller is likely to
be a
a. CHA
b. CPA
c. CFBE
d. USAL
Answer: b
systems.
12. In which type of accounting system would a hotel’s data be combined with data from other hotels
prior to its analysis?
a. Centralized
b. Decentralized
c. GAAP system
d. USALI system
Answer: a
systems.
13. Who would be the best person to conduct an audit of a hotel’s financial procedures?
a. The hotel’s GM
b. The hotel’s controller
c. An independent and qualified CHA
d. An independent and qualified CPA
Answer: d
systems.
136
14. Which financial tool would help a GM determine the best time to temporarily close a large number
of guest rooms for renovation?
a. Audit
b. Budget
c. Revenue forecast
d. Statement of cash flows
Answer: c
Learning Objective: 6.3. Identify five major accounting-related tasks for which GMs and their
controllers are responsible.
15. Which financial tool is an estimate of a hotel’s future revenue and expense?
a. P&L
b. Budget
c. Balance sheet
d. Income statement
Answer: b
16. What is the purpose of coding hotel expenses?

a. Reduce per guest operating costs
b. Assign costs to specific hotel areas
c. Increase the speed of invoice payment
d. Decrease the speed of invoice payment
Answer: b
137
17. What is the formula accountants use to create a Balance sheet?
a. Assets = Liabilities - Owners’ equity
b. Assets = Liabilities + Owners’ equity
c. Assets = Liabilities ÷ Owners’ equity
d. Assets = Liabilities x Owners’ equity
Answer: b
18. Which type of budget would be best used for scheduling needed capital expenditures?
a. Weekly
b. Monthly
c. Annual
d. Long range
Answer: d
19. A hotel’s AR balance increases when

a. products and services are sold to customers on credit.
b. invoices for products purchased by the hotel are paid.
c. legitimate invoices have been received by a hotel for payment.
d. customers who have been sold products and service on credit pay their bills.
Answer: a
138
20. A hotel’s AP balance increases when
a. products and services are sold to customers on credit.
b. invoices for products purchased by the hotel are paid.
c. legitimate invoices have been received by a hotel for payment.
d. customers who have been sold products and service on credit pay their bills.
Answer: c
21. Which document reports the financial performance of a hotel for the specific time period addressed
by the document?
a. Balance sheet
b. Income statement
c. Long range budget
Answer: b
22. Which document reports the financial condition of a hotel at a single point in time?
a. Balance sheet
b. Income statement
c. Long-range budget
Answer: a
139
23. On June 1st. a hotel’s balance sheet shows assets of $6,400,000 and owners’ equity of $2,000,000.
What is the amount of the hotel’s liabilities?
a. $2,400,000
b. $4,400,000
c. $6,400,000
d. $8,400,000
Answer: b
24. An accounts aging report allows a GM to better manage a hotel’s

a. AP.
b. AR.
c. ADR.
d. RevPAR.
Answer: b
25. Which management activity is NOT reported on a hotel’s Statement of cash flows?
a. Investing
b. Financing
c. Operating
d. Forecasting
Answer: d
140
Chapter 7 – Revenue Management
CHAPTER 7 OUTLINE
The Role of the Revenue Manager Measures of Effectiveness

Revenue Management Occupancy Index
Room-Rate Management ADR Index
Revenue Manager and FOM RevPAR Index
Revenue Manager and DOSM Distribution Channel Management
Revenue Manager, FOM, and Traditional Distribution Channels
DOSM Current Distribution Channels
Room-Rate Economics Walk-Ins
Traditional Pricing Strategies Telephone/Smart Phone
Web-Influenced Pricing strategies Apps
Revenue Management Essentials E-Mail/Traditional Mail
Forecasting Global Distribution System
Occupancy Management Central Reservation System
ADR Management Specialized Web-Based Distribution
RevPAR Management Channels
Yield Management Maintain Rate Integrity
Philosophy Property Website
Yield Management Chain Website
Implementation Third-Party Websites
Chapter Overview
This chapter helps students understand how a hotel’s general manager, its revenue managers,
and others work together to forecast guest room demand and thus establish appropriate guest
room pricing strategies. The chapter introduces the concept of revenue per available room
(RevPAR); one important metric used to determine the success of a hotel’s revenue
management team in optimizing room revenue.
Chapter Objectives
1. Explain the procedures revenue managers use to establish the selling prices of hotel guest
rooms.
2. Summarize the manner in which revenue managers seek to optimize a hotel’s ADR and its
occupancy percentage.
3. Describe the major distribution channels used by revenue managers in the hospitality
industry.
141
Lecture Outline
THE ROLE OF THE REVENUE MANAGER
A hotel’s revenue manager is responsible for optimizing rooms’ revenue through
effective guest room pricing and inventory management.
Rooms Inventory is all of the guest rooms available to be sold by a hotel.
Maximizing room revenue is every employee’s job

 Housekeeping ensures clean hotel rooms
 Restaurant servers encourage dining guests to return
 Front desk and bell staff entice repeat guests by offering great and timely service
 Maintenance staff ensures the property is functioning properly
Revenue Management
Room-rate management and revenue management are not synonymous
GM,FOMS, and DOSM may establish room rates, while RMs manage and
maximize revenue resulting from those rooms rates
RMs forecast future room sales and provide negotiated rates to certain groups (e.g.
government workers, military, and AAA)
A negotiated Rate is a special room rate offered for a fixed period of time to a specific
hotel client.
A negotiated rate agreement may be established for these groups detailing specific
contractual obligations of a negotiated rate. Typical agreement terms include:
 Start date
 Negotiated room rate
 Agreement duration
 Blackout dates - Any day on which the hotel will not honor a negotiated rate
An important factor in revenue management is the length of stay (LOS) or the number
of nights a hotel’s individual guests use their rooms.
For example, in a hotel with 300 nights sold to 100 guests, LOS would be computed as:
142
As LOS increases:
• Housekeeping costs decrease because cleaning a stay-over room (i.e. a room
occupied by a guest that is not checking out that day) is typically lower than
cleaning a check-out room.
 Front desk’s labor is reduced (i.e. recording information for a guest staying for
three nights vs. three separate guests each staying for one night)
Room-Rate Management
Important factors for guests selecting a hotel include location and room rate
Guests seek a hotel’s rate-related information from

• Central reservation system (CRS)
o An entity operated by a franchisor that offers potential guests the
opportunity to make reservations at its affiliated (branded) hotels.
• Property-level reservation agents
• Sales and marketing departments
• Other distribution channels (any source of reservation delivered to the hotel)
• Websites
Figure 7.1 displays the intermingled room rate-management tasks
Revenue Manager and FOM

Rates should be identical or internally consistent regardless of the source (i.e. websites,
search engines, direct call to the hotel, and CRS)
143
Revenue Manager and DOSM
RMs and DOSMs work together to make decisions, coordinate their efforts, and adjust
rate strategies.
RMs provide input to DOSMs regarding the number of rooms to be sold to group sales
versus transient travelers.
Revenue Manager, FOM, and DOSM

Coordination activities and updates assist all members of the RM team to adhere to a
cohesive rate management strategy.
Room-Rate Economics
Room-rate economics refers to the processes by which revenue managers price rooms
while considering how consumers may react to pricing strategies used.
Factors such as supply and demand impact the allocation of scarce resources.
Law of demand is the concept of economics that recognizes, when supply is held
constant, an increase in demand results in an increase in selling price.
Conversely, with supply held constant, a decrease in demand leads to a
decreased selling price.
Law of Supply is the concept of economics that recognizes that, when demand is held
constant, an increase in supply leads to a decreased selling price.
Conversely, with demand held constant, a decrease in supply leads to an
increased selling price.
A rate type is a single rate for a specific type of room sold during a specific time period.
Special Event Rate reflects a change in price (usually much higher than rack rate)
based upon a specific event such as a concert, sporting event, or holiday.
Concierge Level is a section of a hotel (usually with restricted access) reserved for
special guests paying higher room rates and receiving special amenities
A seasonal rate is a rate established by an increase (or decrease) in rack rate

based upon the dates when the room is rented. (i.e., a beach-front hotel may
have a higher seasonal rate offered in the summer with a lower winter rate
offered in the off season)
Corporate Rate is a special rate offered to individual business travelers
Government Rate is a special rate offered to the employees of local, state, or

federal governments
144
Group Rate is a special rate offered to a hotel’s large volume guest room
purchasers
Package Rate is a special rate that allows a guest to pay one price for all of the
features and amenities included in the package. Some features include various
plans such as:
American Plan is a special rate that includes specifically identified guest
meals (typically breakfast, lunch, and dinner).
Modified American Plan is a special rate that includes a specifically

identified guest meal (usually one meal per day, oftentimes breakfast).
All-Inclusive Plan is a special rate that typically includes all guest meals
and unlimited beverages, as well as the use of other specifically identified
hotel amenities and services.
European Plan is a room rate that does not include guest meals.
Day Rate is a special rate that typically includes 8–12 hours (but not overnight)
use of a guest room.
Half-Day Rate is a special rate that typically includes 1–4 hours (but not
overnight) use of a room.
Fade Rate is a reduced rate authorized for use when a guest seeking a
reservation exhibits price (rate) resistance. Sometimes called a flex rate.
Traditional Pricing Strategies

Historically, the Hubbart room rate formula was used for determining what a hotel’s
ADR should be to reach the hotel owner’s financial goals using specific financial and
operational assumptions:
 Dollar amounts for property construction (or purchase)
 Total cost of operations
 Number of rooms to be sold
 Owner’s desired investment return on the hotel’s land, building, and FF&E
145
Pricing formula alternatives to the Hubbart rate include:
 $1.00 per $1,000 rule
 Every $1,000 invested should support $1.00 in ADR
 Closely tied to occupancy level
 Use a 70% occupancy assumption
Example:
$1.00 per $1,000 rule with Occupancy Variance
146
Cost Per Key or cost per room is the average purchase price of a hotel’s guest room
expressed in thousands of dollars
Bottom-Up Selling is a tactic to first sell a hotel’s least expensive rooms.
Top-Down Selling is a tactic to first sell a hotel’s most expensive rooms.
Web-Influenced Pricing strategies

Nontraditional methods to establish rates:
 Competitive Pricing: Charge what the competition charges.
 Follow-the-Leader Pricing: Charge what the dominant hotel in the area charges.
 Prestige Pricing: Charge the highest rate in the area and justify it with better
product and/or service levels.
 Discount Pricing: Reduce rates below that of likely competitors with minimal
consideration of a hotel’s operating costs.
The reasons for the change in rate-setting standards occurred because:

 The consumer’s use of web-based booking channels
 The competition’s knowledge of a hotel’s pricing strategy
RMs use the Internet to:

 Select and monitor competitive hotels’ rates
 Obtain real-time room rates offered by these hotels on any number of travel
websites advertising the rates
 Search rates and sites of competitive properties as frequently as desired
 Perform rate comparisons by specific check-in and check-out dates
 Make rate comparisons based on a guest’s desired LOS
 Assess rate comparisons based on room type
147
 Analyze rate comparisons based upon tracking codes (codes created for a
specific traveler demographic)
 Group and print the data obtained from competitive hotel properties, specific
travel website(s), arrival dates, and other factors important to the revenue
manager
REVENUE MANAGEMENT ESSENTIALS

 Estimating demand
 Maximizing the income yield of the hotel
 Measuring the effectiveness of the revenue management process
Forecasting
When the future level of sales volume is known, the proper number of staff and the
supplies those staff need to do their jobs can best be predicted.
Forecasts should include:

 Rooms available to sell
 Estimated rooms to be sold
 The estimated occupancy rate
 The estimated ADR
 The RevPAR estimate
Full-service hotels’ revenue forecasts can include income from:

 Room service
 Banquets
 Meeting room rentals
 Meeting room food and beverage revenue
 Audio and visual equipment rentals
 Service charges
 Internet access charges
 Pay-per-view movies and games
 Parking charges
 Gift shop sales
 Telephone tolls (local and long distance calling charges)
 Guest laundry
 Golf or other recreational fees
 Health club and spa usage fees
148
Occupancy Management
RMs use room types and tracking codes to manage their hotels’ occupancies and
resulting ADRs.
For example, if Saturday’s demand for rooms is very strong, but weaker on Friday and
on Sunday, to drive (increase) occupancy, Saturday may be identified as having a
minimum length of stay (MLOS) or as a day that is closed to arrival (CTA).
A Minimum Length of Stay (MLOS) requires guests who seek a room to stay for a
designated minimum number of nights
A Closed to Arrival (CTA) means a hotel will decline reservations for guests attempting to
arrive on this specific date
Overbooking (oversold) is when the hotel has more guest room reservations than it has
rooms available to lodge those guests. Overbooking is often undertaken to help ensure
a hotel room sellout on overbooked days.
Walk(ed) is a situation in which a guest with a reservation is relocated from the reserved
hotel to another hotel because no room was available at the reserved hotel.
ADR Management
The ADR management goal of all RMs is to achieve an ADR as close as or higher than the
hotel’s rack (non-discounted) rate
Reducing room rates is a strategy that should be employed only in the most
extraordinary of times
149
When aggregate demand for rooms is slight, the reduction of room rates by a single
hotel in a market is unlikely to significantly increase that aggregate demand
RevPAR Management
Yield Management is a demand forecasting systems designed to maximize revenue by
holding rates high during times of high room demand and by discounting room rates
during times of lower guest room demand.
Yield Management Philosophy

The interaction between consumer (buyer) and business (seller) is affected by varying
levels of demand and supply
The airline industries were pioneers in actively managing its revenue by varying pricing
in response to changes in consumer demand. They did so by varying:
 Service levels (e.g. First class, business class, or coach)
 Time of ticket purchase (e.g. 21-day advance and same-day purchase)
 Number of tickets purchased (e.g. Wholesaler, travel agent, or leisure traveler
Industries (e.g. airlines, hotels, and others) using yield management share the common
characteristic of the daily perishability of inventory
If improperly managed, it can generate the negative consumer reactions
(example: the pricing of gasoline)
Yield Management Implementation

Yield management implementation can be viewed as the application of specific tactics
that predict (forecast) consumer behavior and effectively price highly perishable
products to optimize revenue.
Revenue managers should be implementing yield management techniques when:

• demand for their rooms varies by
 day of week
 time of month
 season
 special events
• The rooms demand variance is predictable
• They turn away customers willing to pay a higher price because the room was
previously sold to another guest at a lower price
• Their guests are value conscious (due to convenience, status, or another
motivating factor)
• They have clearly discernable differences in service or product levels that can
easily be explained to guests.
• Their property is committed to properly training staff prior to the
implementation of yield management strategies
• They seek to optimize RevPAR
150
Yield management techniques are employed to:
• Accurately forecast demand
• Minimize rate discounts in high-demand periods
• Use MLOS and CTO to maximize revenue in high-demand periods.
• Increase discounts during low-demand periods.
• Implement special event rates during periods of extremely heavy demand.
Measures of Effectiveness
RMs evaluate the effectiveness of their occupancy and ADR management decisions.
They do so by evaluating:
o Occupancy rate (percentage)
o ADR
o RevPAR
o GOPAR (gross operating profit per available room):
The formula for GOPPAR is:
Total Operating Revenue – (Total Departmental Expenses + Total Undistributed Expense)

Total Rooms Available To Be Sold
Occupancy Index
Competitive Set refers to a group of competing hotels against which an individual hotel’s
operating performance is compared.
Occupancy Index is the industry’s standard for evaluating the management of occupancy
rates. This ratio measure is computed as:
Occupancy Index Evaluation

Occupancy Index Assessment/ Recommended Action
Far Below 100% Management is ineffective. ADR excessive for the market.
Reduce rack rate.
Below 100% Management is less than effective. Evaluate
weekday/weekend ADR Index. Closely examine sales
efforts.
At (Near) 100% Management is effective. Consider eliminating discounts
for most popular room types during high-demand periods
151
to test the hotel’s ability to maintain index.
Above 100% Management is less effective. Immediately eliminate
discounts for most popular room types during high-demand
periods.
Far Above 100% Management is ineffective. ADR is too low. Increase rack
rates on all room types at all times.
ADR Index
ADR index is the industry’s standard for measuring the effective management of room
rates. The formula for an ADR index is:
ADR Index Evaluation

ADR Index Assessment/ Recommended Action
Far Below 100% Management is ineffective. Evaluate appropriateness of
the competitive set. Evaluate rack rate structure;
increase rack rate.
Below 100% Management is less than effective. Evaluate
weekday/weekend ADR Index, increase rates for either
period if the index for that portion of the week exceeds
100%.
At (Near) 100% Management is effective. Monitor the competitive set’s
percent change in ADR (from prior month and prior
year) for evidence of competitor increases in room rates
and maintain rate parity.
Above 100% Management is less effective. Evaluate room rates in
conjunction with occupancy index. If occupancy index is
above 100%, increase rates. If occupancy index is below
100%, consider increasing discounts during slower
periods to maximize RevPar.
Far Above 100% Management is ineffective. Evaluate competitive set for
appropriate fit. ADR may be too high if occupancy index
is significantly below 100%.
152
RevPAR Index
When a hotel’s RevPAR is lower than its competitive set, contributing factors can
include:
• Inferior management of room cleanliness and facility maintenance
• Poor franchise (brand) name
• Poor exterior signage or facility access
• Poor room mix for the market
• Substandard property furnishings or décor
• Sales and marketing/advertising budget too small
• Sales and marketing staff too small
• Marketing staff ineffective
• Substandard guest amenities
• Substandard technological capabilities
RevPAR Index Evaluation

RevPar Index Assessment/ Recommended Action
Far Below 100% Management is ineffective. Evaluate room rates in
near or above 100%, increase rates. If ADR index is near or
above 100%, consider increasing discounts during slower
periods to maximize RevPar. If both indices are
substantially below 100%, reevaluate the competitive set.
Below 100% Management is less than effective. Evaluate room rates in
below 100%, reduce rates. If ADR index is below 100%,
consider raising rates or eliminating discounts during high-
demand periods.
At (Near) 100% Management is effective. Monitor occupancy and ADR
indices to maintain no more than a 10-point difference
between these two measures.
Above 100% Management may be effective. Evaluate room rates in
above 100%, increase rates. If ADR index is above 100%;
consider increasing discounts during slower periods to
further maximize RevPAR. If more than 10 percentage
153
points separate the two indices, take the corrective actions
required to improve the lower index.
Far Above 100% Management (or ownership) is less effective. Evaluate
competitive set for appropriateness of fit; increase rack
rates, aggressively seek to increase ADR during high-
demand periods; consider building additional room
capacity.
• Revenue Management Is a Daily Activity: As an RM you should monitor your and

your competitors’ room demand daily
• Occupancy and ADR Indices Should Be Close to the Same: These two indices should
be within a few percentage points of each other.
• It Is Necessary to Gamble At Times: Managers overbook on high-demand nights and
minimize costly walks
DISTRIBUTION CHANNEL MANAGEMENT

Distribution channels are sources of potential room reservations. (e.g. hotel’s
telephone, internet, websites, etc.)
Traditional Distribution Channels

• Telephone
• Physically arriving at the hotel
• Mail service
• Intermediaries (e.g. travel agents and travel wholesalers)
A travel wholesaler purchases a large numbers (blocks) of hotel rooms and then
sells the rooms to travel agents
154
FIGURE 7.10 display a simplified intermediate room sale process
By the end of the 1970s, the airlines created Global Distribution System or GDS.
This provided travel agents a way to electronically book airline flights for the first
time.
155
If a guest booked through a travel agent using the GDS, the hotel was typically required
to pay:
 A commission to the travel agent (usually 10%)
 A fee (set by the airlines) for the use of the GDS
 A reasonable amount to the hotel chain or brand’s centralized reservations
department to help offset the cost of developing the chain’s reservation
interface system
Current Distribution Channels

Walk-Ins
Evaluation of this channel include:

• Immediate welcome and friendly “acceptance” of potential walk-in guests
• Attractive and clean lobby area
• Special discounts off of rack rate for “last minute travelers”
• Upgraded room assignment from a standard to a higher-level room type to
increase perceived value and help ensure the room’s sale
• Use of a logical and defensible fade rate if rate resistance is encountered
Telephone/Smart Phone Apps

Some GMs employ a mystery shopper to evaluate telephone sales efforts
Hotels increasingly moved their reservation systems online as the adaption of the smart
phone increased mobile bookings
• Now account for 40% of all hotel room buyers
• These bookings are increasing at the rate of 20% per year
156
E-Mail/Traditional Mail
Bypasses fees associated with other reservation methods
Higher Net ADR Yield or the rate (ADR) actually received by a hotel after subtracting the
cost of the fees and assessments associated with a room sale.
Types of reservation generation fees:

• Travel agents
• GDS
• Hotel’s CRS
• Operators of Web-based booking sites
Global Distribution System

GDS began as a partnership between airlines and those travel agencies that sold their
plane tickets
Room reservations booked by a travel agency (using the GDS) must be interfaced
directly with a hotel’s PMS to provide real-time room inventory, rates, and availability
information
Maximizing GDS effectiveness:

• Monitor the number of hotel reservations received from the GDS
• Ensure hotel’s information on the GDS is accurate and up-to-date
• Ensure fees charged to the hotel for GDS usage are fully understood
• Establish a relationship with one or more travel agents who can evaluate on a
regular basis the accuracy of the hotel’s information on the GDS
Central Reservation System

CRS reservations may constitute 25% or more of a hotel’s total monthly room revenue
and consists of:
157
• Toll-free telephone call center
• Chain-operated website
• E-mail/traditional mail reservations division
• Group-sales division
To improve CRS effectiveness:

• Ensure accurate hotel information is supplied to the brand’s call center staff
• Conduct periodic mystery shopper calls to the call center
• Ensure accurate hotel information on the brand’s website
• Supply quality photos and describe the hotel’s features and amenities
• Follow up promptly on any CRS’s group business leads
Specialized Web-Based Distribution Channels

Travel is one of the most popular items sold on the Internet and well over 50% of all
hotel reservations are booked online
Net ADR yields can be 15–25% below other distribution channels
Incurs Internet usage (reservation generation) fees, GDS, and CRS fees
E-wholesalers promise better website placement in exchange for even greater room
discounts or fees
RMs must maintain rate integrity and regularly monitor their room sales results to
effectively manage a hotel’s Web presence
Maintain Rate Integrity

Rate integrity simply means making logical decisions regarding the prices listed on each
site advertising the hotel’s room rates
Monitor the results of the property website, chain website, and third-party website(s)
Property Website
Usually the highest net ADR yield channel
Content considerations of a property’s website:

 Written Content
o Should encourage visitors to book rooms
o Displays key information (hotel’s current brochures, sales letters,
promotional kits)
o nearby attractions, activities, and local areas of interest
 Visual and Audio Content
o Logos, graphics, digital photography, and all forms of streaming audio
and video
o Avoid long lead-ins and excessive delays caused by too much content
158
 Reservations Device
o The ability to book a room quickly and directly from a hotel’s website or a
franchisor’s CRS
o Real-time reservation availability
 Appropriate Links
o Increases your hotel’s Web presence
Chain Website
Typically, it is the highest revenue generating channel
A chain’s own website is a part of its CRS
Travelers are now booking large numbers of rooms on third-party websites (websites
other the a hotel or franchisor)
In respond to third-party operated websites, most franchisors have instituted lowest

rate guarantee programs as a means to drive travelers to the franchisor’s own website
The lowest rate guarantee is a program that assures travelers the lowest available rate
for a specific room type on a specific date will be found on the guarantor’s website.
Third-Party Websites
Third-party websites allow consumers to see easily the prices, names and addresses of
competing hotels located in the same geographic are
In addition to room discounts hotels’ provided to the third-party website, the additional
costs of travel agents, GDSs, and CRSs fees caused many hotels’ net ADR yields to be less
than 30% on rooms sold to third-party sites!
Third-party website do not own or operate hotels and possess no rooms to sell.
Merchant Business Model

A model used when hotels sell rooms to third-party site operators.
These sites allow consumers to enter requested location and arrival dates to see
a selection of hotels and rates available for immediate purchase.
Also referred to as the “Agency” model.
Opaque Model
A model that allows consumers to “bid” an amount they are willing to pay for a
room on a specific arrival date and the third party website operator matches that
bid with a hotel willing to sell a room(s) at that rate.
Current examples include Priceline.com and Hotwire.com.
159
1. For the month under review, is reasonably apparent that the hotel’s revenue
management team performed poorly. While the hotel’s occupancy index for the period
was strong (well above 100%), its ADR index was significantly below 100%. As a result,
the hotel’s RevPAR index was below 100%; which represents performance less
satisfactory than that of its competitors.
2. When a hotel’s occupancy index exceeds 100%, but its ADR index is significantly below
100%, it typically indicates that a hotel’s management team has not been aggressive
enough in driving rate. Driving rate, in this sense of the term, refers to the
establishment of aggressive rack room rates, and the decision to hold those rates
without discounting them. Failure to drive rate properly is typically the result of
underestimating the demand for guest rooms
While student answers to this question can vary, it is important for instructors to point
out that the results achieved for this time could be the result of effective management.
For example, if the sale to a large piece of group business was dependent upon offering
a low rate (low ADR) then the result could be high occupancy, reduced ADR, and
depressed RevPAR levels. This strategy might make sense if, for example, significant
food and beverage or meeting room rental income resulted from the sale to the large
group.
3. Errors in predicting occupancy levels accurately typically result from a lack of historical
information. In this example the managers should carefully monitor both their previous
fiscal year, and current periods, to better determine occupancy levels. In addition, the
management team should monitor local events carefully to determine the reasons why
occupancy levels are trending significantly higher than in the past. Possible causes
include the closure of a direct competitor, increased effectiveness by the local visitors
and convention bureau, or even weather-related factors.
160
1. In this very common scenario, a manager is faced with the question of whether to bid,
or not bid, on a specific piece of business. Airline crews represent a market segment
that some hotels find very profitable. Other hotels do not. The factors that the hotel’s
manager should consider prior to deciding if the airline contract would be a good one
for the hotel would include the cost of cleaning each room, the potential to sell the
room to another guest at a higher rate, and any advantages that accrue to the hotel of
consistently increasing its occupancy level by 20 rooms per night. Instructors should
point out to their students that accepting this piece of business would have the effect of
increasing the hotel’s occupancy by 5% per year (20 rooms / 400 rooms = 0.05). It would
also have the effect, however, of reducing the hotel’s room inventory by 20 rooms on
those nights when the hotel is traditionally sold out at higher rates.
2. The manager would likely instruct the property’s revenue managers to accept the piece
of business if the increased number of rooms sold (increased occupancy), achieved at
the reduced rate (decreased ADR), increases the hotel’s overall RevPAR in a significantly
positive way.
Depending upon skill level/ background of students in the classroom, instructors may
want to take this opportunity to introduce and discuss the concept of gross operating
profit per available room (GOPPAR) and the impact consideration of this key metric
would have on the manager’s decision.
3. It is important to point out to students that any increase in room sales has the impact of
increasing a hotel’s overall RevPAR. As a result, the manager of this hotel will see an
increase in RevPAR if this piece of business is acquired. This hotel manager would likely
ask the revenue management team to decline the bid, however, if the impact to the
hotel was a reduced level of RevPAR increase relative to other alternatives. Thus, the
revenue managers would be instructed not to bid on the piece of business if it is felt
that, in the future, better (i.e. more financially attractive), pieces of business will
become available and are attainable.
161
Your Opinion Counts
1. This question asked students to identify advantages that result when general
managers of smaller, and larger, properties have responsibility for revenue
management activities.
When GMs of smaller properties are completely responsible for their revenue
management activities, they can be assured that the proper amount of emphasis is
given to the most important areas. For example, in those properties where a very
significant amount of volume is derived from third-party online travel agent sites OTAs),
the management of pricing on those sites would be a high priority. Alternatively, for
those properties at which a significant amount of revenue is generated through group
sales, the management of bids and contracts might be of most importance. Similarly,
general managers who control the entire revenue management process can be assured
that changes and adjustments in pricing strategies are implemented immediately; thus
allowing the properties pricing structure to change quickly as forces in the marketplace
change.
In larger properties, those general managers whose staffs are primarily responsible for
revenue management decision-making are freed to attend to more property-wide policy
and planning-related activities. It is also true that the skill levels of those hospitality
professionals working full-time in the revenue management area can be extremely high.
In most cases a highly skilled revenue management specialist will be even more
knowledgeable about the best strategies to implement than will even the most well-
informed property general manager. This is not surprising and is to be expected. Just as
a talented food and beverage director would not be expected to produce a complex
sauce that is superior to that of a well-trained executive chef, general managers will
often find that the skill level of those hotel specialists who concentrate on only a specific
area of hotel management exceed the general managers own skill level.
162
2. This question asks students to consider the entire concept of yield management as an
effective operating strategy. It does so by asking the student to put himself, or herself,
in the role of affected guest.
While student answers this question will no doubt vary it is important for instructors to
point out that a wise general manager will instruct staff to carefully weigh the long-
term, and not merely the short-term, RevPAR impact of yield management. Most hotel
guests will understand that high demand periods may cause rate increases. Significant
price increases leveled on regular and frequently returning guests, however, are usually
not a good long-term strategy for a hotel.
In this instance the guest should likely be informed that the rates for the date requested
are indeed higher than normal due to strong demand, and then this guest’s rate should
be modified to a point below the rates currently offered to the hotel’s one-time only
guests. The short-term reduction in ADR achieved by the hotel in this case will be more
than offset by future increases in RevPAR. Alternatively, room upgrades, or added in-
room amenities may provide additional methods of demonstrating the hotel’s
appreciation to this and other returning guests.
3. One advantage of emphasizing a hotel’s occupancy maximization is that increased room

sales (especially in full-service hotels) will generally lead to increased revenue in other
departments such as food and beverage, or spas, as well as additional sales of in-room
amenities such as pay-per-view movies and purchases from in-room mini-bars. One
disadvantage of emphasizing occupancy maximization is that the cleaning of each guest
room carries with it fixed cleaning costs. Additionally, hotels that emphasize occupancy
over rate may find that normal wear and tear on room furnishings (because more rooms
are sold) increases and the costs associated with these increases may exceed the
additional available revenue achieved by selling rooms at very low rates.
An advantage of emphasizing ADR maximization is that the costs associated with

actually selling rooms, (e.g. guest room supplies, cleaning costs, reservations costs, and
the like) are minimized (because fewer rooms are likely to be sold). A disadvantage of
emphasizing ADR maximization can be that too few rooms may be sold to allow the
hotel to cover the costs that remain fixed regardless of the number of rooms sold. These
costs, such as manager’s salaries, rent, insurance, and the like, remain constant
regardless of ADR or occupancy levels. If general managers place too great an emphasis
on maximizing ADR, rather than overall occupancy levels, the hotel may not achieve the
minimum occupancy levels required to provide the revenue needed to pay for these
fixed costs.
163
4. Factors that are likely to be considered when increasing funding for Web-based
marketing efforts include the increasing popularity of this distribution channel. As
increasing numbers of guests and travel agents elect to book room reservations via the
Internet, or smart phone application, more emphasis may need to be placed on this
area. In addition, the cost of processing a reservation via these sources is most often
very low. Thus, increasing the funding designated for this distribution channel is can be
a very cost-efficient way to market rooms.
For those hotels that rely upon group room sales for a large portion of their business,
face-to-face selling remains a very effective method of securing new and repeat
business. Prospecting for new group business clients, devoting time for careful room
rate negotiation, custom needs assessment, and the ability to pay special attention to
detail frequently result in increased repeat sales. All of these are reasons why general
managers may elect to increase the funding levels of their group sales departments.
5. Student answers to this question will vary, but are likely to include such hotel
characteristics as location, price, hotel brand name, and amenities offered. Other
factors mentioned may include complimentary breakfasts, frequent guest programs,
and the availability of specific room types. The quality of the website itself often plays a
large role in a customer’s decision to book at a specific property.
If it is not mentioned as a significant factor, instructors should point out to students

that, increasingly, online reviews posted by past guests (user-generated content) are an
extremely important factor when guests choose which hotels to book online.
164
1. The number of rooms of all types available for sale by a hotel is known as the hotel’s
a. rooms level.
b. rooms inventory.
c. product placement.
d. product assortment.
Answer: b
Learning Objective: 7.1. Explain the procedures revenue managers use to establish the
selling prices of hotel guest rooms.
2. What is the term used to identify, in advance, days in which a company’s negotiated room
rate will NOT be accepted by a hotel?
a. Full date
b. Sold date
c. Refusal date
d. Blackout date
Answer: d
3. Last night a hotel sold 185 rooms and achieved an ADR of $175. What was the amount of
rooms revenue achieved by the hotel last night?
a. $27,550
b. $32,375
c. $47,550
d. $52,375
Answer: b
165
4. Who manages a hotel’s central reservation system (CRS)?
a. Hotel GM
b. Hotel owner
c. Hotel FOM
d. Hotel franchisor
Answer: d
5. Guests receive no complimentary meals when they book their room under the
a. European plan.
b. American plan.
c. all-inclusive plan.
d. modified American plan.
Answer: a
6. A fade rate will most likely used by a hotel when

a. rate resistance is encountered.
b. rate resistance is not encountered.
c. room supply equals room demand.
d. room demand exceeds room supply.
Answer: a
166
7. A hotel has 400 rooms and its owners have put it up for sale for $120.5 million dollars. At
that price, and using the $1.00 per thousand formula, what is the approximate room rate
(ADR) that should be achieved by the hotel?
a. $250
b. $300
c. $350
d. $400
Answer: b
8. A hotel revenue manager seeks to keep her room rates 10% above the rates charged by
similar hotels in her market area. Which pricing strategy is this revenue manager utilizing?
a. Prestige pricing
b. Discount pricing
c. Competitive pricing
d. Follow-the-leader pricing
Answer: a
9. Which factor will most affect the daily fluctuation of a hotel’s room rates?
a. Room supply
b. Room demand
c. Room rate codes
d. Room rack rates
Answer: b
Learning Objective: 7.2. Summarize the manner in which revenue managers seek to
optimize a hotel’s ADR and its occupancy percentage.
167
10. Revenue managers are primarily responsible for optimizing a hotel’s
a. fade rate.
b. CTA rate.
c. occupancy rate.
d. negotiated room rates.
Answer: c
11. When must a hotel walk a guest?

a. When the hotel is overbooked
b. When the hotel is under-booked
c. When forecasted demand is low
d. When forecasted demand is high
Answer: a
12. What is the formula revenue mangers use to calculate their hotels’ RevPAR?
a. Occupancy % + ADR = RevPAR
b. Occupancy % - ADR = RevPAR
c. Occupancy % x ADR = RevPAR
d. Occupancy % ÷ ADR = RevPAR
Answer: c
13. What is another term commonly used in the hotel industry to describe revenue
management?
a. Rate management
b. Yield management
c. Rooms management
d. Occupancy management
Answer: b
168
14. What is the denominator in the formula revenue managers use to calculate GOPAR?
a. ADR
b. Total rooms sold
c. Total operating revenue
d. Total rooms available to be sold
Answer: d
15. A hotel achieved an occupancy rate of 80% this month. This month the hotel’s competitive
set achieved an occupancy rate of 64%. What is the hotel’s occupancy index for this
month?
a. 95
b. 114
c. 125
d. 144
Answer: c
16. A hotel achieved an ADR index of 140 this month. This month its competitive set achieved
an ADR of $210. What was the hotel’s ADR for the month?
a. $150.00
b. $194.00
c. $250.00
d. $294.00
Answer: d
169
17. A hotel achieved a RevPAR index of 80 this month. This month its competitive set achieved
a RevPAR of $200. What was the hotel’s RevPAR for this month?
a. $110
b. $160
c. $210
d. $260
Answer: b
18. Who are the customers of travel wholesalers?

a. Guests
b. Hotels
c. Travel agents
d. Third party web sites
Answer: c
Learning Objective: 7.3. Describe the major distribution channels used by revenue
managers in the hospitality industry.
19. Which industry created the global distribution system (GDS)?

a. Hotel
b. Airline
c. Restaurant
d. Car rental
Answer: b
20. Which guest rooms booking method is currently increasing at the fastest rate?
a. Email
b. Mobile
c. Walk-in
d. 800 number
Answer: b
170
21. Approximately what percent of hotel reservations are currently booked online?
a. 21-30%
b. 31-40%
c. 41-50%
d. Over 50%
Answer: a
22. Typically, a hotel’s highest net contribution will be achieved when reservations are booked
a. on the GDS.
b. by a travel agent
c. by a third party Web site
d. on the hotel’s own website.
Answer: a
23. In which type of Internet sales model do hotel guests make a bid that represents the
amount they are willing to pay for a hotel room?
a. Agency
b. Opaque
c. Merchant
d. Leverage
Answer: b
171
24. A hotel will achieve an 80% Net ADR yield on a reservation supplied by one of its
distribution channels. The room was reserved at a room rate of $180 per night. What is the
amount of per night reservation generation fees the hotel will pay for this reservation?
a. $16.00
b. $26.00
c. $36.00
d. $46.00
Answer: c
25. A hotel received a room reservation for $200 from one of its distribution channels. The
reservation fees to be paid for the reservation are 20%. What will be the Net ADR yield on
this reservation?
a. 60%
b. 70%
c. 80%
d. 90%
Answer: c
172
Chapter 8 - Sales and Marketing
CHAPTER 8 OUTLINE
The Role of Sales and Marketing Marketing Tasks

In the Hotel Marketing Plan Development
In the Business Community Advertising
Segmentation of Sales and Marketing Promotions
Department Publicity
By Product Sold Public Relations
By Market Marketing Activities
Corporate On-Property Activities
Leisure Trace Systems
Long-Term Stay Sales Leads/Cold Calling
SMERF and Others Client Appreciation Activities
By Source Web-Based Activities
Drop-Ins Proprietary Presence
Meeting Planners Third-Party Presence
Travel Agents Social Media-Oriented Activities
Consortia Evaluating the Sales and Marketing Effort
Internet The Pace Report
The Smith Travel Accommodations
Report
Chapter Overview
In this chapter students learn about the role sales and marketing professionals play in the
operation of a successful hotel. The chapter addresses the activities hotels undertake to
optimize sales and marketing effectiveness. The chapter concludes by examining the Pace and
STAR reports; the two primary tools managers use to evaluate the effectiveness of a hotels’
sales and marketing efforts.
Chapter Objectives
1. Explain the role of sales and marketing professionals in a hotel and within the hotel’s
market area.
2. Analyze the manner in which hotels segment their markets.
3. List the primary tasks that must be addressed within a hotel’s sales and marketing effort.
4. Describe three main activities hotels currently undertake to optimize their sales and
marketing effectiveness.
5. Compare the purposes of two primary reports GMs use to evaluate the effectiveness of
their hotels’ sales and marketing efforts.
173
Lecture Outline
THE ROLE OF SALES AND MARKETING
Find and cultivate potential guests whose needs match the service and product offerings
of the hotel
The Director of Sales and Marketing (DOSM) leads the sales effort, manages marketing
efforts, helps set room rates, and negotiates sales contracts
Marketing is all activities designed to increase consumer awareness and demand by

promoting and advertising the hotel
Sales are specific activities related directly to servicing consumer demand and booking
(confirming sales to) clients
Marketing includes:
• Product design
• Marketing plan development
• Package development
• Product and services pricing
• Revenue management
• Development of an Internet-based presence
• Maintenance of a positive social media presence
• Advertising development and placement
• Evaluation of the marketing effort
In the Hotel
Tasks of Marketing
• Planning the hotel’s sales and marketing strategy
• Preparing and issuing sales contracts in a timely manner
• Maintaining accurate sales records, forecasts, and histories
• Coordinating and communicating special client requests with other hotel
departments
• Hosting clients during their stay
• Conducting site tours
In the Business Community

A hotel’s perceived and actual presence in its own business community is critical to its
success.
Sales opportunities include business promotion (informing the community about a

hotel’s products and services) and networking (developing relationships for business-
related purposes).
174
Perhaps no organization provides hotel sales staff with better promotion and
networking opportunities than does the local Convention and Visitors Bureau (CVB).
A Convention and Visitors Bureau (CVB) is an organization that seeks to increase the
number of visitors to the area it represents. This organization is generally funded by
taxes levied on overnight hotel guests.
Networking opportunities will result in an increased number of high-quality sales calls.

Sales calls occur when a meeting is arranged with the purpose of selling the
hotel’s products and services
SEGMENTATION OF SALES AND MARKETING DEPARTMENT

The sales and marketing department is organized or segmented based upon:
• The products (and services) sold by sales and marketing staff members
• The market (client) type served
• The source of the reservation
By Product Sold
 Group guest rooms
 Special packages (example, week-end get away)
 Conferences
 Catered events
 Meetings
 Conventions
 Weddings
 Special events
By Market
A subset of guests, or potential guests, who have common needs or characteristics.
Common categories in the hotel industry include:

Corporate
Room rates paid by this group are among the highest
Leisure
Relies heavily on user or travel advisor rating systems (e.g. guest reviews, AAA’s
diamond status, and the like)
Long-Term Stay
Advantages include guaranteed occupancy, the ease of room cleaning, and
uncomplicated billing
A disadvantage is rooms are often sold at very low ADRs
175
SMERF and Others
Social, Military, Educational, Religious, and Fraternal organizations
Other segments include:
• Sports teams
• Government workers
• Tour buses
By Source
Based on how the hotel’s sales are made and can include:
Drop-Ins
Guests who arrive without an appointment
Meeting Planners
Often uses comparison-shopping techniques
Buys large numbers of sleeping rooms and meeting and catering space
Represents corporations, groups, or organizations
Travel Agents
Brick and mortar agencies
 Retail TAs - sell to the public
 Wholesale TAs – buy hotel, airline and other services in bulk and then offer them
for resale through Retail TAs
Online Travel Agencies (OTA)
Consortia
Group buyers who organize for the purpose of reducing their client’s travel-related costs
DOSMs evaluate the group’s potential volume level, establish a negotiated rate, identify
any blackout dates, and monitor the consortium’s pickup (actual number of rooms
purchased)
Internet
Fastest growing distribution channel
All guest segments have the ability to use this distribution channel to view a hotels’
products and services, and purchase rooms and meeting space, through the use of links
that direct guests to a property’s website(s)
MARKETING TASKS
Marketing activities are designed to improve a hotel’s profitability
• Research to discover groups of potential clients, their needs, and how a hotel
can meet those needs
176
Marketing Plan Development
A marketing plan is a compilation of activities designed to meet the goals of the sales
and marketing department.
Marketing plans include:

• A review of your competing market, including historical:
 Occupancy trends
 ADR trends
 Performance of your hotel in the market
• Competitive analysis, including a review of your own property and your
competitors’:
 Strengths
 Weaknesses
 Pricing structure
• Forecast of future market conditions, including:
 Estimates of market growth or contraction
 Performance goals and objectives set for your hotel
 Timeline for achieving performance goals and objectives
• The determination of specific marketing strategies and activities designed to
enhance sales including those related to:
 Advertising
 Public relations
 Promotions
• Preparation of a marketing budget
• The development of measurement and evaluation tools to help assess the
marketing plan’s effectiveness and allow for needed modifications
Advertising
Common Types:
• Exterior signage
• In-hotel and in-room signage and materials
• Brochures
• Radio or television commercials
• Direct mailings
• Internet
• E-mail
• Social networks
• Franchisor-supplied advertising tools
• Billboards
• Personal contact
Advertising characteristics:
• Are eye- or ear-catching
• Are memorable
177
• Sell the hotel’s features
• Are cost-effective
• Do not become quickly outdated
• Reflect positively on the hotel’s image
• Can be easily directed to the hotel’s core client groups
Promotions
Special packaging of products or services (i.e., a summer getaway package)
Publicity
Information about the hotel that is distributed, free of charge, by the media
Public Relations
Activities designed to ensure that a hotel has a positive public image. Examples include:
 Hosting fund-raising events
 Contributing cash or in-kind services to charities
 Donations of the hotel’s staff time for a worthy cause
MARKETING ACTIVITIES
GMs or DOSMs monitor and assess on-property activities, web-based activities, and
social media-oriented activities
On-Property Activities include:

• Presale Phase (meet with client, inquire about their needs, make requests to submit
an offer or bid for services)
• Sales Phase (RFPs, Proposals (rooms, rates, features and services), site tours,
contract preparations)
• Postsale Phase (written thank you to client, review of final bill, reminder to bid on
next event date)
Trace Systems
A prospect is an individual or group not currently using the hotel but considered a
potential user of the hotel and its services in the future.
Prospecting for new clients is, arguably, the single most important task of the
DOSM’s staff
An effective trace system helps the marketing department manage its sales records,
meet deadlines, and plan future activities
A trace system is a methodical process used to record what has been done in the past
and what must be done in the future to maximize sales effectiveness. An effective trace
system includes a “contact management” component that allows records to be kept for
each individual customer (contact). Also known as a customer relations management
(CRM) system.
178
Without an effective trace system, deadlines will be missed, follow-up calls will not be
made, important client information will be misplaced, overbookings or under bookings
will occur, and business will ultimately be lost.
Sales Leads/Cold Calling

Examples of sources for sales leads:
 Networking
 CVB
 Guest referral
 Prospect calling property directly
Whenever possible, good sales staff seeks opportunities of cold calling.
Cold calling is making a sales visit or presentation to a potential client without having
previously set an appointment to do so
Client Appreciation Activities

Activities to express gratitude to clients and solidify business relationships can include:
 Dinners
 Client appreciation galas
 Sporting events
 Concerts
 Theater tickets
 Gift giving
Web-Based Activities
Evaluate presence of proprietary and third-party sites
Proprietary Presence is Internet-posted information that a hotel itself creates, owns, and
manages.
Hotels must ensure their websites:

• are easy to navigate
• have interactivity
• are appropriately linked to companion sites
• allow for easy online booking
• balance guest privacy needs with the hotel’s desire to build a customer database
• can be easily updated to reflect current room rates/availability/etc.
• include an accurate virtual property tour (streaming pictures or video)
• complement marketing efforts
• are available in the language(s) of the hotel’s clients
• have easy to remember Web addresses
179
Third-Party Presence
Third party sites may:
 Be free or pay a fee for hotel listing
 List only area-specific hotels
 Provide links to proprietary website
 Provide extensive hotel information
 Allows for guest room reservation
DOSM should affiliate their properties with major demand generators; which are an
organization, entity, or location that create a significant need for hotel services (e.g.,
large businesses, parks, tourist sites, sports teams, educational facilities, and
manufacturing plants)
Social Media-Oriented Activities

Social media is one of the most significant marketing-related areas and it allows
individuals to share user-generated content (e.g., blogs, discussion forums, posts, chats,
tweets, images, videos, and audio)
GM’s assessment should include:

 Blogging Efforts
 Management of Online Reputation
 Link Management
 Gamification Efforts
EVALUATING THE SALES AND MARKETING EFFORT

Subjectively, GMs evaluate the day-to-day professionalism and the appearance of the
staff, their diligence at work, and their creativity in presenting the hotel’s best features
Objective and quantitative measures of evaluation include the Pace report and the STAR
report
The Pace Report

Summarizes confirmed group sales made by a sales and marketing department
The Pace Report details group room sales made in a given month that will be realized in
future months
180
Percentage Change Formula
FIGURE 8.2 Sample Pace Report
Sample Total Sold Sold Same Month Total Sold Last

Pace Report Sold This Month YTD Last Year (LY) YTD
Jan 25 150
Feb 450 750 250 550
Mar 550 1,550 330 1,250
Apr 650 1,550 550 1,350
May 875 1,175 650 1,050
Jun 1,100 1,400 800 1,700
Jul 1,350 2,250 1,100 2,150
Aug 1,700 2,900 1,500 1,900
Sep 500 700 750 1,750
Oct 300 800 550 1,050
Nov 850 1,150 300 600
Dec 300 550 125 225

Total 8,650 14,775 7,055 13,575
181
A pace report can be prepared based on the number of rooms sold and/or the sales
value (dollars) of the sales made for any specific time period
Tentative contracts should be monitored, but not counted as a sale until there is a
signed contract
Pace reports tell management where future occupancy problems may exist so corrective
actions can be implemented
A strong Pace Report would show that sales made by the sales and marketing
department are increasing on a monthly and/or annual basis
A weaker report would show they are the same or are declining
By evaluating the pace report, GMs can evaluate the bottom-line effectiveness of the
sales and marketing department’s efforts
Unusual circumstances such as a market conditions, exceptionally large sale or

cancellation, and others can cause fluctuations
In these cases, there is the opportunity to discuss the hotel’s selling environment
and plan reactive strategies
The Smith Travel Accommodations Report (STAR)

The Pace Report tells the hotel’s owner and its GM the actual sales volume generated
by the sales and marketing department. It does not indicate, however, what the actual
sales volume should be.
GMs want to know the comparative sales strength of their hotel and its sales and
marketing staff.
STAR reports are widely recognized and accepted measures of comparative

performance in the hotel industry.
Unbiased measures of occupancy rate, ADR, RevPAR, and market share comparisons are
important to a wide range of interest groups. These include:
• Hotel Owners: Owners and investors want to know if their management team is
effectively competing in the marketplace
• Management Companies: Good results are used to demonstrate the value of
these companies to current and prospective management company clients
• Property Managers: GMs and DOSMs want to know the effectiveness of their
own marketing plans and sales abilities as well as those of their competitors
• Franchisors: Strong brand performance helps sell additional franchises
• Property Appraisers: Strong results to assist in establishing the financial value of
a hotel
182
• The Financial Community: Good relative performance (a strong STAR report)
helps persuade lenders to lend
Smith Travel Research (STR) maintains the confidentiality of all individual hotel data it
receives.
STR combines operating data submitted by selected competitors and compares results
against an individual hotel’s operating performance
Common operating comparisons include:

• Occupancy
• ADR
• RevPAR
• Market share
• Rank within the competitive set
• Historical trends
• To-date performances
• State or regional comparisons
Figure 8.3: Sample STR Occupancy Trend Segment
183
The Property column refers to the hotel under examination (your own hotel).
The Comp. Set column refers to the five (in this example) hotels you have chosen as your
competitive set.
The Index column is computed as your property performance divided by your comp.
set’s performance.
In this example, the property has a 2.6% higher occupancy than their competitors do.
The % Change column represents the performance change from the previous year’s
same time period. Its computation is:
Most often, occupancy rate is directly related to ADR.
Analysis of this sample STAR reveals:

 In most months, the subject property outperforms its competitive set.
• This year, the occupancy trend for the property, as well as its competitors, is an
upward one.
• The property’s occupancy performance last year was weakest in September,
October, and November and strongest in August.
• While occupancy rate for the property was down in June of this year, compared
with June of last year, the hotel’s competitors experienced an even greater
decline.
• The hotel may want to consider yield managing ADR more aggressively in August
this year based on its strong occupancy performance in August last year.
184
Achieving a performance index of less than 100 most often means a hotel is performing
at a rate below its comp. set while performance indices above 100 most often mean the
hotel is outperforming its comp. set.
STAR reports are a valuable tool for assessing the performance of a sales and marketing
department, as well as the entire property.
185
1. Sales-related factors significant in this situation include those related both to customers and
to the hotel’s competition. Anytime customers are faced with significant changes in the way
a business does business, the potential for significant challenges can arise. Historically,
hotels allowed guests to cancel reservations on their day of arrival (usually prior to 4 or 5
PM).
Increasingly, some hotel chains are assessing this historical manner of conducting business.
The manager of this hotel must consider any competitive disadvantage that would accrue
from making a change such as this. If other hotels, who are direct competitors, do not also
implement such a change, it could place this hotel at a significant competitive disadvantage.
2. Non-sales related factors that are significant in this situation include advantages that would
accrue to the hotel if such a change could be successfully implemented. These factors are
primarily related to the increased occupancy levels that could result due to better
management of the hotel’s rooms inventory.
3. As indicated in the answer to question one in this case study, the actions of direct
competitors will be significantly important as the manager of this hotel addresses the
suggestion made by the hotel’s controller. It would be fairly easy to find out what other
competitors are doing by either making a reservation at their properties or, if the
relationships among general managers in the area are good, simply calling competitive
hotels and talking to their management staff about this issue.
186
1. In this situation each of the factors identified by the hotel’s DOSM may in fact be in play. It
is also important to recognize, however, that the decline in future business experienced by
this hotel may be the result of poor performance on the part of the hotel in executing past
group-related or catered events.
Instructors should point out to students that poor hotel performance may be related to
events not under the direct control of management (such as business conditions in the local
hotel market), but in other cases poor performance in the future (as measured by a
declining Pace report) is a direct result of poor performance in the past. If that is the case,
the general manager must address and correct the hotel’s current operational performance
before the hotel’s future sales and marketing performance can be improved.
2. The manager managers should look at metrics that measure hotel performance, such as
guest surveys and comment cards. This case presents a fairly common dilemma experienced
by general managers. That is, identifying the cause of declining sales. Regardless of the
approaches the general manager will use, identifying the cause of declining business levels
is an important skill all general managers must acquire.
3. Tools managers can use to address this problem include historical occupancy levels, ADR
levels, and prior Pace reports. This question should illustrate to students the importance of
maintaining accurate and current historical records.
4. Student answers this question will vary, however, it is important for instructors to point out
that general managers will in fact be held responsible for the financial performance of their
hotels. While this may or may not be “fair” it is most often a fact of life in the hospitality
industry.
187
Your Opinion Counts
1. Student answers to this question will vary based on the textbooks they have selected for
their research. In this chapter marketing is considered to be activities designed to increase
consumer awareness and demand by promoting and advertising the hotel. Sales are
activities related to directly servicing consumer demand and booking clients.
The chapter indicates that sales is the process of servicing business already identified while
marketing seeks new business. Clearly managers must focus on both activities. Since sales
deal with activities directly serving consumers and result in bottom line profits, many
hospitality professionals consider that sales activities are a more critical process than
marketing. However, it is clear that sales success and/or productivity depend much on the
effectiveness of marketing efforts and strategies.
Because customers' needs and wants change constantly, and because the market is so
competitive, excellent general managers are keenly aware of the interrelationship between
sales and marketing activities and the importance of both areas.
2. This question asks students to consider activities that may be undertaken by a general
manager or director of sales and marketing to help their less-experienced sales team
members. Suggested activities may include:
1) Taking or sending them to as many sales events as possible.
2) Introducing them to as many people at those events as possible.
3) Giving them appropriate business cards in advance.
4) Assisting them with tips regarding appropriate dress.
5) Encouraging them to write "thank-you" or "nice to have met you" notes promptly
after the events.
6) Building their self-confidence by enrolling them in Dale Carnegie (How to win friends
and influence people)-type seminars.
A common task for sales and marketing teams is to initiate new business via cold calling. In
fact, good sales people seek opportunities to cold call whenever they can, to increase
potential client volume. Techniques and skills acquired by interacting with strangers are a
good basis for improving cold calling and networking skills.
Networking is commonly defined as the development of personal relationships for a

business-related purpose. Good general managers and DOSMs should encourage sale staff
members to undertake positive networking activities such as joining professional business
and community service organizations, meeting community government and business
leaders, and participating in community social events.
188
Instructors should point out that a general manager's own good networking skills play a
very important role in relatively small to medium-size properties, since in those situations
he or she is often involved in a great number of sales-related activities.
3. Student answers will vary, but all should recognize that advanced technology-related issues
have significantly impacted all areas of hotel operations. Property management systems
(PMS) in the front office, and Point-of-Sale (POS) in the food and beverage operation, are
representative examples. Specifically, technological advances relative to the sales and
marketing department are noticeable because they have changed the ways in which the
Sales and Marketing staff communicate with current customers and attract new customers.
Among examples of fast-growing and rapidly updating technology are room bookings and
check in procedures.
Over the past several years, the numbers on line hotel books has grown dramatically. In
addition, communication methods used with customers have shifting from traditional
telephone, mail and fax, to e-mail systems and smart phone applications such as texts and
tweets. In the pre-internet hotel world, consumers often used third parties (travel agents),
to reserve their rooms. However, on-line and mobile phone apps now allow consumers to
book and purchase products and services directly, without intervention by a third party.
Despite the advantages of such technological advances, the general manager and all sales
and marketing department staff members need to be cautious. This is so because today’s
customers can easily compare products and prices by simple internet exploration. In fact,
this can be accomplished by a few clicks of the mouse or swipes of the finger. The risk, in
the eyes of some industry observers, however, is that advanced technology may also reduce
the amount of customer interaction with real people, and thereby reduce the amount of
the customer’s brand or property loyalty.
4. Increasingly, consumers look to online reviews of a hotel’s performance prior to booking a

room. Because that is true, general managers must continually evaluate the online review
performance of their hotels. Doing so requires a systematic monitoring of sites that provide
hotel rankings, and this task falls typically to the sales and marketing department. In other
cases, front office managers may be assigned responsibility for this task. Regardless of the
professional assigned to monitor popular web-based review sites, they must be monitored
and, when appropriate, management’s responses should be posted. Doing so allows general
managers to continually monitor the evaluations their hotels have received and work to
improve areas of customer concern.
5. The chapter presents two methods (Pace Report and STAR-Smith Travel Accommodations
Reports) of evaluating the sales and marketing department. One disadvantage of using the
Pace report as a sole measure of sales effectiveness is that this report does not indicate
what the actual sales volume of a hotel should be. On the other hand, a STAR report shows
the comparative strength of one's own hotel and the sales and marketing staff. In fact,
understanding the competitive set is a major key to understanding and interpreting STAR
189
reports. That is, operating comparison criteria such as occupancy, ADR, RevPAR, market
share, historical trend, and to-date performances are used to assess the hotel performance.
However, STAR reports suffer from limitations where it is used solely to evaluate sales and
marketing staff and hotel's performance. This is so because they do not take into account a
property’s physical condition and other elements beyond the direct control of the hotel’s
director of sales and marketing. Examples include poor franchise name, poor exterior
signage, poor room mix for the market and marketing/advertising budgets that are
inadequate. As a result, experienced general managers develop objective methods to
evaluate their sales staffs’ effectiveness as well as his or her own hotel's performance.
Suggested performance indicators include: 1) comparison of sales generated in relation to

salaries of sales and marketing staff (including the director); 2) tracking sales activities of
staff by monitoring call reports (e.g., numbers of client calls received, personal sales calls,
and the like) and 3) examining the rebooking rate and the amount of desirable new business
obtained. Effective general managers then make every effort to provide timely feedback to
the sales and marketing staff so that any required corrective actions can be taken.
190
1. Who most often negotiates sales contracts on behalf of a hotel?

a. GM
b. FOM
c. Owner
d. DOSM
Answer: d
Learning Objective: 8.1. Explain the role of sales and marketing professionals in a hotel and
within the hotel’s market area.
2. Servicing consumer demand and booking clients are activities directly related to hotel
a. sales.
b. marketing.
c. promotions.
d. advertising.
Answer: a
3. The act of reserving a hotel’s ballroom for a guest’s 50th. anniversary party is an example of
hotel
a. sales.
b. marketing.
c. advertising.
d. public relations.
Answer: a
191
4. What is the primary goal of a local chamber of commerce?
a. Influence business tax policy
b. Advance business interests in the community
c. Supplement hotel marketing efforts in the community
d. Advance the level of tourism-related marketing efforts in the community
Answer: b
5. How are CVBs funded?

a. State sales taxes
b. Hotel occupancy taxes
c. Hotel membership fees
d. Chamber of Commerce grants
Answer: b
6. Which market segment is made up of business travelers?

a. Leisure
b. SMERF
c. Corporate
d. Long-term stay
Answer: c
Learning Objective: 8.2. Analyze the manner in which hotels segment their markets.
7. Which symbol is utilized by AAA when it issues hotel ratings?

a. Stars
b. Metals
c. Diamonds
d. Pineapples
Answer: c
192
8. Lawrence, a sales manager, has been assigned by his DOSM to work the SMERF market. As
a result, Lawrence will primarily be working with
a. travel agents.
b. group markets.
c. corporate clients.
d. long-term stay guests.
Answer: b
9. A travel agency that interacts with its customers only, or primarily, via the Internet is
known in the lodging industry as
a. an ITA.
b. an OTA.
c. a travel wholesaler.
d. a transparent agency,
Answer: b
10. A subset of customers who have common needs is known as a

a. target market.
b. generic market.
c. market resource.
d. market segment.
Answer: d
11. Organizing a hotel’s sales and marketing effort by product sold makes good sense when the
a. variety of products sold by the hotel is limited.
b. variety of products sold by the hotel is extensive.
c. number of customers served by the hotel is large.
d. number of customers served by the hotel is small.
Answer: b
193
12. Which activity would be listed in a hotel’s marketing plan?
a. Sell clean rooms
b. Provide friendly service
c. Place advertisement in CVB guide
d. Maintain facilities is excellent condition
Answer: c
Learning Objective: 8.3. List the primary tasks that must be addressed within a hotel’s sales
and marketing effort.
13. The use of brochures, billboards and exterior signage are examples of a hotel’s
a. publicity efforts.
b. promotion efforts.
c. advertising efforts.
d. public relations efforts.
Answer: c
14. Which marketing activity is provided to hotels at no cost?

a. Publicity
b. Promotion
c. Advertising
d. Public relations
Answer: a
15. Which marketing activity can often be used to counter negative publicity?
a. Sales
b. Promotion
c. Advertising
d. Public relations
Answer: d
194
16. Who typically approves a hotel’s marketing plan after it has been developed?
a. GM
b. EOC
c. FOM
d. DOSM
Answer: a
17. A hotel’s Sales and Marketing committee is one example of

a. web-based marketing activities.
b. social-media-oriented activities.
c. on-property marketing activities.
d. franchisor-based marketing activities.
Answer: c
Learning Objective: 8.4. Describe three main activities hotels currently undertake to
optimize their sales and marketing effectiveness.
18. A hotel Rooms Division Manager is typically responsible for managing which two operating
departments in a hotel?
a. Front office and Housekeeping
b. Front office and Food and Beverage
c. Front office and Sales and Marketing
d. Food and Beverage and Housekeeping
Answer: a
195
19. Who would issue an RFP to a hotel?
a. GM
b. Client
c. Owner
d. Franchisor
Answer: b
20. Cold calling is the process of visiting potential clients without

a. an appointment.
b. a marketing plan.
c. a purpose for the call.
e. a basic familiarity with the potential client.
Answer: a
21. Which is an example of a potential demand generator for an individual hotel?

a. Low prices
b. Clean rooms.
c. Local university
d. Popular franchise
Answer: c
22. The two most commonly used tools to evaluate the effectiveness of a hotel’s sales effort
are the STAR report and the
a. P&L.
b. pace report
c. manager’s daily.
d. occupancy forecast.
Answer: b
Learning Objective: 8.5. Compare the purposes of two primary reports GMs use to evaluate
the effectiveness of their hotels’ sales and marketing efforts.
196
23. A hotel achieved an occupancy rate of 90.2 % this May. Last May the hotel achieved an
82.0% occupancy. What was the amount of this hotel’s percentage change in occupancy
this year when compared to last year?
a. +8.2%
b. -8.2%
c. +10%
d. -10%
Answer: c
24. What is always true when a hotel has a RevPAR index above 100?
a. The hotel’s ADR is lower than its competitive set
b. The hotel’s ADR is higher than its competitive set
c. The hotel is out performing its competitive set
d. The hotel is under performing its competitive set
Answer: c
25. The STAR report for a manager’s hotel indicates that last month the hotel achieved an ADR
Index of 110. The manager’s competitive set achieved an ADR of $180. What was the ADR
of the manager’s hotel last month?
a. Between $170 and $179
b. Between $180 and $189
c. Between $190 and $199
d. Between $200 and $209
Answer: c
197
Chapter 9 – The Front Office
CHAPTER 9 OUTLINE
Overview of the Front Office Registration

The PMS and Its Management Concierge
Revenue and Reservations Guest Information Security
Management Stay and Departure
Forecasting Guest Demand Accounting for Guests
for Rooms Rooms Management/Assignment
Practicing Revenue Front-Desk Check-In
Management Self Check-In
Management of Guest Services Bucket Check
Accounting for Guests Billing the Folio
Data Management Night Audit
Managing Guest Reservations Checkout
Key Reservation Information Data Management and Security
By Reservation Type Guest Payments
Individual Room Reservations Electronic Locking/Security Systems
Group Room Reservations Telephones
By Delivery Method Call Accounting
Electronic Wake-up Calls
Telephone Voice Mail
Walk-In Message on Hold
Managing Guest Services House Phones
Arrival Point of Sale Locations
Prearrival In-Room Services and Products
Bell station Back-Office Accounting Systems
Valet Breach of Data Security
198
Chapter Overview
This chapter introduces students to the major responsibilities of a hotel’s front office. It details
the steps taken to properly service guests from the time reservations are made, through the
guests’ arrival, stay and departure. It summarizes the accounting tasks undertaken at the front
desk and describes the importance of maintaining adequate security of all guest-related data
and information.
Chapter Objectives
1. Describe the major responsibilities of a hotel’s front office.
2. Explain the manner in which a hotel’s front office manages guest reservations.
3. Outline the major services provided by a hotel’s front desk during guest arrival, stay, and departure.
4. Summarize the accounting tasks completed at a hotel’s front desk.
5. Review the importance of ensuring guest information and other data maintained in the front office
is properly managed and kept secure.
199
Lecture Outline
OVERVIEW OF THE FRONT OFFICE
Even though the front office is sometimes referred to as the front desk, the front office
controls much more than the activities occurring at a hotel’s registration desk.
The front office is the department within the hotel responsible for the management of
guest reservations, service, and payment, as well as guest-related data collection and
security.
In most cases, the front-office manager (FOM) will report directly to the GM or a hotel’s
rooms manager.
Organizational chart for typical 350-room full-service hotel
Front Office
Manager
(FOM)
Reservations Guest Services Night Audit
Bell/Van
Desk Staff Concierge
Driver Staff
Those reporting to the FOM would be responsible for:

• Establishing and daily monitoring of room rates and reservations (reservations
manager)
• Providing for guest services (guest service manager), including services related to
guest registration (desk staff), guest information (concierge), and guest
assistance (bell staff)
• Managing the front office-related accounting and data collection process (night
auditor)
• Managing and training all front-office staff members
The Concierge staff provides guests with detailed information regarding local dining and
attraction options, as well as assisting with related guest needs and requests.
Bell Staff are attendants responsible for guest services, including luggage handling, valet
parking, airport transportation, and related guest services.
200
Front office functions include:
• The PMS and its management
• Revenue and reservations management
• Management of guest services
• Accounting for guests
• Data management
The PMS and Its Management

The PMS is a computerized system used to:
 Manage rooms rate and revenue
 Record reservations and room assignments
 Maintain guest histories
 Perform accounting tasks
 Address other guest services
 Perform selected management functions
A PMS has a hardware and software component
Care for the PMS’ hardware should include:

 Keeping the hardware clean and free of dust
 Examining and replacing connecting cables as needed
 Protecting power sources by using surge protectors
 Inspecting and testing backup systems
 Ensuring PMS software systems receive outstanding software support
PMS’ software systems must have high levels of tech support to quickly resolve
hardware- and software-related problems
FOMs should provide GMs with evidence that:

 The hotel uses all appropriate PMS features
 The installation of vendor recommended/mandated software updates have been
completed
 A regularly scheduled hardware maintenance program is in place
 There is an ability to rapidly secure software support when needed
201
Revenue and Reservations Management
Front-office staff should seek to optimize RevPAR by increasing occupancy percent
and/or ADR:
Occupancy % ADR RevPAR
Methods of improving RevPAR include:

 Forecasting (estimating) guest demand for rooms
 Practicing yield management effectively
Forecasting Guest Demand for Rooms

A Sell-Out is defined as:
1) A situation in which all rooms are to be sold or oversold. A hotel, area, or entire
city may, if demand is strong enough, sell-out (i.e., in a city hosting the NFL’s
Super Bowl)
2) A period of time in which management attempts to maximize ADR (i.e., the night
before Thanksgiving)
Knowing demand for rooms is key!
When demand for rooms is high, the hotel must drive (increase) ADR and influence
occupancy (by offering lower rates/specials) when demand for rooms is low
Forecasting demand effectively requires that the front office:

• Keep accurate historical records to understand historical (past) demand.
• Know about special events or circumstances that will impact future room
demand
• Monitor and adjust their room rates to reflect the realities of actual room
demand
The FOM must monitor and adjust room rates to reflect the realities of actual room
demand, not merely in response to periods of exceptionally high demand
202
Figure 9.3 Sample Occupancy Forecast
Figure 9.4 Sample Availability Forecast
An availability forecast is an estimate of the number of rooms that remain to be sold.
Occupancy forecast percentage formula
FOMs seek to estimate demand in an effort to match room rates with the number of
travelers willing to pay those rates
203
Historical (and current) demand-related data is necessary to make better room rate
management decisions.
Practicing Revenue Management

Yield management is a set of techniques and procedures used to manipulate occupancy,
ADR, or both to optimizing the revenue (yield) achieved by a hotel.
Opening and closing discounted rates to establish minimum room rates across room
types is the core activity of yield management
Figure 9.5 is an example of a simplified revenue management strategy
Management of Guest Services

The front office is responsible for a variety of guest services, including:
 Airport transportation
 Parking cars
 Handling luggage
 Providing directions to attractions within the local area
 Making restaurant reservations
 Receiving and delivering guest messages
 Delivering newspapers
 Managing safety deposit boxes
 Supplying directions for meeting rooms, business centers, dining room, and
other amenity areas within the hotel
 Managing wake-up calls
 Providing for guest security via careful dissemination of guest-related
information
 Handling guests’ service-related concerns and billing disputes
Accounting for Guests

The front office’s has the major responsibility for bookkeeping and accounting tasks
related to the guest stays.
204
The front office must ensure all guest folios (statement of charges and credits) are
accurately processed and all guest payments accurately recorded
Data Management
Some data management tasks include maintaining an accurate list (sorted by room
number) of guest room occupants, verifying room rates charged, recording payments,
and confirming checkout dates
Guest-related data stored in the PMS include:

• The date of the guest’s last stay
• All guest names, addresses, telephone numbers, and payment card information
• Room rate paid and room type occupied by the guest
o A room type is a specific guest room configuration (e.g., King or double
bed, suites)
• A history of the guest’s prior folio charges
• The form of payment previously used by the guest
• The guest’s group affiliation and any applicable discounts
• The guest’s company affiliation
• The guest’s room type preferences
• Guest telephone calls made
• Charges for in-room movies or games
Additional non-guest related information stored in the hotel’s PMS includes:

• Housekeeping’s record of guest room status (e.g., clean vs. dirty)
• The monitoring the use of electronic keys
• Maintaining safety-related data (such as safety inspections reports for hotel-
operated motor vehicles)
MANAGING GUEST RESERVATIONS

The proper maintenance of key reservation information is critical due to the enormous
amount of stored information supplied by the guest when they make a reservation
Figure 9.6 is a reservation screen containing data fields relating directly to the guest
Data fields are places where information is entered (e.g. guest name, room type,
payment information, etc.)
205
When processing a reservation request, an account number (confirmation number) is
created and then used to identify that specific guest reservation request
Although the names used to identify specific data fields will vary based upon the PMS in
use, all systems collect important information about guests and their reservation
requests
Managing guest reservations is one of the most complex tasks that must be achieved in
a successful hotel
206
By Reservation Type
One of the most important reservation type distinctions is transient sales versus group
sales
Individual Room Reservations

Also known as transient sales, are defined as rooms and services sold primarily through
the efforts of a hotel’s front office and its staff
Reservations may be guaranteed (by payment card or advance deposit) or

nonguaranteed (a reservation request without providing payment)
Typically, nonguaranteed reservations must be guaranteed within a specific time period

(i.e., 24 hours prior to arrival) or the room will be released and sold to another guest
Group Room Reservations

Group room reservations are a “block” of guest rooms reserved exclusively for use by
the group
When group room reservations are made, contract terms, including cut-off dates, are
established
Cut-off dates identify the dates when the group rooms are to be released from
the block and made available for sale to any traveling individual or group.
Typically, group room reservations are made by:

• The individual reserving the guest room, or
• The group coordinator supplying the hotel with a group rooming list (i.e. a list
identifying the group’s arriving guests)
By Delivery Method
Distribution channels, or how the hotel actually receives its reservations, are quite
varied and may be classified as electronic, telephone, or in-person
Electronic
To understand electronic reservations, you must first understand the development of
the Global Distribution System (GDS).
The Global Distribution System (GDS) is a network that connects those travel
professionals (TAs) worldwide who reserve rooms with those hotels offering rooms for
sale.
The GDS provided the emerging airline industry and TAs with an electronic ticket
booking system that was more efficient and cost-effective than the existing distribution
channels of telephone, telegraph, or mail.
207
With time, TAs were able to book car rentals and hotel room reservations on the
same GDS systems
Soon, other airlines created their own independent electronic reservation systems.
These systems were not electronically connected (interfaced) with one another.
Each airline’s system required its own directly connected, designated data
terminal located within the travel agency
Hotel companies had to interface their own centralized reservation systems with the
airline systems in the GDS
From a financial perspective, the expanding use of the GDS would significantly alter a
hotelier’s traditional view of room rates received.
Reservations through GDS would require the hotel to pay:

• A TA’s commission (usually 10%)
• An amount to the hotel chain, brand, or specialized technology company that
developed and managed each individual hotel’s interface to the GDS
• A fee set by the airlines for the hotel’s access to each individual airline’s portion
of the GDS
Several of the largest hotel chains banded together to develop their own reservation
interface systems called THISCO; a “switch,” which would act as a GDS systems,
translator to interface information from all hotel and airline systems
208
Increasingly today, the online distribution database (ODD) is replacing the GDS as a
primary source of hotel reservations
Room Rate and Availability Information Flow
Telephone
A significant source of transient room reservations is the toll-free number used in
franchisor-operated call centers
Hotel features and services provided to call center agents must be up-to-date and
accurate.
Information provided by the hotel to call center agents includes:

• Room availability
• Blackout dates
• Closed to Arrival (CTA) dates
• Minimum Length of Stay (MLOS) dates
• Room rates
• Seasonality of rates
• Room types
• Distances to local attractions
• Hotel amenities and services offered
• Directions to the property
• Franchisor-mandated ratings or ranking information
209
Managers should regularly test call franchisor-operated call centers to verify the
accuracy of the information provided to callers
Walk-In
A guest seeking a room who arrives at the hotel without an advance reservation
Excellent curb appeal, as well as a friendly initial greeting from the front-office staff,
helps ensure that walk-ins are converted to paying guests
Curb appeal is describe the initial visual impression of the hotel’s parking areas,
grounds, and external building aesthetics create for an arriving guest
MANAGING GUEST SERVICES

The front office must be properly staffed and managed to ensure professional standards are
upheld when meeting guests’ needs during arrival, stay, and departure
Arrival
Prearrival
The Front Desk prints (or holds in electronic storage) a registration (reg.) card for all
guests scheduled to arrive the next day
A registration card is the legal contract between the hotel and its guests. It provides
details such as guest’s name, arrival date, room rate, departure date, and other
information related to the guest’s stay
Bell station
Bell staff assists guests in moving baggage into the hotel and their rooms, as well as
being knowledgeable of hotel services and guest room features
Valet
Originally, a term used to identify an individual who cared for the clothes of wealthy
travelers
Commonly used today to refer to those individuals responsible for parking guest
vehicles
210
Registration
The five-step process of registering guests consists of:
1. Greeting the Guest
 Minimize wait/make guests feel welcome
2. Confirming the Information on the Reg. Card
 Serves as a record of the guest’s stay
3. Securing a Form of Payment
 Authorize (validate) the card at time of registration
4. Making a Room Assignment
 Accommodate guest preference for room types (location, view, bed type, &
amenities)
5. Issuing keys
 Control issue of guest room keys for guest safety
Concierge
Responsible for assisting guests, examples include:
• Making dining reservations
• Securing tickets for theater and sporting events
• Arranging transportation
• Providing information on local attractions
• Translating language
• Providing hotel-specific information
Guest Information Security

A professionally managed front office is one in which guests are confident that their
privacy is properly maintained by all staff members
 Never confirm or deny that a guest is registered in the hotel without the guest’s
express permission
 Never give out information related to a guest’s stay (e.g. arrival, departure, rate,
room number, and the like) to any third party without that guest’s express
permission
 Always be vigilant in informing the guest of any unusual third-party information
requests regarding their stay
 Never give out a guest’s room number to any third party without that guest’s
express permission
 Never perform registration tasks in such a way as to allow guest room
information to be overheard by others in the front-office area
 Never mark room numbers directly onto keys
 Never issue a duplicate room key to anyone without confirming the positive
identification of that person as the room’s properly registered guest
211
Stay and Departure
During their stay and at time of checkout, guests may bring up issues that detracted
from their experience
If these issues are handled professionally, they can actually enhance the guest’s
experience
GMs monitor the front-desk staff to ensure guests with legitimate complaints are
treated courteously and with empathy upon their departure
ACCOUNTING FOR GUESTS

Accounting for guests means that all charges incurred by a guest’s use of the hotel are
charged for properly and that payment is collected
Some common guest charges posted (entered) to a guest’s folio include:

• Guest room charges including appropriate taxes
• Resort and spa fees
• In-room minibar purchases
• In-room safe charges
• Pay-per-view movies, games, charges
• Internet access charges
• Restaurant charges
• Bar charges
• Room service charges
• Telephone tolls
• Gift shop purchases
• Laundry charges
• Valet parking charges
• Meeting room charges
• Audiovisual equipment rental fees
• Banquet charges
• Service charges
Rooms Management/Assignment
The task of assigning guests to the right room, at the right room rate, with the right
required form of payment, can be quite complex
Front-Desk Check-In
Prior to assigning a guest to a room, front desk agents confirm the room’s status (clean,
vacant)
Housekeeping employees cleaning and inspecting rooms must update the status of
guest rooms so arriving guests can be quickly assigned to their room
212
Self Check-In
Allows guests to enter personal information, choose from available rooms, and receive a
key or pass code to their selected room
Systems must be accurate and secure because of the legal liability (for example, the
liability that could result if a guest checks into an already occupied room)
Accounting systems must allow staff to:

• Verify and document personal information positively identifying the guest to
whom the room is rented
• Assign guests, whenever possible, to their requested room type
• Assure the status of the room assigned to the guest is “Clean and Vacant”
• Confirm the rate to be paid by the guest prior to the issuance of room keys
• Confirm the guest’s departure date prior to the issuance of room keys
• Secure an acceptable form of payment from the guest
Bucket Check
The “bucket” is the historical industry term for the location of the actual registration
cards signed by guests at check-in
The “bucket check” is a manual or automated procedure used to verify, for each guest,
the accuracy of that guest’s registration information
Billing the Folio

Hotels process hundreds, or even thousands, of guest-related billing transactions daily
Each front-desk shift ensures all appropriate guest charges are posted to the
appropriate guest’s folio and that hard copy or electronic documentation supporting
such charges has been thoroughly reviewed prior to the posting
Night Audit
“When does one day’s hotel sales end and another’s begin?”
The end of the day is not a fixed time period, but rather is designated as the time at
which the night auditor concludes (closes) the night audit
The night audit is the process of reviewing for accuracy and completeness the
accounting transactions from one day to conclude or close that day’s sales information
in preparation for posting the transactions of the next day
213
The night audit requires:
1. Posting the appropriate room and tax rates to folios of the guests currently in the
hotel
2. Verifying an accurate room status (in the PMS) of all rooms
3. Posting any necessary adjustments or allowances to guest folios
4. Verifying that all legitimate nonroom charges have been posted throughout the day
to the proper guest folio
5. Monitoring guest account balances to determine whether any are over the guest’s
credit limit
6. Balancing and reconciling the front desk’s cash bank
7. Updating and backing up the electronic data maintained by the front office
8. Producing, duplicating, and distributing all management-mandated reports, related
to ADR, occupancy percentage, source of business, and in-house guest lists
Check-out
The first step in check-out involves settlement of the guest’s bill and revision of the
room’s status. This consists of a several-step process, including:
Because guests may need adjustments applied to their bill, GMs must ensure the front
office understands the limits of adjustments they can make
Guest checkout is the perfect selling opportunity to rebook the guest for future stays!
DATA MANAGEMENT AND SECURITY

The front office is the center for the hotel’s data management systems
An increasing number of data-generating systems are interfaced with the hotel’s PMS.
(for example, the PMS interfaces with an electronic locking system or call accounting
system)
214
Guest Payments
When interfaced with the PMS, credit and debit cards, smart phone wallets, and other
mobile payment systems can help speed up guest payment processing and checkout
Guests may pay their full bill with their payment card but later protest all or part of that
bill
Each major card issuer has its own preferred processing procedures and the FOM may
have to defend the hotel’s card-processing procedures when guest payment disputes
occur
Payment card acceptance and processing guidelines that should exist in written form for
ease in staff training include ensuring that all front-desk agents:
• Confirm the name on the card is the same as the individual presenting the card
for payment (e.g., driver’s license or state ID)
• Examine the card for signs of alteration
• Confirmation the card is valid and has not expired
• Compare the card’s signature with the one made by the guest paying with the
card
• Document the identity of the employee who processed the charge
• Balance and reconcile all payment card charges at the end of each shift
Electronic Locking/Security Systems

The front office is responsible for maintaining the data and the security systems when
issuing guest room keys
Hotels use an interfacing recodable locking system
A recodable locking system is designed to enhance safety by having a guest insert,

swipe, or flash the key for the first time, which will immediately recode the lock and
cancel unauthorized entry
Keycards can speed up registration because they can be coded up to 12 months in

advance
Staff must
• Be trained to issue duplicate keys only to confirmed registered guests
• Maintain an accurate data system that actually identifies registered guests and
their assigned room numbers
215
Telephones
Private Branch Exchange (PBX): A system within the hotel used to process incoming,
internal, and outgoing telephone calls
Call Accounting
This system records the time, length, and number called of each telephone call made
within each guest room
When interfaced, charges are posted immediately to the guest’s folio
Wake-up Calls
When automated, wake-up calls can be programmed into the PBX either by guests or by
staff members
Voice Mail
Voice mail is a feature that may be interfaced with the PBX but is, in fact, a separate
telephone component
An important feature for business travelers and administrative staff
Message on Hold
This feature interfaces with the PBX to provide the guest “on-hold” a combination of
pleasant music and well-written marketing script (for example, listing hotel’s
features/amenities, apology for waiting, etc.)
House Phone
A publicly located telephone within the hotel used to call for emergency services, the
front desk and, in many cases, guest rooms as well
Point of Sale (POS) Locations

POS systems can be any sales recording systems, excluding the front desk, at which
hotel goods and services are purchased.
216
Typically, the POS(s) is interfaced with the PMS. Examples of typical POS locations
include:
 Restaurants
 Room service
 Lounges
 Spas
 Fitness centers
 Laundry
 Valet
 Retail shops
 Business centers
In-Room Services and Products

Typical interfaces between the PMS and in-room purchases of products and service
purchases include:
• Movies and Video games
• Minibars - in-room refrigerated or unrefrigerated cabinets used to store
beverages, snacks, and other items for sale
• Wi-Fi or Internet access
Back-Office Accounting Systems

Recall from Chapter 6, that the financial data contained in the PMS must ultimately be
transferred to the controller’s office in order to prepare a hotel’s balance sheet, income
statement, and statement of cash flows (SCF)
Some PMSs offer the capability of interfacing directly with the hotel’s back-office
accounting system
Back-office accounting system should offer:

• A good underlying technology
• A strong company behind the product, including good leadership
• Compatibility with popular hardware products
• A sizable customer base
• Good customization capabilities
• Expandability
• Ease of use by nontechnology-savvy employees
• Excellent telephone support
• Excellent online support
• The potential for future (additional) PMS interfaces
217
Breach of Data Security
Hotels are not immune from a security breach related to sensitive guest information.
Strategies to reduce the chances of a data security breach include:

1. Developing Data Security Policies and Data Breach Reporting Procedures
Because many employees have access to credit card and other personal
information of guests, strong security-related policies and procedures
must be in place
2. Providing Ongoing Data Security Training
Because of employee turnover, FOMs must have a thorough data security
plan in place to instruct new employees
3. Ensuring that Property-Supplied Internet Connectivity (if Offered to Guests) Has
the Latest Virus Protection and Security Features.
If a hotel’s Internet connections are not secure, sensitive guest
information is at risk of being compromised by Cyber hackers and identity
thieves
4. Moving the Maximum Amount of Sensitive Guest Information Possible to the
Cloud Rather than Maintaining It on the Property’s On-Site Computers
With online (cloud-based) storage services, data is encrypted during
transmission and while in storage, thus making it safer than it is when it is
stored locally
There will always be a need for talented front-office management and staff that can
maximize revenue, provide outstanding guest service, and record the data needed for
the smooth operation of the property.
218

1. This question asks students to address the very common issue of forecasting no-shows on
sold out nights. In this case the hotel is potentially oversold by five rooms if it accepts the
requested reservation from their large customer. While student answers may vary, in
most cases, experienced front office managers would likely take this piece of business. In
order to accommodate each reservation already on the books, as well as the new piece of
business, the night’s no-show rate would need to equal 2.5% (200 arrivals x 0.025 no-
show rate = 5 rooms). Historical data shows that the hotel has ranged from a 0% to 5%
no-show rate in the past several weeks. Because that is true, a manager’s best guess
would be that there will, in fact, be sufficient rooms available to service all arriving
guests.
2. The purpose of this question is to illustrate to students that not all reservations are
created equally. The fact that these proposed reservations are for 10-night stays makes it
all the more likely the hotel would accept the newly requested reservations.
3. If the hotel accepts the new reservations and, subsequently, an arriving guest must be
walked, the hotel’s “walk” protocol should be implemented. Instructors should point out
that this is a common case and one that must be addressed on a regular basis by
professional front office staff. For that reason it is important that a hotel have a well-
established “walk” protocol and that it is followed meticulously.
4. The purpose of this question is to encourage students to think about “overbooking” from
a business perspective and an ethical perspective. Some students, no doubt, will take the
position that accepting the new reservations in an overbooked situation is indeed
unethical. Other students can legitimately take the position that; in this case, it is the
hotel’s best estimate that all reservations will in fact be honored, thus no ethical issue
exists. While there are no correct answers to this question, instructors should encourage
an open discussion on this somewhat controversial topic.
219
1. Student responses to this question will no doubt vary. Instructors should encourage
students to think about the pros and cons of the newly proposed policy. One advantage
of the new policy is the potential to increase frequent traveler guest satisfaction. A
potential disadvantage of the policy is that some travelers with reservations will be
preselected for rooms of lesser quality and thus an ethical issue may exist here.
2. Those students taking the position that the new policy is fair to all arriving guests will
likely point out that it rewards the hotel’s best customers. Those students who feel the
policy is not fair to all arriving guests will likely point out that those guests booking
through online travel agencies (OTAs) will be automatically relegated to less desirable
rooms. Both positions are, of course, true and instructors can point out additional
positives and negatives of implementing the newly proposed policy.
3. This question asked students to think about the impact of this proposed policy on the
long-term revenue generation of the hotel. In most cases the student’s position will be
less important than his or her rationale for it. Instructors should, however, ensure
students recognize the impact of “net ADR” when discussing this issue. This case study
illustrates just one of the many challenges facing front office managers in the rapidly
changing hospitality industry.
220
Your Opinion Counts

1. Whether the revenue manager reports to the sales and marketing director (DOSM), or to
the FOM, most often depends on the major customers or market segments served by the
hotel. If the majority of guests comprise transient sales, the revenue manager is more
likely to actively counsel with, and work with the FOM. This is so because revenue
management is a major front office functional area that the FOM often supervisors and
managers. The text points out that the revenue manager’s responsibility is to report to
the FOM in the establishment of room rates in the management of rooms inventory.
Furthermore, the revenue manager and the FOM must work together to optimize the
hotel’s revenue per available room (RevPAR). Alternatively, if the property is primarily a
convention or conference hotel (which generates mostly group sales), the revenue
manager must coordinate with the sales and marketing director to maximize the
properties ADR and occupancy percentage.
In addition to the hotel’s unique characterization and customer base, effective general
managers will assess the skill and background of both FOMs and DOSNs to ensure that
the most skilled individual takes the lead role in the revenue management optimization
process.
2. In previous chapters, students learned that general managers may come from a variety of
backgrounds. As a result, they may have a variety of skill sets. If a particular general
manager has technical proficiency and expertise in using the property management
system (PMS), he or she may have great skill in managing the computer programs that
relate to the front office and back office data management and accounting systems.
The general manager should not feel diminished if he or she does not have the skills or
knowledge of all the all features of their hotel’s PMS. In such a case, however, the general
manager should strive to stay abreast of technological advances related to the PMS. The
PMS is considered one of the most commonly utilized of advanced applications in the
hospitality industry. As result, excellent general managers make the effort to become
familiar with its upgrades, its functions, and its benefits. For most general managers,
reading trade literature, talking to vendors, and attending hospitality conferences will
help to become better aware of various hospitality technological advancements related
to front desk operations.
3. In previous chapters, students were introduced to the concept of issuing credit. It is at

the front desk, however, that most credit issues with guest arise. This is especially true if
the guest begins to exceed his or her credit limit. Student answers regarding the criteria
an FOM might use to establish credit limits and the communication that would take place
if those credit limits are exceeded will no doubt vary. For this question, the specific
answers supplied by students are somewhat less important than the rationale presented
in support of their answers.
221
4. This question asks students to address conflicting demands between transient and group
room allocation, a very common challenge in many hotels. While the hotel’s FOM and
DOSM must always work together, it is often the case that the interests of these two
individuals come into conflict. One such case of this involves time periods in which the
hotel forecasts a sell-out. In such cases it is likely that the DOSM will experience increased
demand for group rooms, while the hotel’s FOM will likely experience increased demand
for transient rooms.
There is no hard and fast “best” answer to this question, however, instructors can point
out that a general manager’s decision to proportion rooms in favor of either transient, or
group, travelers is one that has long-term implications. In most cases such as this, it is
most often best to service increased demand for groups, rather than address increased
demand for transient rooms. The reason for this is that group business involves large
numbers of rooms and may often be repeated in the future. Alternatively transient
reservations typically represent the needs of only one or two travelers at a time, and
hotels typically receive no significant customer fall-out if they are sold out.
It is also important to note that, on potential sell out dates, transient room rates can
often be increased. Group rooms, on the other hand, are often sold at reduced rates. As a
result, an increase in the proportion of transient rooms made available during sellout
dates tends to increase ADR, while the general manager’s decision to increase the
proportion of group rooms on sell-out dates is most often an effort to increase a hotel’s
occupancy levels over the long-term.
5. Generally speaking, the demand for a self-registration or self-check-in system will be

higher among business travelers than a m o n g leisure travelers. However, this demand
will often depend on the average technology-related skills of arriving guests and on guest
demographics. For instance, if a guest lacks advanced technology expertise, he or she
may simply be fearful of using, or intimidated by using, self-registration programs. Also,
the wisdom of implementing self-registration systems in a property will often depend on
the levels of service typically offered to, and expected by, guests. For example, guests
checking in to a world-class luxury hotel are most likely to expect personal service and
significant direct contact with staff, and thus a self-registration or self-check-in program
may not be appropriate.
Alternatively, a select-service hotel with only 60 to 70 rooms may not achieve much in
the way of net economic benefit when introducing a computerized self-registration
terminal due to the system’s high initial acquisition, installation, and maintenance costs.
In nearly all cases, however, a self-registration system will likely be well accepted and
favored by a large number of guests if the computerized system significantly reduces
long-waiting lines during the check-in or check-out process.
222
1. A concierge provides a hotel’s guests with

a. information.
b. in-room services.
c. payment options.
d. luggage assistance.
Answer: a
Learning Objective: 9.1. Describe the major responsibilities of a hotel’s front office.
2. The situation in which all of a hotel’s rooms are sold or oversold is referred to as a
a. CTA
b. sell-out.
c. shut-out.
d. black-out.
Answer: b
3. A hotel has 400 rooms available to sell on Monday night. The hotel forecasts 360 rooms will
be sold that night. What is the hotel’s occupancy forecast for Monday night?
a. 50%
b. 71%
c. 90%
d. 111%
Answer: c
4. For any specific date, a hotel’s availability forecast identifies the

a. price at which rooms should be sold.
b. price at which rooms have been sold.
c. number of hotel rooms remaining to be sold.
d. number of hotel rooms that have already been sold.
Answer: c
223
5. A hotel has 500 rooms available for sale. For Monday night the hotel’s occupancy forecast
is 60%. What is the number of rooms the hotel has available to sell for Monday night?
a. 100
b. 200
c. 250
d. 300
Answer: b
6. What information would be entered in the “Guest Tracking” data field when a guest makes
a room reservation?
a. The rate to be paid
b. The date of check-in
c. The type of guest (e.g. leisure or business)
d. The room type (e.g. double-double or King)
Answer: c
Learning Objective: 9.2. Explain the manner in which a hotel’s front-office manages guest
reservations.
7. In most cases, at what time are non-guaranteed room reservations released by a hotel’s
front office?
a. 4:00 to 6:00 a.m.
b. 6:00 to 8:00 a.m.
c. 4:00 to 6:00 p.m.
d. 6:00 to 8:00 p.m.
Answer: c
reservations.
224
8. Which room sales are most often made through the efforts of a hotel’s front-office staff?
a. Group
b. Transient
c. Convention
d. Meeting rooms
Answer: b
reservations.
9. On which date would a hotel release rooms that have not been picked up from a group
block?
a. Arrival date
b. Cut-off date
c. Black-out date
d. Conclusion date
Answer: b
reservations.
10. In its earliest days of operation, who utilized the GDS to book hotel rooms?
a. DOSMs
b. Travel agents
c. Airline agents
d. Front office managers
Answer: b
reservations.
225
11. Which type of hotel guest would be most influenced to choose a hotel based upon its curb
appeal?
a. Group
b. Walk-in
c. Transient
d. Corporate
Answer: b
reservations.
12. What forms the legal contract between a hotel and its arriving guests?
a. Bill
b. Folio
c. Reservation
d. Registration card
Answer: d
Learning Objective: 9.3. Outline the major services provided by a hotel front desk during
guest arrival, stay and departure.
13. Which is the last step in the guest registration process?

a. Room assignment
b. Issuance of room keys
c. Securing form of payment
d. Confirming information on the registration card
Answer: b
226
14. Front desk agents should authorize (validate) the card used by a guest as that guest’s
preferred form of payment at the time
a. of the guest’s arrival.
b. of the guest’s check out.
c. the guest is issued a reservation confirmation number.
d. the guest’s payment-related reg. card data fields are completed.
Answer: a
15. A caller to a hotel’s front desk asks if a specific guest is staying in the hotel. The desk agent
answering the call should
a. provide no information about the guest.
b. ask about the caller’s relationship to the guest.
c. provide the guest’s name and room number only.
d. confirm only if the guest is or is not staying in the hotel.
Answer: a
16. To which department would a hotel guest most likely complain about a TV that is not
functioning properly in his room?
a. Front office
b. Maintenance
c. Housekeeping
d. Sales and Marketing
Answer: a
227
17. A guest who must be walked is always one who
a. is a walk-in.
b. is part of a group block.
c. has a confirmed reservation.
d. does not have a confirmed reservation.
Answer: c
18. A hotel guest’s charges should be posted to that guest’s

a. folio.
b. registration card.
c. reservation data field.
d. frequent guest account.
Answer: a
Learning Objective: 9.4. Summarize the accounting tasks completed at a hotel’s front desk.
19. What is the purpose of a bucket check?

a. Assist in ADR calculations
b. Assist in occupancy forecasting
c. Verify the accuracy of guest folio balances
d. Verify the accuracy of guest registration information
Answer: d
20. Proper guest accounting begins with assigning guests to the room types they have reserved
and
a. doing so at the time their reservation is made.
b. at the rate indicated on the guest’s reservation.
c. confirming the guest’s preferred payment method.
d. recording the guest’s frequent traveler program information.
Answer: b
228
21. At what time would it be best for an auditor to perform his or her night audit?
a. 5:00 a.m. to 7:00 a.m.
b. 2:00 a.m. to 4:00 a.m.
c. 11 p.m. to 1:00 a.m.
d. 4:00 p.m. to 6:00 p.m.
Answer: b
22. What is the hotel industry term used to describe the computerized system that identifies
telephone charges to be posted to guest folios?
a. Tolls assessment
b. Call accounting
c. Telephone charge system
d. Telephone reconciliation
Answer: b
Learning Objective: 9.5. Review the importance of ensuring guest information and other
data maintained in the front office is properly managed and kept secure.
23. What is the system in a hotel that processes incoming, internal and outgoing telephone
calls?
a. PBX
b. CHA
c. Call assessment
d. Toll assessment
Answer: a
229
24. What is true about the recordable locking systems used by hotels?
a. They are powered by batteries
b. They can be programmed by guests
c. They are direct wired to a hotel’s electrical system
d. They are typically manufactured by the same company that make a hotel’s PMS
Answer: a
25. Who would be most responsible for maintaining the security of a hotel’s back-office
accounting systems?
a. FOM
b. DOSM
c. Controller
d. Director of Security
Answer: c
230
Chapter 10 - Housekeeping
CHAPTER 10 OUTLINE
The Role of the Housekeeping Department Inventory Management

Public Space Lost and Found
Guest Rooms Facility Care and Cleaning
Laundry Public Space Cleaning
Staffing the Department Guest Room Cleaning
Executive Housekeeper Sleeping Areas
Room Inspectors Bath Areas
Room Attendants Laundry
Additional Housekeeping Staff Collecting
Managing Housekeeping Sorting/Repairing
Safety Washing
Equipment and Supplies Drying
Training Finishing/Folding
Employee Scheduling Storing
Delivering
Chapter Overview
In this chapter, students learn about a hotel’s housekeeping department. Major positions in the
department and the important role of the executive housekeeper are addressed. Key topics
include public space cleaning, guest room sleeping area and bath area cleaning, and laundry
operations. Special emphasis is given to the importance of ensuring the health and safety of all
housekeeping employees.
Chapter Objectives
1. Explain the role of a hotel’s housekeeping department.
2. Describe the staff positions that exist in a typical hotel’s housekeeping department.
3. Summarize the major management responsibilities for which executive housekeepers are
held accountable.
4. Identify the key tasks that must be completed to properly clean a hotel’s public spaces and
guest rooms.
5. List the important steps housekeepers must address when managing a hotel’s on-premise
laundry area.
231
Lecture Outline
THE ROLE OF THE HOUSEKEEPING DEPARTMENT
The housekeeping department in a hotel is responsible for the hotel’s cleanliness.
When a hotel’s housekeeping staff is effective, guest satisfaction is high, employee

morale is good, and ultimately the hotel is profitable.
When the housekeeping staff’s work is below par, guest complaints soar.
Guests who feel a hotel is not clean simply do not return.
Depending on the type and size of hotel, the housekeeping department will generally be
responsible for cleaning and maintaining all of the following areas in a hotel:
Public Spaces Guest Room Areas

Lobby areas Elevators
Public restrooms Corridors
Exercise areas Stairwells
Pool and spa areas Guest rooms
Employee break rooms and locker Laundry
rooms Laundry preparation areas
Selected meeting and foodservice Laundry supply closets
areas Guest linen and supplies
Front-desk areas storage areas
Management offices
Game rooms
Public Space
Public Space refers to those areas within the hotel that can be freely accessed by guests
and visitors. Examples include lobby areas, public restrooms, corridors, and stairwells
A house person is the individual responsible for the cleaning of public spaces (the house)
Also, sometimes referred to as a public area (PA) cleaner or porter
The Executive Housekeeper is the individual responsible for the management and
operation of the housekeeping department
232
Guest Rooms
Providing perfectly cleaned guest rooms is a top priority for any well-run hotel
The cleaning of guest rooms is always the responsibility of the housekeeping

department and must be executed flawlessly
Room status refers to the up-to-date (current) condition (occupied, vacant and clean,
dirty, etc.) of the hotel’s individual guest rooms
In well-managed hotels, there is a strict policy that front-desk staff does not assign a
guest to a room unless that room has been:
 Properly cleaned by the housekeeping department
 Verified as clean by a second member of housekeeping
 The room’s status has been accurately reported to the front desk
Specific companies or areas of the country may vary the terms, and the abbreviations
used to designate them may be somewhat different; however, these terms or their
equivalents must be used in the hotel if the housekeeping department is to accurately
communicate current room status to the front desk.
Housekeeping Term Abbreviation Meaning

Clean and Vacant V/C The room is vacant, has been cleaned, and can be
assigned to a guest.
Dirty and Vacant or V/D The room has not yet been cleaned and, thus,
On-Change cannot be assigned to a guest.
Occupied O The room is registered to a current guest.
Occupied and Dirty O/D A registered guest is currently staying in the room,
but the room has not yet been cleaned.
Occupied and Clean O/C A registered guest is currently staying in the room,
and the room has been cleaned.
Do Not Disturb (DND) DND The room is occupied, but has not been cleaned
due to the guest’s request not to be disturbed.
Sleep-Out (Sleeper) The room is reported as occupied, but the room
was not used (bed not used, no personal
belongings in room) and the guest is not
present.
Stay-Over SO The registered guest will stay in the room at least
one more night.
Due Out DO The registered guest(s) have indicated this is the
last day they will use the room.
Check Out CO The guest(s) have departed and the room is
vacant.
Out of Order OOO The room is unrentable and, thus, unassignable at
233
this time.
Lock Out LO The guest has personal items in the room and may
be denied access until approved to re-enter by
management.
Late Check Out The guests have requested and been given an
extension of the regular check-out time.
Laundry
Hotels generate a tremendous amount of laundry and most hotels operate their own on
premise laundry (OPL).
The two major item types cleaned in an OPL are:

1. Linen: A generic term for the guest room sheets, pillowcases, tablecloths, and
napkins washed and dried in the laundry area.
2. Terry: A generic term for the bath towels, hand towels, and washcloths washed
and dried in the laundry area.
A hotel’s laundry needs will vary with the hotel’s size and product offerings
For some smaller hotels, it may make the most sense to enter into a contract with a
company that specializes in laundry operations and then allow that company to operate
the laundry or to provide all of its linen and terry on a daily delivery basis
Regardless of its size, or who operates it, however, the laundry is a major responsibility
of the housekeeping department and the executive housekeeper
STAFFING THE HOUSEKEEPING DEPARTMENT

Historically, the housekeeping department has been one of the most difficult to staff in
the entire hotel
When properly managed, however, this department can be well staffed with stable,
highly professional employees who add tremendously to the success of the hotel
Key Housekeeping Positons include:

 Executive Housekeeper
 Room inspectors
 Room attendants
Highly skilled and motivated room attendants are incredibly vital to a hotel’s success
In many hotels recruiting, selecting, and retaining a sufficient number of room

attendants to adequately clean the number of rooms sold is a difficult process
234
Reasons given for this often include:
 We don’t pay enough to attract the right people.
 The work is too hard.
 There is a labor shortage.
 Today’s workers simply won’t work.
 Workers don’t care about doing a good job anymore.
These statements do not have to be true!
To build an effective room cleaning staff Executive Housekeepers and GMs must:
 Treat room attendants with the respect they deserve at all times
 Ensure that room attendants are supervised only by excellent supervisors
 Maintain room cleaning assignment policies that are perceived as fair by the
room attendants
 Provide excellent, on-going training
 Provide a realistic career ladder for room attendants
 Enforce housekeeping department policies that affect room attendants
consistently and without favoritism
 Ensure room attendant safety through training and appropriate hotel policies
 Provide benefit packages competitive for the area
 Pay fair wages for the area in which the hotel is located
Additional Housekeeping Staff

In addition to the executive housekeeper, inspectors, and room attendants required, the
housekeeping department will employ, depending on its size, one or more house
persons for the cleaning of public spaces as well as records or payroll clerks who serve
as administrative assistants to the executive housekeeper
Additional staff will also include the hotel’s OPL workers
MANAGING HOUSEKEEPING
Managers in the housekeeping department must be among a hotel’s most talented.
Safety
Employee accident rates in the housekeeping department are generally among the
highest in the hotel. There are two reasons for this:
1. The housekeeping department is usually one of the hotel’s largest in terms of
the number of workers it employs.
2. The physical nature of the job.
Training the housekeeping staff properly is just as important as providing them with the
tools to do their jobs.
235
A hotel’s GM ensure the housekeeping department has the necessary equipment,
supplies, and training programs in place to minimize threats to worker safety.
Equipment and Supplies

Housekeepers’ jobs often require the use of:
 Vacuum cleaners
 Washers
 Dryers
 High-capacity linen ironing machines
 Folding machines
 Other equipment
Workers should never be allowed to operate equipment until they are fully trained
Supplies used by housekeepers in the completion of their daily tasks include:

 Powerful cleaners
 Chemicals
Improperly used, these chemicals and cleaners can cause nausea, skin rashes, vomiting,
blindness, and even death
Housekeeping employees should handle chemicals and cleaners only after they have
been properly and thoroughly trained to do so
Specific information on how to handle special chemicals and cleaners can be found on
the mandatory material safety data sheets (MSDSs) that must be secured and made
readily available for employee inspection for each chemical or cleaning product used by
the hotel
Training
In the housekeeping department important areas of required staff training include:
 Chemical handling
 Cleaning procedures
 Correct lifting techniques
 Properly entering guest rooms
 Contending with guest rooms containing:
o Firearms
o Uncaged pets/animals
o Individuals perceived to be threatening
o Guests who are ill/unconscious
o Drugs and drug paraphernalia
o Blood and potential blood-borne pathogens
236
 Guest service
 Guest room security
 Lost and found procedures
Blood-Borne Pathogen is described as any microorganism or virus carried by blood that

can cause a disease.
Blood-borne pathogen training is especially important for room attendants because

they can readily come into contact with body fluids and/or bloody sheets, towels, or
tissues as they clean guest rooms
If employees are not trained in the proper procedures for such situations, they could
become infected
In addition, needles from intravenous drug users or those with medical conditions
requiring the use of hypodermic needles can result in threats to the safety of room
attendants
Employee Scheduling
Properly scheduling employees in the housekeeping department requires skill on the
part of the manager creating the schedule and often flexibility on the part of the staff
The number of room attendants that should be scheduled on any given day depends on
several factors, including:
 size of the guest rooms
 amenities in the guest rooms
 the number of rooms to be cleaned
 the amount of deep cleaning; the intensive cleaning of a guest room, typically
including the thorough cleaning of items such as drapes, lamp shades, carpets,
furniture, and walls
Regularly scheduled deep cleaning of guest rooms is one mark of an effective

housekeeping department
Larger guest rooms take more time to properly clean than smaller ones, and rooms with
special amenities such as refrigerators, microwaves, stoves, and dining areas require
more attendant time than those without these features
The actual number of rooms to be cleaned is the variable most critical to effective
employee scheduling, and it is important to realize that this number is subject to
normal, but rapid, fluctuation
237
Minutes per room is determined by the following computation:
For example, if the average number of minutes per room in a hotel is 30, and if it is
estimated that 200 rooms are to be sold, the two-step formula used to compute the
number of room attendant hours that should be scheduled would be:
Step 1
Step 2
The actual number of individual room attendants scheduled would depend on the
number of full- and part-time workers to be placed on the schedule
238
Inventory Management
The housekeeping department maintains a large number of products used in the
cleaning and servicing of rooms.
The following partial list gives some indication of the very large number of inventory
items that must be maintained by the executive housekeeper
Sheets (all sizes) Glass cleaners
Pillows and pillow cases Furniture polish
Bedspreads Acid-based cleaners
Bath towels Glassware
Hand towels Cups
Washcloths Coffee/coffee filters
Soaps In-room literature
Shampoos Telephone books
Conditioners Pens
Sewing kits Paper pads
Duvets Tissues
Figure 10.2 Sample Product Usage Report (Housekeeping)
When determining the count of products in housekeeping, it is important to remember

to count the entire product on hand, whether it is in use, in storage, or in reserve.
In the example of king-size bedsheets, to accurately determine the total number of

these actually on hand, physical counts would need to be taken in all:
 Guest rooms
 Room attendant carts
 Room attendant storage areas
 Soiled linen areas (including washers and dryers)
 Clean linen storage areas
 New product (unopened) product storage areas
239
Lost and Found
Often, guests either intentionally or accidentally leave valuable items in their rooms
when they check out.
As a result, the housekeeping department must have specific written lost and found
procedures in place
Each of the three types of unclaimed property requires that a housekeeping staff
respond differently. The three property types are:
 Mislaid Property. The owner has unintentionally left the item behind.
 Lost Property. The owner has unintentionally left the item behind, and then
forgotten about it.
 Abandoned Property. The owner has intentionally left the item behind.
The length of time a hotel must hold lost property depends on the value of the property.
The greater the value, the more reasonable it is to hold it for an extended period of
time. To protect the hotel, should have a written record of:
 The date the item was found
 A description of the item
 Location where the item was found (room number, if applicable)
 Name of the finder
 Supervisor who received the item
When returned to its rightful owner, or disposed of, the written record should be
updated to include:
 The date the item was returned to the owner
 Owner’s name/address/telephone number/e-mail address
 Housekeeping manager or supervisor returning the item
 Method of return (mail or in person)
 Date the property was declared to be abandoned
 Name of hotel employee receiving the abandoned property (if applicable)
FACILITY CARE AND CLEANING

Executive housekeepers most often will develop their own inspection checklists to
assess the quality of their departments’ work.
Inspection checklists an excellent starting point for the inspection process.
Public Space Cleaning

Public space cleaning is important because it forms the basis for a guest’s initial
impression of the property
240
Each hotel will have its own requirements for public space cleaning based on its size as
well as its service and product offerings
Instructor Note: Review Figure 10.3 Here
Guest Room Cleaning

Effective guest room cleaning is the heart of the housekeeping department
Routine inspections that identify areas for improvement and reinforce good practices
are a tremendous help in keeping the housekeeping department operating at its best.
GMs often seek to evaluate the effectiveness of their housekeeping departments

through the computation of labor, cleaning, or guest supplies costs per occupied room.
Costs per occupied room are the total costs incurred for an item or area, divided by the
number of rooms occupied in the hotel for the time period examined. Cost per occupied
room is calculated using the following formula:
Sleeping Areas
The sleeping area of a guest room is typically the first part seen by the guest when
entering the room.
It must be kept impeccably clean.
Bath Areas
The bathroom area of a guest room is one that must be very closely inspected by guests
for cleanliness.
Inadequate cleaning of the bathroom area will inevitably result in guest dissatisfaction
and complaints.
Like the sleeping area of the guest room, the bathroom area must be kept absolutely
clean.
241
LAUNDRY
Operating an effective OPL is a multistep process that includes:
Collecting
Room attendants collect soiled linen from guest room sleeping areas, and used terry
products of many sizes from guest room bath areas, spa and exercise areas, and pools
In the guest rooms, room attendants strip beds and place dirty linens directly into
laundry bags attached to their cleaning carts
When full, these laundry bags are either hand carried or carted to the OPL
Bloodstained items and must be placed separately into a biohazard waste bag, a
specially marked plastic bag used in hotels. Laundry items that are blood- or bodily-
fluid-stained and, thus, need special handling in the OPL are placed into these bags for
transporting to the OPL.
Sorting/Repairing
Once in the OPL, laundry is sorted both in terms of its fabric type and degree of staining.
Different fibers and colors require different cleaning chemicals
Different water temperatures or length of washing may also be required
Proper sorting addresses these differences
242
Washing
Washing is the most complex part of the laundering process
The executive housekeeper must teach laundry workers to monitor washing times, wash
temperatures, chemicals, and agitation when actually washing laundry.
Length of washing time is a key factor because heavily stained items will need to be
washed longer than lightly soiled items.
Too long a washing cycle may waste time, water, energy, and chemicals.
If the washing cycle selected is too short, the laundry may not come clean.
Wash water temperature is also important because some fabrics can handle exposure to
very hot water while others cannot.
Generally, hot water cleans better than cold, but fabrics washed in overly hot water for
their fiber type can be damaged.
The chemicals used to wash items are determined by the type of fabric to be cleaned.
Typically, chemicals used in the laundry area include:

 Detergent
 Bleach
 Heavy stain removers
 Starch
 Fabric softeners
The amount of each that should be used is important both to maximize the cleanliness
of the fabric washed and to control the cost of chemical usage.
Drying
Some fabrics are not dried after they are washed
Terry, as well as most other fabrics, must be properly dried before folding or ironing
Drying is the process of moving hot air (140–145F or 60–63C) through the fabrics to
vaporize and remove moisture
Fabrics that are dried must go through a cool-down period in the dryer before they are
removed from it
This minimizes any damage done to the fabric and helps prevent wrinkling
243
Once removed from the dryer, these items should be immediately finished
Finishing/Folding
The finishing of fabrics is important because washers and dryers should not produce
more clean laundry than workers can readily process by ironing and/or folding it
Most finishing work today involves folding than it does ironing
Regardless of how much ironing is done, the space required for finishing laundry must
be adequate
In larger hotels, the folding of linens and terry may be done by machine, while in smaller
properties it is generally done by hand
The finishing area must be very clean so that the finishing process itself does not soil the
laundry
Once the laundry has been finished, it moves to the storage area(s) of the housekeeping
department
Storing
The storage of linens is important because many fabrics must “rest” after washing and
drying if the damage to them is to be minimized
Most laundry experts suggest a rest time of 24 hours for cleaned laundry
A hotel’s housekeeping department should strive to maintain a laundry par level of

three times normal use
 One set in the rooms
 One set in the laundry (being washed and dried)
 One set in storage
When par levels are appropriate the hotel will have adequate products for guests and
enough reserve to permit the laundry to rest for the proper amount of time before
being placed back into guest rooms
If laundry par levels are too high, sufficient storage space may be difficult to find and
maintain, and excessive dollars will have been committed to laundry inventories
If laundry par levels are too low, guests may not get the items they need, and room
attendants may not be able to complete their work in a timely manner
244
Delivering
In smaller hotels, room attendants may themselves simply go to laundry storage areas in
the OPL to pick up linen and terry items
In larger properties, these items may be delivered to housekeeping carts or storage

areas located in various parts of the hotel
Because these linens and terry are frequent targets of theft by hotel guests and staff,
the storage areas containing these items should be kept locked and the housekeeping
staff should inventory them on a regular basis
Although GMs will not generally need to inspect laundry areas as often as guest rooms,
a periodic inspection of these areas is a good idea both for the safety and morale of
laundry workers
245
Figure 10.6: Sample Laundry Area Inspection Sheet
GM’s Laundry Area Inspection
Date: ________________ Inspection assisted by: ____________________________________
Item/Area Outstanding Acceptable Unacceptable Comments

Bags and carts used to
collect laundry are clean
and in good condition
Area used to sort laundry
is clean/uncluttered
Washers clean inside and
out
Washing instruction signs
easily read
Area around washers
clean/ free of clutter
Chemicals properly
labeled and stored
Material safety data
sheets available
Dryer temperatures
controlled, posted
Folding area adequate,
clean of all debris
Laundry storage areas
clean, properly labeled
Other
Other
Other
Other
Other
246
1. Numerous issues can be of concern when a high-level manager in an independently-owned

hotel considers a move to a large hotel management company. These issues are generic
including the “pros and cons” of working for an independent versus a multi-unit company.
Note: these are addressed in questions two and three below. There are other issues
relevant to the personal situation described in the case study. The specific positive factors
include the (a) close location of family and friends, (b) familiarity with the work situation
including no surprises, (c) a reasonable assurance of “fair” compensation increases, and a
stable location if, for example, a manager’s family includes children of school age and/or
spouse with a job in the area. Disadvantages are that a manager would lose the above-cited
positive aspects of the present position.
2. A manager might accept employment with a hotel management company to learn more
about business operations in different hotels while remaining with the same company,
potential compensation increases, and opportunities to move to different locations are
among them. Other advantages may include increasing responsibilities and challenges and
the opportunity to become the general manager for properties of increasing size. A
manager might even become a multi-unit district or regional manager. Another advantage:
the manager will have a large network of unit manager peers to consult with as special
problems arise. The disadvantages of the present position (see question one) would also be
factors in a move to the new position.
3. When one has a good job and enjoys it there is less reason to seek a new position than if
the current position is only acceptable until a better position is found. When the status quo
is good (or even great!), a person is “taking a chance” that another position is better and
that the employment benefits cited by the potential employer are, in fact, correct. The
advantages of the present position (see question one) would also be factors in a decision to
seek a new position.
247
1. Hopefully, the response to this challenge is not determined only on the basis of this
conversation between the front desk manager and the new general manager. Qualified
high-level managers should be empowered to make these types of decisions with the
approval and support of their own manager. Situations are almost always best resolved
when the manager is able to tell a guest, “Here is what we can do,” instead of “I will check
on this and then get back to you.”
The proper contract for the present occupants of the room should specify that the room
rental ends on the day in question, and the agreement for the arriving guests specifies that
the room rental begins on the same day. The front desk manager should inform the present
guest room occupants about the problem and offer them the best available complementary
room. He or she can also indicate that a hotel employee can assist with the move to the
new room and, perhaps, personally deliver a bottle of wine or champagne to the
complementary room. Alternatively, the manager can offer to (a) determine if any
similarly-rated hotel in the area has an unoccupied suite and (b) explain the situation with a
request that a rate lower than rack rate be offered.
2. If the above tactics are successful, the arriving couple will have access to their suite at the
time specified on the contract, and no other compensation or adjustments will be
necessary.
3. The general manager should use this challenge as a real opportunity to show trust in and
respect for the front desk manager. Perhaps, because the relationship between the two
professionals is just now being formed, the general manager could provide feedback to the
manager as the situation is described, and then suggest that the manager consider all
alternatives and then make the decision.
248
Your Opinion Counts
1. This question asks about the types of hotels in which students would like to work. Answers
will vary, and some students may say they want to work in different hospitality industry
segments.
Instructors may emphasize that the average property is located in non-urban zones, is
relatively small, and sells rooms for a modest price. Therefore, students need to have
realistic expectations about their employment opportunities.
Career advancement in limited-service hotels can occur more rapidly while career
advancement in large, full-service hotels will likely take longer. There are greater operating
cost challenges in full service hotels than in smaller limited-service properties. Also,
because there are more departments and employees, general managers and departmental
heads must efficiently coordinate and control of activities within and between various
departments, and it typically takes some time and experience to develop these leadership
traits.
The last part of Question 1 relates to other management concerns that may impact
employment decisions. Instructors may want to preview management basics in Chapter 4
that include planning, decision making, organizing principles, delegation, flow of
communication, motivation, leadership, and discipline. The needs of leisure travelers are
different from those of business travelers. Depending on the hotel’s target market, hoteliers
must provide the products and services that targeted guests most likely will desire. At the
same time, selected aspects (guest safety, cleanliness of facility, and service, for example)
are common guest concerns regardless of the segment in which a hotel operates. Also,
guests are concerned about "value" (perceptions about what they receive for what they
pay), and the extent to which value is received relates to the level of the guests' satisfaction
with a lodging experience.
2. Question 2 reinforces the importance of consistently delivering guest service. Guest

relations training should begin at orientation for new employees by emphasizing that guests
are buying service. Department heads must design specific guest-relations training
applicable to their departments' own needs and systems. It is important to anticipate the
specific needs of guests to be addressed by each department. For example, the concierge at
a resort hotel will need to know about local attractions. Front-desk personnel must be
trained to effectively and efficiently exceed guests’ needs as they check guests in and out of
the property.
249
Guest-relations training is also needed for non-guest contact employees. For example, if
housekeeping employees notice that several guests frequently move furniture in the guest
room to make it more convenient; the issue of room re-arrangement should be reported to
the executive housekeeper. Delivering quality service by recognizing guest preferences is
everyone's job in the hotel!
Training is absolutely critical to the hotel’s success. However, ensuring consistent delivery
of guest service at the hotel will not likely be achieved by training alone. For example, it is
easy to train employees how to make beds, but it may be more difficult to train employees
how to anticipate guests' needs and meet them. Make guest service the heart of the hotel's
culture by create a service culture which helps all employees at all organizational levels to
be alert to the concept of service while they are at work. The hotel can reward employees
who provide high-quality service; this recognizes their efforts and also encourages others to
do the same. Also, empowering line-level employees can help to consistently deliver
greater quality service. Remember that a property's guests judge the quality of service
based in large measure on their encounters with front-line employees.
3. Answers to this question will vary, and excellent career opportunities exist in all types of
properties of all sizes in almost all locations if one is well prepared. The instructor may
suggest that the decision about location, at least at the beginning of one’s career may relate
to long-term career goals.
While personal preferences may be affected by numerous concerns including family,

educational opportunities, healthcare availability, cost of living, weather, and off-job activity
preferences, the ability to learn about the hospitality business should be concern as early
career opportunities are evaluated.
4. This question addresses the labor shortage problem in the lodging industry and asks
students about tactics to retain current employees and to recruit new employees. Specific
activities can include creating a culturally diverse workforce, strictly enforcing a zero-
tolerance harassment policy, and making employee safety a top priority. As a tactic to
recruit new employees, the hotel can make an effort to boost the company's image so
potential employees can feel proud of working there. Networking with internship
coordinators at hospitality programs is also important. Furthermore, during interviews,
managers can share the success of their business and the future direction of the company
with potential employees.
The question also asks for examples of recruitment tactics. Students may note the use of
social media for recruitment, alerting friends and relatives of current employees (internal
recruiting), job fairs, executive search firms, recruiting at schools, and appropriate use of
"help wanted" signs.
Lastly, to be considered as an "employer of choice" within the community, an organization

can (1) create career opportunities for staff and allow them to grow professionally and
250
personally, (2) develop a systematic mentoring program, (3) show that the organization
encourages transfers within company operations, and (4) offer good retirement plans.
5. Career opportunities in the lodging industry are diverse. Numerous types of management
positions are available. Since basic management principles can be utilized in all types of
lodging segments, experience and skills gained in one type of hotel can be transferred to
another. Students can begin to prepare for successful and responsible management
positions by attending a hospitality program, working in a variety of lodging positions,
developing a career ladder for professional development, and talking with hotel managers.
These suggestions emphasize that students should learn as much as they can about the
industry from diverse individuals.
Ask students to develop their own career ladders and to evaluate their own strengths to
market themselves, and their weaknesses to find ways to improve themselves. Identify
career goals and make progress every day towards those career goals. Career planning is an
ongoing process and career plans change as personal lives and circumstances evolve.
251
1. Which area within a hotel is NOT typically cleaned by a hotel’s housekeeping staff?
a. Public
b. Kitchen
c. Laundry
d. Corridors
Answer: b
Learning Objective: 10.1. Explain the role of a hotel’s housekeeping department.
2. What is the title of the individual responsible for the administration of a hotel’s
housekeeping department?
a. Housekeeping Manager
b. Executive Housekeeper
c. Manager of Housekeeping
d. Administrative Housekeeper
Answer: b
3. When a guest room is reported in a PMS as being occupied, but the room was not used,
and no guest or guest belongings are present in the room, that room’s status would be
reported by housekeeping as a
a. due out.
b. stay over.
c. sleep-out.
d. check out.
Answer: c
252
4. Which item would be washed in keeping with a hotel’s standards for cleaning terry?
a. Bed sheet
b. Tablecloth
c. Pillow case
d. Bath towel
Answer: d
5. Who on a resort hotel’s staff would most often be responsible for cleaning lobby elevators
used by guests?
a. House person
b. Room attendant
c. Front desk agent
d. OPL staff member
Answer: a
6. What is the accepted industry term hotel professionals use to identify those housekeepers
who are assigned guest room cleaning duties?
a. Maids
b. House persons
c. Rooms persons
d. Room attendants
Answer: d
Learning Objective: 10.2. Describe the staff positions that exist in a typical hotel’s
housekeeping department.
7. When should room inspectors perform their tasks?

a. Immediately upon guest arrival
b. Immediately upon guest departure
c. After updating room status in the hotel’s PMS
d. Prior to updating room status in the hotel’s PMS
Answer: d
253
8. The value of a hotel’s investment in linen, terry and machines is reduced when
a. turnover among OPL workers is excessive.
b. guests ignore appeals to reuse terry and linen products.
c. current OPL staff provide extensive training to new OPL workers.
d. OPL workers must be used to manage payroll and related clerical tasks.
Answer: a
9. What is the professional association for those managers responsible for the administration
of hotel housekeeping departments?
a. HMA
b. IEHA
c. HSMA
d. AHLEI
Answer: b
10. For how approximately many hours can HIV, the virus that causes AIDS, stay active in dried
blood?
a. 12
b. 24
c. 36
d. 48
Answer: b
Learning Objective: 10.3. Summarize the major management responsibilities for which
executive housekeepers are held accountable.
254
11. Property that a guest unintentionally left behind and has forgotten about is referred to as
a. lost property.
b. mislaid property.
c. discarded property.
d. abandoned property.
Answer: a
12. What is true about a hotel’s material safety data sheets?

a. Their use is voluntary
b. Their use is mandatory
c. They must be provided in English
d. They are for the use of managers only
Answer: b
13. In most cases, what is a reasonable amount of time to hold a valuable item placed into a
hotel’s lost and found?
a. 30 days
b. 45 days
c. 60 days
d. 90 days
Answer: d
255
14. On Monday a hotel scheduled 8 workers, each of which worked 8 hours cleaning guest
rooms. In that time, 174 guest rooms were cleaned. What were the minutes per room
achieved by these workers on Monday?
a. 12 minutes
b. 17 minutes
c. 22 minutes
d. 27 minutes
Answer: c
15. Which type of cleaner would be the best choice for removing rust stains from cement
walkways?
a. Acid-based
b. Alkali-based
c. Diluent-based
d. Solvent-based
Answer: a
16. What is typically the first part of their accommodations guests see when entering their
assigned guest rooms?
a. Bath area
b. Toilet area
c. Storage area
d. Sleeping area
Answer: d
Learning Objective: 10.4. Identify the key tasks that must be completed to properly clean a
hotel’s public spaces and guestrooms.
256
17. Which area in a hotel most often informs a GM of housekeeping deficiencies experienced
by the hotel’s guests?
a. Front office
b. Housekeeping
c. Sales and Marketing
d. Property Operations and Maintenance
Answer: a
18. What is the denominator in the formula managers use to compute Cost per Occupied
Room?
a. Rooms sold
b. Rooms cleaned
c. Rooms reserved
d. Rooms available for sale
Answer: a
19. What is the numerator in the formula a manager would use to calculate room attendant
wage Costs per Occupied Room?
a. Average minutes per room
b. Total room attendant wages
c. Average daily room attendant wages
d. Average hourly room attendant wages
Answer: b
257
20. For approximately how many days can bed bugs go without feeding and still stay alive?
a. 20
b. 100
c. 400
d. 800
Answer: c
21. What is the recommended rest time for cleaned laundry?

a. 6 hours
b. 12 hours
c. 24 hours
d. 48 hours
Answer: c
Learning Objective: 10.5. List the important steps housekeepers must address when
managing a hotel’s on premise laundry area.
22. In most cases, how many times its normal usage should a housekeeping department stock
to maintain proper laundry par levels?
a. 2 times
b. 3 times
c. 4 times
d. 5 times
Answer: b
23. What is the recommended air temperature for drying laundry items?
a. 140–145 F
b. 150–155 F
c. 160–165 F
d. 170–175 F
Answer: a
258
24. An Executive Housekeeper instructs OPL workers to begin cleaning terry and linen products
in a manner that minimizes water extraction. The result of these instructions will likely be
to make the work of OPL employees
a. harder, and increase the OPL’s drying costs.
b. harder and decrease the OPL’s drying costs.
c. easier, and increase the OPL’s drying costs.
d. easier, and decrease the OPL’s drying costs.
Answer: a
25. What results when OPL procedures result in agitation length and strength that is excessive?
a. Excessive water usage
b. Damage to fabric fibers
c. Needless chemical usage
d. Insufficient cleaning of fabrics
Answer: b
259
Chapter 11 – Food and Beverage
CHAPTER 11 OUTLINE
Overview of Hotel Food and Beverage Op- Room-Service Operations

erations Profitability Concerns
Similarities: Hotel and Restaurant Menu Planning Factors
Food Services Operating Issues
Operational Similarities Within Guest Room Service
Personnel Requirement Simi- Issues
larities Banquet Operations
Differences: Hotel and Restaurant Profit Opportunities
Food Services Menu Planning
Marketing-Related Differ- Service Styles
ences Beverage Functions
Other Differences Labor and Other Charges
Organization of Hotel Food and Beverage Banquet Room Set-Up
Services Banquet Contracts and Bill-
Smaller Hotels ing Policies
Larger Hotels VIP Club Floors and Lounges
Hotel À la carte Dining Operations Alcoholic Beverage Operations in Hotels
Menu Planning Trends in Hotel Food and Beverage Opera-
Guest Concerns tions
Menu Impacts Trends Affecting the Food and Bev-
À la carte Service erage Industry
Other Hotel Food and Beverage Services Trends Affecting Hotel Food and
Beverage Operations
260
Chapter Overview
This chapter helps students understand the basic differences between hotel and restaurant
food-service operations. It addresses how hotel food and beverage departments are organized
in full-service and select-service hotels, and describes ala carte, room service and banquet op-
erations. The chapter concludes by presenting an overview of future hotel food and beverage-
service challenges and trends.
Chapter Objectives
1. Review basic differences between hotel and restaurant food-service operations.
2. Describe how hotel food and beverage operations are organized.
3. Provide an overview of hotel à la carte dining operations.
4. Describe three types of hotel food and beverage services: room service, banquet opera-
tions, and concierge (VIP) services.
5. Present an overview of hotel beverage-service operations. 6. Discuss future hotel food
and beverage-service challenges and trends..
261
Lecture Outline
OVERVIEW OF HOTEL FOOD AND BEVERAGE (F&B) OPERATIONS
Operating a profitable hotel F&B (short for food and beverage) department is typically
more complex than operating a profitable restaurant; and some hotel F&B depart-
ments are not profitable
Profitability is how a GM assigns (allocates) revenues and expenses to a department

will dictate, in large measure, the profit levels in that department.
Revenue − Expenses = Profit
A full-service hotel provides extensive food and beverage products and services to
guests
The F&B director is the individual responsible for the effective operation of the F&B
department and normally reports directly to the GM
F&B departments typically generate less revenue, more complaints, and fewer profits
than the rental of a hotel’s guest rooms
Similarities: Hotel and Restaurant Food Services

The basics of managing a commercial food-service operation including those in hotels
and restaurants, are almost identical to those used to successfully operate a
noncommercial food-service operation.
Both types of F&B operations must address financial, human resources, product
control, and marketing issues.
Commercial food-service operation are offered in hotels, restaurants, and other

organizations whose primary purpose involves generation of profits from the sale of
food and beverage products.
Noncommercial Food-Service Operation are provided by healthcare educational,

military, religious, and numerous other organizations whose primary purpose is not to
generate a profit from the sale of food/beverage products but rather is to support
another organizational purpose.
Operational Similarities
Hotel F&B operations are similar to restaurant operations in numerous ways including:
 Planning Issues
 Financial Concerns
 Emphasis on the Guest
 Cost-Control Procedures
262
Personnel Requirement Similarities
Hotel F&B managers typically recruit the same type of individuals as their restaurant
counterparts.
The number of F&B staff needed depends on the hotel’s size and the volume and com-
plexity of its products and services.
In addition to its Director, the F&B department employs staff in numerous positions:
 Culinarians
 Restaurant and Dining Room Managers
 Catering Managers
 Beverage Managers and Bartenders
 Kitchen Stewarding Staff
 Service Staff
Differences: Hotel and Restaurant Food Services

Marketing-Related Differences
 Location within the Community
 Location within the Hotel
 Menu
 Marketing to Hotel Guests
Other Differences
There are two other important differences between hotel and restaurant F&B opera-
tions:
1. The “Contract-Out” Option
Alternatives range from restaurant chain organizations with known brand
names to independent entrepreneurs in their local communities to large organi-
zations that operate restaurants and hotels under varying names
2. The Package Pricing Possibilities
Hotels can package a guest room and F&B product sales to guests
263
Package Pricing Example
Package Charge
Guest room $99.00 Excludes taxes
Champagne $10.00 In room
Chocolates $7.00 In room
Roses $8.00 2 long stem flowers in room
Dinner $60.00 $30/meal for 2 persons
Cocktails/Wine $24.00 2 cocktails/person for 2 persons @ $6.00 each
Service charge $11.00 For dinner and cocktails (13.2%)
Breakfast $20.00 $10.00/person for 2 persons
Service charge $2.00 For breakfast (10%)
$241.00 Rounded down to $239.99 for package price
ORGANIZATION OF HOTEL FOOD AND BEVERAGE SERVICES

Smaller Hotels
Figure 11.2 Organization of Food and Beverage Management Positions
264
Larger Hotels
FIGURE 11.3 Organization of Food and Beverage Management Positions
The director of F&B operations in a large hotel also typically benefits from the technical
assistance of several specialists. These include those with expertise in human re-
sources, centralized purchasing, marketing and sales, and accounting/financial man-
agement.
HOTEL À LA CARTE DINING OPERATIONS

À la carte food services allow guests in a hotel’s restaurant to order and pay for the
specific menu items they desire.
These meals are typically served in one or more dining rooms and other locations.
Some hotels generate significant à la carte business from persons living in the local area
Menu Planning
Menus must offer what guests want to buy, and basic marketing principles should be
used to determine potential guests’ needs.
Menu Planning is the process of determining which food and beverage items will most
please the guests while meeting established cost and profitability objectives.
265
Guest Concerns
Many guest-related factors must be considered when planning menus:
 Purpose of Visit
 Value
 Demographic Factors
 Other Factors
Menu Impacts
Menu-driven impacts include:
 Product Purchases
 Personnel Needs
 Layout/Design Concerns
 Equipment Availability
 Production Volumes
Instructor Note: Review FIGURE 11.4 Menu Planning and Operations
À la carte Service
À la carte food dining can be divided into two activities:
1. Moving food and beverage products from production personnel (cooks and bar-
tenders) to the food and beverage servers who will serve them to guests
2. Moving food beverage products from service staff to the guests
266
OTHER HOTEL FOOD AND BEVERAGE SERVICES
Room-Service Operations
Luxury hotels and many other full-service hotels typically offer room service, and some
provide it 24 hours per day, 7 days per week.
Smaller full-service hotels generally offer room service as well, but frequently on a
more limited basis.
Guests of all types may use room service.
Large hotels employ a room-service manager with total responsibility for this service.
Profitability Concerns
Guests and others who look at room-service menus may think, “With these high prices,
hotels must make a lot of profit on room service.”
In fact, many hotels do not generate profits from room service.
Why is room service frequently unprofitable?

 Labor costs
 Product quality issues
Menu Planning Factors

Special concerns must be addressed when planning room-service menus.
 Quality control
 Minimum order
 Mandatory service charges
 Language issues
Operating Issues
 Communications issues (ordering)
 Communication errors are not easily corrected
 Communication between room-service food production and service staff is
critical
267
Within Guest Room-Service Issues
Room service does not “end” when the order reaches the guest room. Room-service
attendants must be adequately trained in service procedures including:
 Asking guests where the room-service meal should be set up
 Explaining procedures for retrieval of room-service items
 Presenting the guest check and securing payment
 Opening bottles of wine, if applicable
 Providing an attitude of genuine hospitality (as opposed to being rushed to re-
turn to the kitchen for another room-service delivery)
Banquet Operations
The ability to plan and deliver banquet events sold by a catering staff salesperson sepa-
rates F&B departments in hotels from many counterparts in other hospitality industry
segments.
A hotel’s sales and marketing staff is normally responsible for generating banquet busi-
ness by negotiating contracts and arranging details for specific events.
Large properties often have a separate convention-services department whose person-

nel plan and coordinate all activities (including those that are F&B-related) for the
groups visiting the hotel.
Planning a single banquet for a group is similar to planning a banquet for a convention
or more extensive group meeting, but there are some differences, including:
 The need for coffee and refreshment breaks for attendees during intermissions
in business meetings.
 The potential need for hospitality suites and other functions within guest
rooms.
 The potential set-up of receptions, breaks, and even dinner/buffet food services
in public spaces within the hotel that may not normally be used for these pur-
poses.
268
Profit Opportunities
Banquet events are generally more profitable than dining room operations for several
reasons:
 Banquets are frequently used to celebrate special events. This provides the op-
portunity for menu items that are more expensive and, therefore, higher in con-
tribution margin
 The formula for contribution margin is:
Types of banquet bars include:

Hosted Bar: A beverage-service alternative in which the function host pays for
beverages during all or part of the banquet event; also called an “open” bar.
Cash Bars: A beverage-service alternative where guests desiring beverages dur-

ing a banquet function pay for them personally.
Menu Planning
Banquet menus must be very carefully planned to ensure the hotel has the resources
including management and employee experience to execute them
Many hotels develop pre-established banquet menus.
Often these menus can be used without change, or with relatively minor changes such
as a substitution of a specific dessert, vegetable, or other side item.
On other occasions, a menu designed specifically for the host and his/her special event
is desired.
Successful catering is a matter of paying attention to numerous details.
Most hotels utilize a customized banquet event order (BEO).
Instructor Note : Review Figure 11.6 Here
10
269
Service Styles
Banquet events can use numerous ways to serve guests. These include:
 Butler Service
Appetizers and pre-poured champagne can be served by service staff at a re-
ception.
 Buffet Service
Quantities of food are prearranged on a self-service line; guests pass along the
line and help themselves.
 Family Style (English style)

Platters and bowls of food are filled in the kitchen and brought to guests’ tables.
 French Service
Meals are prepared or finished at tableside by service staff.
 Platter Service (Russian service)

Pre-plated food trays are brought to the table where the server places individu-
al portions on guest plates that have been preset.
 Plated Service (American service)

Pre-portioning of food on plates are brought to the table for service to the
guests.
Service styles are a way to differentiate an elegant and often higher-priced banquet
from its less-elegant and lower-priced counterparts.
Beverage Functions
Banquets served in hotels often feature alcoholic beverages of various types including:
 Call brands
 Premium brands
 House brands (well brands)
There are several ways that charges for beverages can be assessed:
 Individual Drink Price
 Bottle Charge
 Per-Person Charge
 Hourly Charge
11
270
Labor and Other Charges
Costs for labor required to produce and serve banquet food and beverages can include:
 Bartenders and barbacks
 Beverage servers
 Beverage cashiers
 Security personnel
 Valet (parking) staff
 Coat room employees
Some hotels also charge a corkage fee; the charge levied when a guest brings their own
bottle of alcoholic beverage to a hotel for consumption at a banquet function or in the
hotel’s dining room.
Banquet Room Set-up

In large hotels, banquet rooms may be set up by housekeeping (public-space) staff.
In other facilities, this activity may be the responsibility of staff members within the
F&B department. Regardless, the required activities are the same.
Numerous details are involved in setting up a banquet room.

Size is determined by:
 Number of guests expected
 Local fire safety codes and ordinances
 Size and type of dining room tables (e.g., round or rectangular)
 Number of seats per table
 Required space for aisles, dance floors, bandstands, other entertainment, head
tables, reception/buffet tables
Timing is critical when:

 The same space is to be used for different functions throughout the same day
 A very large evening event precedes a very large breakfast event in the same
space on the following day
12
271
Banquet Contracts and Billing Policies
Topics to be addressed by banquet contracts typically include:
 Guest contact information
 Agreed-upon charges and prices
 Specific function room assignment
 Last date that function space will be held without a signed contract
 Time by when a guarantee of attendance must be received
 Cancellation policies
 Guarantee reduction policy
 Billing
 Information about the service of alcoholic beverages (if applicable)
 Other information applicable to the specific event
VIP Club Floors and Lounges

VIP club floors and lounges can provide a very wide range of F&B amenities including:
 Alcoholic beverage service with bartender and server or may be offered as
“pour yourself” in many locations
 Food offerings ranging from simple menu items to extensive offerings
 Hot breakfast buffet, often with made-to-order omelets
 “To-go” meals at check-out
ALCOHOLIC BEVERAGE OPERATIONS IN HOTELS

Hotels that serve alcoholic beverages face greater responsibilities in their F&B opera-
tions than do their counterparts without licenses to serve these products.
Today, moderate limits on alcohol consumption of alcohol is necessary for those who
serve and those who consume alcohol because, in part, of the expansion of third-party
liability (dram shop) legislation.
Third-Party Liability (Dram Shop) is an important legal concept that holds the
second party (the hotel serving alcohol) responsible for acts caused by the first
party (the alcohol consumer), if the drinker subsequently causes harm to a third
party (the accident victim). This is often referred to as dram shop liability.
Many GMs require that every employee including those who are not F&B employees be
trained in relevant aspects of beverage alcohol awareness. This training is important for
several reasons including:
 Hotel personnel in non-F&B positions can be trained to recognize and respond
to obvious and visible signs of guests’ and nonguests’ intoxication and report
these incidents to their managers.
 Any employee may observe guests consuming alcohol within the hotel but in lo-
cations where such consumption is not allowed.
13
272
 Front-desk, housekeeping, maintenance, and/or security staff may observe
guests appearing to be underage bringing alcoholic beverages on to the proper-
ty and into guest rooms.
 Employees of any department may observe guests who are legally able to con-
sume alcohol supplying that alcohol to underage guests.
Controlling the sale of alcoholic beverages is difficult enough in dining rooms, bars, and
lounges, but is even more difficult in banquet room settings where guests do not have
a designated server but instead go to a portable bar area and then return to their ta-
bles.
The service of alcoholic beverages during banquets such as these is just another exam-
ple of why managing a hotel’s F&B department is often more challenging than manag-
ing a traditional restaurant or bar.
TRENDS IN HOTEL FOOD AND BEVERAGE OPERATIONS

Trends Affecting the Food and Beverage Industry
 Changing Employee Expectations
 Increased Use of and Reliance on Technology
 Recruiting the Best Leadership Talent
 Food Safety Concerns
 Environmental Concerns
 Food Planning and Purchasing Concerns
o Organic foods
o Locally sourced foods
 Emphasis on Guests’ Health
Trends Affecting Hotel Food and Beverage Operations

 Expanded F&B Offerings in Select-Service Properties
o Lobby bars
o Lobby pantries
o Grab and Go
 Large hotels renting lobby or other prime real estate spaces to well-known restau-
rant brands
 Large hotels seeking to regain their roles as “the places to dine” within their com-
munities
14
273

1. JD must recognize that the restaurant owner’s ideas may be good for an independent res-
taurant, but they are not useful for the hotel. The hotel must offer breakfast for hotel
guests desiring this meal, the menu for all meals must be in concert with what hotel guests
desire, and the property including its food and beverage operation must be marketed (ad-
vertised) to a wider market than just the city. In addition, it’s doubtful the hotel can be
remodeled to accommodate a food service drive up venue.
2. The text points out that a hotel must be marketed with a priority focus on guest room
rentals. While many hotels do successfully market F&B services to the local community,
the operation must be compatible with the needs of those renting guest rooms. The avail-
ability of room service, extensive banquets, and VIP areas require hotel F&B managers to
consider much more than just ala carte operations. Top-level managers have numerous fi-
nancial and other concerns not related to F&B operations that require time and knowledge
to address. In addition, the profitability of the entire operation – not just F&B - is a priority
and may even take precedent over the financial success of the F&B department.
3. The text emphasizes that the basic principles of managing a food service operation are very
similar regardless of whether one manages a restaurant or a hotel F&B department. This
concept may appear out of place given the challenges of the case study and responses to
the above two questions. However, the similarity is that, in both types of operations, the
focus must be on the guests, and the needs of guests differ in hotels and restaurants.
The restaurant owner may offer a great background of operational knowledge and experi-
ence to the hotel, but he will need to learn about and be committed to meet the needs of
the hotel’s guest market.
As with many management situations, the GM’s judgment and decision-making abilities
will be challenged if the employment of the restaurant owner would ever become a possi-
bility.
15
274
1. The hotel will need the assistance of every member of its management team to ensure a
successful event. Hopefully, the F&B Director is aligned with the mission of the property
and can easily recognize how important this event is to the future of the hotel. The GM
should request his assistance for and attendance at the event. The hotel should reimburse
the F&B Director for all non-refundable vacation costs.
2. The GM and her management team must carefully consider and ensure that they success-
fully plan and implement this event. Every detail must be carefully analyzed with every ac-
tivity carefully considered before the contract is initially developed (can the property deliv-
er what it will promise?). The team should focus on what it knows it can do – not on what
will generate the greatest volume of revenue.
The GM should convene the hotel’s executive committee to consider the exact role of each
department in the event including what assistance each department will provide to other
departments. A schedule for subsequent up-date meetings (weekly to begin and more
frequently when date is closer) will also be established.
3. The GM should request that every department head work with his or her management
team to develop a detailed plan of what must be done by an assigned person by a specific
date. The GM should carefully review each departmental plan that must be submitted by a
specific date. The GM should meet with each department head and members of his or her
management team weekly or more frequently to assess progress according to the plan and
to consider alternatives as problems arise.
16
275
Your Opinion Counts

1. The text emphasizes that the basic principles of managing food and beverage operations in
hotels and restaurants are very similar. Therefore, as one learns about and gains experi-
ence in one food service segment, that professional background information will transfer
to a position in another food service segment.
A priority concern when considering a position in a hotel or restaurant is the same: is the
company’s philosophy, vision, and core values in concert with one’s own values, personal
standards, and/or goals? With that issue addressed, another important concern in an en-
try-level management trainee position relates to how much one can learn: the company’s
philosophy about effective training and professional development opportunities.
Each segment may require unique demands and skills; however, students need not to be
concerned about moving between segments since similar management principles apply
to all. Then factors including hours of work, location, job responsibilities, advancement op-
portunities, and compensation and benefits should be considered.
Many managers move between hotel and restaurant food service positions during their ca-
reers because of personal priorities rather than generic advantages and disadvantages to
positions within the two different segments. Employment in food and beverage positions
in both hotels and restaurants offers excellent opportunities to use one's creativity to
exceed guests' needs, to attain career advancement goals, to have constantly changing
personal and professional social contacts, and to obtain satisfaction by serving guests.
2. The process of allocating revenues and expenses to more accurately identify each depart-
ment’s profitability in hotels can be difficult, but it is important to do so.
A basic objective of an accrual accounting system is to match revenues earned with the ex-
penses incurred to generate the revenue. For example, a food service department will
have unreasonably higher food costs with reduced F/B “profits” if the department is ex-
pected to absorb the food costs for meals served to all hotel employees instead of trans-
ferring applicable food costs to other departments for meals served to its employees.
Note: these costs would be considered as a labor (employee benefit) cost by that depart-
ment.
17
276
The allocation process should be cost effective and practical. The American Hotel & Lodg-
ing Association has issued a Uniform System of Accounts for the Lodging Industry
(USALI) to provide specific guidance and/or instructions for providing financial infor-
mation in a uniform manner. This or another reference should be used by accounting
personnel interacting with department managers to determine the allocation process that
should consistently be used by each hotel. Franchised operations and units in a chain or-
ganization should follow the same accounting system to enable comparisons between in-
dividual units in the organization.
3. Catering event coordination and management functions can be the responsibility of per-
sonnel in the sales and marketing or food and beverage department, or the responsibilities
can be shared by staff members in both departments. Keys to any successful system in-
clude the critical need for coordination, communication, and teamwork between person-
nel who assume event management responsibilities.
Several critical activities must be undertaken by personnel with marketing and sales skills
regardless of the department that employs them. Examples include advertising and selling
events, assisting the sponsor with event planning, and serving as the liaison between the
hotel and the sponsor in contract negotiation. Persons in this position may also need to be
available on-site during the event to provide on-site communication and coordination as-
sistance.
It may seem that retaining the entire responsibility for catering events within the F&B de-
partment reduces coordinating and related challenges. However, the functions of advertis-
ing, planning, and interacting with event sponsors are significantly different than the nor-
mal F&B –related activities of food and beverage production and service. Therefore, per-
sons with widely different knowledge and skill backgrounds are needed regardless of the
department with which they are affiliated.
4. Service delivery procedures for room service and dining room service differ. If a room ser-
vice attendant wants to become to an effective dining room server, additional training is
required. Examples include taking orders, suggestive selling, managing orders for guests
with food allergies, ala carte food serving protocols, and teamwork functions related to as-
sisting peers with special tasks. Procedures for setting-up and closing dining areas must al-
so be learned.
Some (especially smaller) hotels do not utilize separate room service personnel, and cross-
training employees who master ala carte and room service duties and responsibilities can
be cost effective as long as service quality is not sacrificed.
18
277
5. The text stresses the importance of training all hotel staff about differing aspects of the
responsible service of alcoholic beverages. Food and beverage managers should adhere to
responsible practices in the service and consumption of alcoholic beverages for the benefit
of both guests and the operation. Although front-desk staff or maintenance employees
are not involved in serving alcoholic beverages, they may need to recognize and respond to
guests and others who are obviously and visibly intoxicated. Also, housekeeping employ-
ees may identify underage guests and others consuming alcoholic beverages. In these and
related situations, non-F&B employees must know what to do.
Many off-the-shelf training tools are available for employees regarding responsible alcohol
consumption. These tools can be modified by a specific property to reduce the time and
costs needed to develop a unique training program for a specific hotel.
19
278
1. Which is the formula mangers use to calculate profits in a food service operation?
a. Revenue – Expense = Profit
b. Revenue x Expense = Profit
c. Revenue + Expense = Profit
d. Revenue ÷ Expense = Profit
Answer: a
Learning Objective: 11.1. Review basic differences between hotel and restaurant food-
service operations.
2. Most popular-priced and fine-dining restaurants

a. do not offer breakfast and are open seven days per week.
b. do not offer breakfast and are not open seven days per week.
c. offer breakfast and are open seven days per week.
d. offer breakfast and are not open seven days per week.
Answer: b
service operations.
3. Compared to the rental of hotel guest rooms, most F&B operations generate less revenue,
a. fewer complaints, and more profits.
b. fewer complaints, and fewer profits.
c. more complaints, and more profits.
d. more complaints, and fewer profits.
Answer: d
service operations.
20
279
4. Which is an example of a non-commercial food service operation?
a. Hotel room service
b. Hotel banquet operation
c. Quick service restaurant
d. Hospital food service operation
Answer: d
service operations.
5. Using a menu for one meal to encourage hotel guests to return for meals at other conven-
ient times is an example of
a. up-selling.
b. cross-selling.
c. menu making.
d. VIP services.
Answer: b
service operations.
6. Which is the position in a hotel that is responsible for selling group functions and interact-
ing with banquet clients?
a. Sous chef
b. Room service manager
c. Catering manager
d. Executive chef
Answer: c
Learning Objective: 11.2. Describe how hotel food and beverage operations are organized.
21
280
7. Which would NOT be a direct report to a hotel F&B Director?
a. Room service manager
b. Beverage manager
c. Restaurant manager
d. Sous chef
Answer: d
8. The organization of a full-service hotel’s F&B services depends primarily on its size and
a. franchisor requirements.
b. revenue volume.
c. location.
d. menu offerings.
Answer: b
9. A full-service hotel’s Food and Beverage Director reports to the hotel’s

a. Banquet Manager.
b. Catering Manager.
c. Executive Chef.
d. General Manager.
Answer: d
10. Value in food service relates to a guest’s perception of menu item quality, service, and din-
ing experience compared to
a. the length of time they wait to be seated.
b. the length of time they wait to order.
c. a menu item’s selling price.
d. a menu item’s portion size.
Answer: c
Learning Objective: 11.3. Provide an overview of hotel ala carte dining operations.
22
281
11. Which is NOT a customer demographic?
a. Age
b. Marital status
c. Education
d. Gender
Answer: c
12. When would a “line-up” training session for staff typically be held?
a. At the beginning of a work shift
b. At the end of a work shift
c. At the beginning of the work week
d. At the end of the work week
Answer: a
13. A hotel F&B Director’s decision to add a menu item that is prepared tableside will have the
most impact on the F&B department’s
a. product purchases.
b. pricing structure.
c. personnel needs.
d. production volumes.
Answer: c
23
282
14. What is true about the cost of providing room service meals?
a. The cost is equal to that of providing dining room service.
b. The cost is higher than that of providing dining room service.
c. The cost is lower than that of providing dining room service.
d. The cost is lower than that of providing dining room service but the cost is more than
offset due to the higher prices charged for menu items served in the dining room.
Answer: b
Learning Objective: 11.4. Describe three types of hotel food and beverage services: room
service, banquet operations, and concierge (VIP) services.
15. What is true about drinks served at a hosted bar?

a. Guests pay the host for the beverages they consume
b. Guests pay the hotel for beverages ordered by the host
c. The host pays the hotel for beverages consumed by guests
d. The hotel comps’ the host's drinks
Answer: c
16. What is the food service term for the amount of money remaining from a food sale after
subtracting the sold item’s cost from its selling price?
a. Check average
b. Food cost percentage
c. Contribution margin
d. Cost of food sold
Answer: c
24
283
17. In a hotel dining room with total revenue of $1,150 and 85 guests served, what would be
hotel’s check average?
a. $13.53
b. $7.39
c. $1.53
d. $0.74
Answer: a
18. Every individual who will serve alcoholic beverages in a hotel must be trained in proper
service procedures, and this training must be
a. provided monthly.
b. provided weekly.
c. properly documented.
d. at least one hour long.
Answer: c
Learning Objective: 11.5. Present an overview of hotel beverage-service operations.
19. In which hotel setting location would it be most difficult to properly control the service of
alcohol?
a. Bar
b. Banquet
c. Lounge
d. Restaurant
Answer: b
20. In a third-party liability (dram shop) lawsuit, who is the second party?
a. The one who served the alcohol
b. The one who was injured
c. The one who caused the injury
d. The one who consumed the alcohol
Answer: a
25
284
21. In a third-party liability (dram shop) lawsuit, who is the third party?
a. The one who served the alcohol
b. The one who was injured
c. The one who caused the injury
d. The one who consumed the alcohol
Answer: b
22. Foods grown and processed without chemicals, preservatives, or artificial flavors or colors
are referred to as
a. convenience foods.
b. organic foods.
c. ready foods.
d. Sous vide foods.
Answer: b
Learning Objective: 11.6. Discuss future hotel food and beverage-service challenges and
trends.
23. A hotel F&B Director is committed to a “farm-to-fork” purchasing philosophy. This F&B
Director would likely purchase many
a. convenience items.
b. locally sourced items.
c. organic items.
d. pre-prepared items.
Answer: b
trends.
26
285
24. Which food item would NOT likely be offered on a hotel’s complimentary continental
breakfast bar?
a. Bagel
b. Bacon
c. Banana
d. Berries
Answer: b
trends.
25. “Farm-to-fork” or “Farm-to- table” trends are driven by concerns about personal health
and
a. product variety.
b. menu item expansion.
c. environmental sustainability.
d. product cost.
Answer: c
trends.
27
286
Chapter 12
Property Operation and Maintenance
CHAPTER 12 OUTLINE
Role of the POM Department Emergency Maintenance

Engineering Outsourced Maintenance
Maintenance Managing Utilities
Design and Renovation Electricity
Staffing the POM Department Lighting
Chief Engineer HVAC
Maintenance Assistants Reducing Electricity Con-
Managing Maintenance sumption
Routine Maintenance Natural Gas
Exterior Maintenance Water and Wastewater
Interior Maintenance Solid Waste
Preventive Maintenance Managing Sustainability
Public Space Benefits of Sustainability
Guest Rooms Leadership in Energy and Environ-
Food Service mental Design Initiatives
Laundry Building Sustainability into Hotel
Other Equipment Operations
Chapter Overview
In this chapter students learn about the role of a hotel’s property operations and maintenance
department and the responsibilities of its leader, the chief engineer. The chapter addresses
the four major areas of routine, preventive, emergency, and outsourced maintenance. It con-
cludes by examining, in detail, the advantages to a hotel of implementing sustainable (green)
practices in its operation.
Chapter Objectives
1. Explain the primary role of a hotel’s POM department.
2. Describe the staff positions that exist in a typical hotel’s POM department.
3. List the types of maintenance a chief engineer must oversee to properly manage a ho-
tel’s POM department.
4. Identify the major areas of utility management for which a hotel’s POM department
staff is responsible.
5. Summarize the advantages to a hotel of implementing sustainable (green) practices in its
operations and maintenance.
287
Lecture Outline
ROLE OF THE PROPERTY OPERATION AND MAINTENANCE (POM) DEPARTMENT
Every hotel has a variety of business assets including its staff, cash in the bank, loyal
guests, and reputation.
The hotel’s grounds, buildings, and equipment comprise its most visible and, usually, its
most expensive business asset.
It is important that the hotel’s owners, GM, and other managers protect and maintain
the hotel facility properly.
An effective POM department achieves important goals, including:

 Protecting and enhancing the financial value of the building and grounds for the
hotel’s owners
 Supporting the efforts of all other hotel departments through timely attention
to their POM needs
 Controlling maintenance and repair costs
 Controlling energy usage
 Increasing the pride and morale of the hotel’s staff
 Helping to ensure the safety of those working in and visiting the hotel
 Minimizing the property’s negative impact on the environment
All of these goals will be achieved if the POM department meets its responsibilities for:
 Engineering
 Maintenance
 Design and Renovation
Engineering
Engineering, as a building specialty, however, is distinct from maintenance.
The engineering of a building refers to the application of physics, chemistry, and math-
ematics to design and operate buildings that provide a comfortable atmosphere for
guests and employees.
A hotel’s chief engineer is the person responsible for the management of a hotel’s
property operation POM department.
Maintenance
Maintenance refers simply to maintaining the hotel’s physical property.
Maintenance-related costs of a hotel vary with its age.
288
Hotel maintenance must be:
 Planned
 Implemented
 Recorded
Design and Renovation

The quality of construction used in the initial building of the hotel will affect POM costs.
Despite the very best of maintenance programs, hotel buildings wear out with use and
must be renovated.
Hotel buildings have a predictable life span that directly affects their maintenance and
renovation needs.
Figure 12.1 Hotel Life Span Building Costs

Building Age Building Characteristics and Requirements
1–3 years Low maintenance costs incurred
3–6 years Maintenance costs increase
6–8 years Refurbishment required; average maintenance costs incurred
8–15 years Minor renovation and refurbishment required
15–22 years Major renovation as well as refurbishment required
22+ years Restoration required; very high-maintenance costs will be incurred
if not completed
Renovation is the process of making repairs that brings a building into good condition.
Refurbishment is a process that involves the major cleaning and redecoration of hotel
areas.
Refurbishment and minor renovation are actually ongoing processes in most hotels.
Major renovation typically takes place every 15–22 years and involves high cost.
289
Figure 12.2 Selected Hotel Renovation and Replacement Considerations
Minor Renovation Major Renovation

Guest Rooms Drapes, bedspreads Bed frames, mattresses
Lamps, shades Wall lights
Carpets Wall vinyl
Upholstered furniture Case goods
Faucets Sinks, tubs, toilets, and
countertops
Mattresses Televisions
F&B: (Front of House) Carpets, chairs, reupholstered Decorative lighting
booths
Table top décor Tables and seating
Dishes, flatware Serving equipment
Wall coverings
F&B: (Back of House) Minor cooking equipment and Ranges, stoves, refrigeration
cookware equipment
Cooking tools and surfaces Dishwashers, sinks
Ceilings, lighting
Public Space Table lamps, lobby furniture Overhead lighting
Lobby carpet Corridor carpet
Lobby wall coverings Corridor vinyl
Meeting rooms Restrooms
Restoration occurs when a hotel undergoes renovation that is so complete that walls
are relocated, rooms and public spaces are totally reconfigured, and mechanical
systems are replaced to modernize the hotel.
A typical hotel undergoes complete restoration every 25–50 years
STAFFING THE POM DEPARTMENT

Chief Engineer
In smaller hotels, the chief engineer may take a very hands-on role in the maintenance
effort (i.e. performing maintenance and repair tasks)
In larger hotels with larger staffs, the chief engineer serves a more administrative role
that consists of planning work, organizing staff, directing employee efforts, and
controlling the POM budget
290
Maintenance Assistants
The POM department will employ maintenance assistants with varying degrees of skills
in the areas of:
 Engineering
 Mechanics
 Plumbing
 Electricity
 Carpentry
 Water treatment
 Landscaping
 Grounds maintenance
The facility needs of a specific hotel will dictate the actual skill, makeup, and number of
POM staff required.
MANAGING MAINTENANCE
The maintenance of a hotel occurs after it has been designed, engineered, and built. It
can be examined in a variety of ways. One helpful way to view its management is to
consider maintenance as:
 Routine
 Preventive
 Emergency
 Outsourced
Routine Maintenance
Exterior Maintenance
Lawn care, landscaping, leaf and snow removal
Actual building maintenance details such as routine roof inspection and repair, window
cleaning and seal inspection, and the care and painting of the building’s wooden
exterior finishes (if applicable)
Interior Maintenance
Replace as needed is a parts or equipment replacement plan that delays installing a
new, substitute part until the original part fails or is near failure.
Total replacement is a parts or equipment replacement plan that involves installing

new or substitute parts based on a predetermined schedule.
When needed, the POM department is given a work order; a hard copy or electronic
form used to initiate and document a request for maintenance.
Work orders are sometimes referred to as a “maintenance request.”
291
Figure 12.4 Hotel Work Order
Sample Hotel Work Order
Work Order Number: (Preassigned) Initiated By:
Date: Time: Room or Location:
Problem Observed:
Received On: Assigned To:
Date Corrected: Time Spent:
POM Employee Comments:
Chief Engineer Comments:
In a well-managed hotel, any staff member who sees an area of concern should be able
to initiate a work order.
Some GMs evaluate the effectiveness of their entire POM department based on the
rapidity with which work orders are completed.
Preventive Maintenance
An effective preventive maintenance (PM) program will save a hotel money by
reducing:
 Long-term repair costs by prolonging equipment life
 Replacement part costs by planning purchases of these parts
 Labor costs by allowing PM to be performed in otherwise slow periods
 Revenue losses from refunds and chargebacks due to guest
dissatisfaction
 Emergency repair costs by minimizing their occurrence
Schedules for PM programs can come from a variety of sources.
292
The POM department should create a specific PM program for the following key areas:
 Public space
 Guest rooms
 Food service
 Laundry
 Other equipment
Instructor Note: Review FIGURE 12.6 (pg 432) Sample Guest Room PM Checklist
Emergency Maintenance
Despite the very best routine and PM efforts of the chief engineer and the POM staff, a
hotel will sometimes experience the need for emergency maintenance.
Emergency maintenance items are defined as those that:

 Are unexpected
 Threaten to negatively affect hotel revenue
 Require immediate attention to minimize damage
 Require labor and parts that may need to be purchased at a premium cost
Outsourced Maintenance
It is unlikely that a hotel’s POM staff will be skilled enough to maintain every piece of
equipment used on the property.
The chief engineer working with the GM and the property’s controller may negotiate
contracts with outside vendors to provide specialized maintenance services.
Contractual agreement topics made between an outside supplier of services and a

hotel’s management include:
 Addressing indemnification for damages, insurance, contracting and
subcontracting options, licenses, payment amounts and terms, performance
(quantity and quality) standards, and start and completion dates.
Indemnification is used to provide someone with protection, especially financial

protection, against possible loss, damage, or liability.
MANAGING UTILITIES
Electricity
Electricity is usually the most expensive form of energy used in hotels
 Can make up 50% - 80% of a hotel’s total utility costs
293
Lighting
Artificial light is produced in a hotel to supplement natural (sun) light.
Natural light is cost-effective and when used properly can have a very positive impact
on utility costs by limiting the amount of artificial light that must be produced.
There are two basic types of fluorescent lamps used inside hotels.
 Compact fluorescent lamps (CFLs) - look like the old-style incandescent bulbs
and are commonly found with integral ballasts and screw bases
 Fluorescent tubes (or circular) lamps - used to light large areas within a hotel
such as offices, hallways, banquet rooms, kitchens, and indoor pool areas.
Light-emitting diode (LED) bulbs also look like the old-style incandescent bulbs and are
the most power-efficient lighting systems available to hotels.
Figure 12.7 Lighting Option Comparisons
Energy Efficiency LED CFL Incandescent

Average bulb life (in hours) 50,000 8,000 1,200
Watts per unit of light gen- 6–8 watts 13–15 watts 60 watts
erated (lumens)
Kilo-watts of electricity used 329 KWh/yr 767 KWh/yr 3,285 KWh/yr
Annual operating cost @ $39.48 $92.04 $394.20
$0.12 per KWh used
A Kilo-Watt is a unit of energy usage equal to 1,000 watt hours. For billing purposes,
electricity charges to a hotel will be measured in kilo-watt hours. Sometimes
abbreviated as KWh, kWh, or kW h.
HVAC
A properly operating HVAC system delivers air to rooms at a desired temperature.
The efficiency at which a hotel’s HVAC system operates and, therefore, the comfort of
the building is affected by numerous factors, including:
 The original temperature of the room
 The temperature of the air delivered to the room
 The relative humidity of the air delivered to the room
 The air movement in the room
 The temperature-absorbing surfaces in the room
294
HVAC systems can be straightforward or very complex, but all consist of specific com-
ponents responsible for heating and cooling the hotel.
 Heating Components
 Cooling Components
Reducing Electricity Consumption

It makes good economic and environmental sense to reduce electricity consumption in
ways that do not negatively influence quality guest service.
GMs include this responsibility in the tasks assigned to their chief engineer.
Figure 12.8 Energy Conservation Techniques
No Cost
• Instruct housekeeping personnel to use natural light when cleaning guest
rooms.
• Close drapes; turn off lights and heating/air-conditioning systems when
rooms are not occupied.
• When possible, during periods of low occupancy, keep a guest room floor
empty and turn off air-conditioning in these rooms.
• Reduce hot water temperatures.
Minimal Cost
• Develop incentive programs to encourage staff to participate in and suggest
energy conservation tactics.
• Seal heating and cooling ductwork.
• Insulate hot water supply pipes and hot water tanks.
• Perform routine maintenance on refrigeration equipment and replace worn
door gaskets.
Longer-Term Investment
• Repaint building exteriors using light colors to deflect sunlight and heat.
• Install motion sensors in rooms to turn on lights and HVAC equipment only
when needed.
• Install programmable thermostats in guest rooms.
• Retrofit incandescent or florescent lamps with low-energy LED lighting.
Natural Gas
In some hotel locations, natural gas, because it is plentiful and cost-effective, is used to
heat water for guest rooms and to power clothes dryers in the laundry area.
The overwhelming majority of chefs and cooks also prefer natural gas for cooking
because of its rapid heat production and the degree of temperature control that it
allows.
Managed properly, natural gas is an extremely safe source of energy.
295
If a hotel is using natural gas equipment of any type, each hot water heater, furnace, or
other piece of equipment should have a PM program designed specifically to minimize
operating costs, ensure safety, and maximize the efficiency of the unit.
Water and Wastewater

Hotels use a lot of water. Aggressively managing a hotel’s water consumption, to
minimize it is a very cost-effective thing to do because it:
 Reduces the number of gallons of water purchased
 Reduces the amount the hotel will pay for sewage (water disposal)
 Reduces, in the case of hot water, water-heating costs because less hot water
must be produced
Figure 12.9 Common Water Conservation Techniques
In Guest Rooms
• Include inspection of all guest room faucets on the PM checklist.
• Inspect toilet flush valves monthly; replace as needed.
• Consider installing “water-saver” showerheads.
• Investigate “Earth Friendly” procedures designed to enlist the aid of guests
in the water conservation process.
In Public Spaces
• Include inspection of all public restroom faucets on the PM checklist.
• Install automatic flush valves in men’s room urinals.
• Where practical, reduce hot water temperatures in public restrooms.
• Check pool and spa fill levels and water pump operation daily.
In OPLs
• Include, as part of the PM program, the monthly inspection of water fittings
on all washers.
• Presoak stained terry and linen rather than double washing.
• Use the lowest hot water wash setting possible while still ensuring clean
terry and linen.
In F&B
• Serve water to diners only on request.
• Operate dishwashers only as needed.
• Use sprayers, not faucets, to pre-rinse dishes and flatware intended to be
machine-washed.
• Use chemical sanitizers rather than excessively hot water to sanitize pots
and pans.
• Use sprayers, not faucets, to rinse/wash produce prior to processing,
cooking, or storage.
10
296
In Outdoor Areas
• Inspect sprinkler systems for leaking and misdirected spraying daily.
• Utilize the sprinkler system only when critically needed; do not overwater.
• Minimize the use of sprayed water for cleaning (driveway and parking areas
for example). Sweep and spot clean these areas instead.
Wastewater is any water whose quality has been negatively affected by its use. This
can include the introduction to the water of human waste (sewage), chemicals, grease,
or other solids.
Wastewater in a hotel is generated by the use of sinks, showers, bathtubs,
toilets, washing machines, and dishwashers.
Solid Waste
Hotels generate a tremendous amount of solid waste or trash. Sources of solid waste
include:
 Packaging materials (cardboard boxes, crates, and bags)
 Kitchen garbage
 Guest room trash
 Yard waste
Source Reduction is an effort by product manufacturers to design and ship products to

minimize waste resulting from a product’s packaging, shipping, and delivery to the end
user.
Recycling, minimizing waste generation, and wise purchasing can all reduce solid waste
disposal costs.
MANAGING SUSTAINABILITY
Environmental Sustainability involves making decisions and taking actions that are in
the interest of protecting nature and the planet with an emphasis on preserving (sus-
taining) the capability of the planet to support human, animal, and plant life.
Benefits of Sustainability
Practices that fall into the category of operating a hotel with a view to sustainability,
these can generally be categorized as one or more of the following:
 Waste minimization
 Energy conservation
 Energy management
 Water conservation
 Water management
 Pollution prevention
 Environmentally sensitive purchasing (sourcing)
11
297
Leadership in Energy and Environmental Design (LEED) Initiatives
Leadership in Energy and Environmental Design (LEED) is a green building certification
program operated by the U.S. Green Building Council.
To receive LEED certification, building projects satisfy prerequisites and earn points to
achieve different levels of certification. Hoteliers can seek LEED certification in one of
several areas:
 Building Design and Construction. Applies to buildings that are being newly con-
structed or going through a major renovation
 Interior Design and Construction. Applies to a project that involves a complete
interior renovation
 Building Operations and Maintenance. Applies to existing buildings that are un-
dergoing improvement work involving very minor or no new construction
 Neighborhood Development. Applies to new land development projects or re-
development projects containing residential units, nonresidential units, or a mix
of both
The better the sustainability efforts included in a project, the greater the number of
points awarded to the project by LEED. Current LEED certifications levels are:
Certified 40–49 points
Silver 50–59 points
Gold 60–79 points
Platinum 80+ points
LEED-certified buildings cost less to operate, are more comfortable, and in some cases
can allow a hotel property to seek and obtain tax rebates or zoning allowances.
Building Sustainability into Hotel Operations

Hotels are increasingly asked by a variety of stakeholders including meeting planners,
corporate and leisure customers, investors and municipalities to quantify the environ-
mental impact of their guests’ stays by providing information indicating the carbon
footprint or greenhouse gas emissions generated by the hotel.
12
298
Metrics such as energy consumption per occupied room, water consumption per occu-
pied room, and waste production per occupied room are important components of un-
derstanding and reducing a hotel’s utility costs and environmental impact.
The following examples are ways to conserve energy, reduce operating costs, and less-
en the hotel’s overall impact on the environment.
 Guest Room Corridors. If the hotel’s lighting has dimming capabilities, dim hallway
lights by 20–30% during daytime hours. Use natural lighting whenever possible.
 Back Rooms and Storage Areas. Ensure HVAC settings are at minimum levels during
hours of low use.
 Kitchen Equipment. Regularly check refrigeration and freezer units for worn or miss-
ing gaskets.
 Laundry. Set laundry hot water temperatures to 120° F (49° C).
 Pools and Hot Tubs. Make sure pools and hot tubs are covered with thermal blan-
kets during nonuse hours to diminish heat loss.
 Housekeeping. Encourage room attendants to turn off all lights and set tempera-
tures to minimum levels of heating or cooling after cleaning each room. Closing
drapes when a room is unoccupied will reduce heat gain in the summer and heat
loss in the winter.
 Front Desk. Assign rooms in clusters so that only occupied building areas or wings
need to be heated or cooled to guest comfort levels. Rooms on top floors, at build-
ing corners, and facing west (in summer) or north (in winter) use the most energy—
consider renting and assigning them to guests after all other rooms have been sold.
13
299

1. In this scenario, it is important that management notify both guests and those employ-
ees to whom guests might make a complaint. These employees might include those in
housekeeping, the front desk, and the maintenance department. A systematic method
of notifying guest would be to call each occupied room and either speak to the checked-
in guest, or leave the guest a voicemail explaining the problem.
The most systematic way of notifying affected employees would be to contact those de-
partment’s managers or supervisors and instruct those departmental leaders to take the
necessary steps to inform their own staff members.
2. It is important that all appropriate employees be notified of the problem now occurring
in the hotel because any of these employees may be approached by a guest. If the em-
ployees are not notified, the problem is likely compounded by workers who appear not
to know what is going on in the hotel. In addition, staff resources may be wasted trying
to address a problem that simply cannot be properly addressed by in-house staff.
3. Front office desk staff receiving a call from a guest who requests a television repair must
have an appropriate response ready. This question asks students to consider what man-
agement must have staff say to guests when a hotel facilities problem is not immediately
rectifiable. This is a common problem and one for which students should be prepared.
4. This question directly addresses an issue of increasing importance. Many franchise

brands now mandate that hotel owners affiliated with their brands offer 100% satisfac-
tion guarantees. In some cases, the guarantee is phrased in such a way as to state: “Full
refund if your problem is not immediately addressed.” In the case of a dirty room, or
leaky faucet, problems may fairly easily be addressed to a guest complete satisfaction. In
cases such as the one in this scenario, however, accommodation cannot be made by the
property.
Student answers will likely vary as to whether a guest should get a full refund. Instruc-
tors can point out the difficulty that would result if all guests in the entire hotel were
given a free night stay due to the loss of television reception. It is easy to see that
providing all guests a free room would be a very expensive proposition for the hotel. Be-
cause that is true, management may need to be creative and satisfy guests in a way that
will prevent the guests from requesting a full refund.
14
300
1. This is clearly a preventable problem. In this scenario, the POM department itself is re-
sponsible for the problems; both the condition of the pool and the resulting on-line
posting. This is a good time for instructors to point out to students that an important
role of the general manager is that of identifying problems, researching solutions, and
ensuring those solutions are implemented. While this problem appears, at first, to be
complex, it truly is not. Unfortunately, the fact that the chief engineer is “sorry” does lit-
tle good.
2. It is apparent in this scenario that two major problems exist. The first relates to the
completion of work. That is addressed in the next question. The greater issue, however,
is the fact that no one in the POM department is ensuring (through visual inspection)
that high-quality maintenance work on the pool is accomplished on a daily basis.
3. The fact that only one hotel employee is adequately trained to maintain the pool is a
significant problem. The guest’s negative online review is a direct result of the depart-
ment’s failure to train an appropriate number of employees to ensure that high-quality
maintenance on the pool is performed seven days a week. Additional training to resolve
this issue is the major problem it must be addressed by the general manager and chief
engineer.
4. To properly address this problem the general manager should require the chief engineer
to develop appropriate training program, have the program reviewed by the general
manager, and then to ensure the program is properly implemented. Instructors can
point out to students that would be appropriate for the general manager to follow up on
this to ensure that the training is being undertaken and that a program of daily pool in-
spection is undertaken as well.
15
301
Your Opinion Counts

1. This question asks students to consider what factors would influence a replacement deci-
sion for exterior parking lot lights in a hotel with parking for 500 cars, given a choice be-
tween systematic total replacement and a "replace as needed" approach. Systematic to-
tal replacement requires changing all bulbs, including those that have not burned out, on
a regularly predetermined schedule. On the other hand, a "replace as needed" program
requires that individual bulbs are replaced immediately when they burn out.
As stated in the chapter, properly maintaining the outside of a hotel impacts its curb ap-
peal, guests' perceptions, and ultimately the building's value. As a result, if burnt out but
unchanged bulbs still are in place before the total replacement schedule replaces them
all, this may impact negatively on guests' perception about the hotel's general care. In
addition, and especially, in the area of parking, all working lights may be very important
for the sake of guest safety. The total replacement approach sacrifices this important
goal.
Before the GM and the chief engineer adopt a "replace as needed" approach, however,
they must take into consideration other factors. Cost of labor is one of these. Generally
speaking, systematic total replacement is more economical than the "replace as needed
approach" when labor costs are high in relation to the cost of the product being re-
placed. Also, if the hotel must rent special equipment (such as a truck-mounted hoist) for
the bulb replacement task, it may be quite expensive to use a "replace as needed" ap-
proach. To help offset this cost, the chief engineer may be able to save money by pur-
chasing bulbs in bulk. Lastly, the general manager and the chief engineer should consider
the aspect of disruptions to the normal operation of business (for example the visual im-
plications of frequently having very large pieces of equipment on-site every time one or
two parking lot bulbs burns out) prior to making a determination as to the best approach
to be used.
2. While the principles that are involved relate to many similar issues, this question ad-
dresses outsourcing considerations that should be assessed before a hotel selects an
outside vendor for lawn and landscape work. During the contractor selection process,
the hotel should consider several important factors. Contract costs are typically among
the general manager’s foremost considerations. If the contractor's suggested costs are
not competitive, the hotel has to negotiate a better price or seek a different contractor
offering better price. However, it is important for a general manager to remember that
work quality should not be disregarded. For example, a vendor may offer relatively inex-
pensive contract fees, but afterward it is found that the contractor's staff is comprised
mostly of inexperienced or poorly trained workers whose efforts are substandard. The
business experience of a particular contractor can be long while the average length of
time their staff stays in that company is short. Thus, ascertaining the technical expertise
and the training-levels of personnel is advisable.
16
302
General managers or their POM managers should make inquiries into the service reputa-
tions of potential contractors. Such information can be found among other chief engi-
neers or general managers of nearby hotels simply by asking about which vendors have
been used and what the general satisfaction levels with them have been. Finally, financial
stability and the quality of equipment the contractor uses, together with information
about the contractor's insurance coverage (liability coverage) should be important con-
siderations.
3. There are several steps management can take to minimize the fact that POM costs are
often highest (due to high maintenance costs) when hotel revenues are lowest (due to
low occupancy rates).
First, managers can make needed equipment and supply purchases during months of
high cash flow (high occupancy). Even where some large maintenance tasks are sched-
uled to be performed during months with expected low occupancy rates (and thus low
cash flows), necessary equipment and supplies can often be purchased in advance so
that only the labor-related costs of maintenance and repair are imposed on the hotel
during low cash flow periods. Secondly, managers can ensure that needed maintenance
work does not involve paying workers over-time pay, because doing so can elevate labor
expenses considerably. Lastly, general managers and their chief engineers may find that
they can reduce their reliance on outside vendors when their occupancy levels are low
because, at such times, the hotel may have more staff available for normally outsourced
tasks such as lawn care maintenance, window cleaning, and the like.
4. This question asks students to address some factors that would influence the time and
financial resources managers would be willing to commit to a comprehensive recycling
program. In hotels, materials such as soiled paper, cardboard, glass, metal containers,
plastic, aluminum, Styrofoam, and paper can often be recycled, and as a result, the hotel
may be able to benefit from reducing disposal costs. Successful and effective compre-
hensive recycling programs, however, most often require a high level of commitment
from many, including the hotel’s management, owners, staff, and even guests.
A hotel owner's view of ecology and environment will most often influence whether or
not the hotel will implement a comprehensive recycling program. While some general
managers and owners strongly believe that operating their hotel in an environmentally
protective manner is the right thing to do, others may have less commitment to this goal.
Secondly, some hotels are adopting comprehensive recycling programs as a response to
community demands regarding environmentally friendly operations. In such cases, if a
high level of community support is available for necessary planning and implementation,
a hotel is more likely to actively participate in an aggressive recycling program, simply to
be perceived as a good corporate citizen. Thirdly, a hotel must consider whether it has
the ability to convey to its own employees the value of ecology and the ability to train its
17
303
employees properly. Instructors should point out that some hotels may not be able to
significantly address sustainability efforts due to a shortage of qualified labor.
5. This question asks students to consider the advantages and disadvantages of having one
major contractor in each maintenance-related area, rather than inviting competitive bids
for each major project, and then selecting the best (lowest) bidder. Student answers will
vary, however, instructors should point out that, when a hotel chooses a specific major
contractor in each area, the hotel can establish a trusting relationship with that contrac-
tor and the quality of work performed by the contractor will be is well known. It is im-
portant to note, however, that in such cases it can be difficult to judge whether that
contractor may, in the long-term, be deceptive about its prices and best values. Compet-
itive bids allow the hotel to ensure best-pricing and to assess any new contractor stipu-
lations or caveats that are appropriate. In addition, competitive bids can take advantage
of lower pricing that may be possible from contractors who are new to the market and
thus are anxious to make good impressions as they seek to gain market share.
18
304
1. The designing of a hotel’s HVAC system would be considered which type of activity?
a. Engineering
b. Maintenance
c. Routine planning
d. Preventive maintenance
Answer: a
Learning Objective: 12.1. Explain the primary role of a hotel’s POM department.
2. Replacement of filters in a hotel’s HVAC system would be considered which type of activi-
ty?
a. Controlling
b. Engineering
c. Maintenance
d. Routine planning
Answer: c
3. An effective HVAC system in a hotel provides comfortable air temperatures and it

a. provides proper air quality.
b. requires minimal maintenance
c. has been designed by the hotel’s chief engineer.
d. must complement the hotel’s water delivery systems.
Answer: a
19
305
4. Keeping careful track of exactly when air filters have been changed in guest room heating
and cooling units is an example of which maintenance activity?
a. Planning
b. Organizing
c. Recording
d. Implementing
Answer: c
5. In general FF&E reserves in a hotel should average what percent of a hotel’s gross reve-
nue?
a. Less than 2%
b. 2-4%
c. 5-7%
d. 8-10%
Answer: b
6. At what age will a hotel building first need minor renovation as well as refurbishment?
a. 3-6 years
b. 8-15 years
c. 16-21 years
d. 22+ years
Answer: b
7. What is the title typically given to the individual responsible for the administration of a
hotel’s property operations and maintenance (POM) department?
a. POM Manager
b. Chief Engineer
c. Director of POM
d. Head of Engineering
Answer: b
Learning Objective: 12.2. Describe the staff positions that exist in a typical hotel’s POM
department.
20
306
8. Which task would NOT typically be assigned to an individual employed as a maintenance
assistant in a hotel?
a. Reset circuit breakers
b. Design electrical systems’
c. Replace electrical switches
d. Use voltage testers and amp probes
Answer: b
department.
9. A hotel purchases a highly complex piece of operating equipment. What is the GM’s role
regarding employee training for the use of this piece of equipment?
a. Ensure the person managing the POM department provides the training.
b. Ensure the company providing the equipment provides employee training.
c. Train the person managing the POM department in the use of the equipment.
d. Hire only maintenance staff with experience operating the piece of equipment.
Answer: b
department.
10. Which types of tasks performed by a POM department involve the customary care of the
hotel facility?
a. Routine
b. Preventive
c. Emergency
d. Outsourced
Answer: a
Learning Objective: 12.3. List the types of maintenance a chief engineer must oversee to
properly manage a hotel’s POM department.
21
307
11. In a well-managed hotel, who should be able to initiate work orders?
a. All employees
b. Only POM staff
c. All salaried employees
d. Only Housekeeping staff
Answer: a
12. Which maintenance tasks performed by a POM department involve the daily cleaning of
the lint traps in dryers used in a hotel’s OPL?
a. Routine
b. Preventive
c. Emergency
d. Outsourced
Answer: b
13. GMs must be most concerned with indemnification-related issues when

a. POM staff are poorly trained.
b. POM staff turnover rates are very high.
c. preventive maintenance activities are undertaken by POM staff.
d. outside vendors, rather than POM staff, are used to provide services.
Answer: d
22
308
14. For which POM activity would it be most important for a hotel to document its routine
maintenance efforts?
a. In-room TV sets
b. Exercise equipment
c. Highway sign lightbulbs
d. Refrigeration compressors
Answer: b
Learning Objective: 12.3. List the types of maintenance a Chief Engineer must oversee to
properly manage a hotel’s property operations and maintenance department.
15. Which maintenance tasks are most likely to require labor and parts purchased at premium
prices?
a. Routine
b. Preventive
c. Emergency
d. Outsourced
Answer: c
16. Which maintenance tasks would most likely require the unplanned use of employee over-
time and the use of outside service providers?
a. Routine
b. Preventive
c. Emergency
d. Outsourced
Answer: b
23
309
17. Which utility cost is typically greatest for hotels?
a. Water
b. Electricity
c. Natural gas
d. Fossil fuels
Answer: b
Learning Objective: 12.4. Identify the major areas of utility management for which a ho-
tel’s POM department staff is responsible.
18. What is measured by lumens?

a. Light intensity
b. Electrical usage
c. Water flow rates
d. Natural gas flow rates
Answer: a
19. The major cost of operating a hotel’s air conditioning system will be related to its use of
a. water.
b. electricity.
c. natural gas.
d. fossils fuels.
Answer: b
24
310
20. In most cases a hotel’s wastewater charges will be reduced when its
a. natural gas usage is reduced.
b. water consumption is reduced.
c. electrical consumption is reduced.
d. fossil fuel consumption is reduced.
Answer: b
21. For what types of equipment would seasonal PM programs be most important?
a. Gas
b. HVAC
c. Kitchen
d. Wastewater
Answer: b
22. Which type of light producing lamps requires special disposal methods because they con-
tain trace amounts of mercury?
a. CFLs
b. LEDs
c. Traditional
d. Incandescent
Answer: a
25
311
23. Which is the highest level of LEED recognition for which a green hotel could qualify?
a. Gold
b. Silver
c. Certified
d. Platinum
Answer: d
Learning Objective: 12.5. Summarize the advantages to a hotel of implementing sustaina-
ble (green) practices in its operations and maintenance.
24. Which two areas of sustainability are most influenced when a hotel’s POM department
installs water flow restrictors in guest room shower heads?
a. Energy conservation and waste minimization
b. Water management and pollution prevention
c. Water management and energy management
d. Energy conservation and environmentally sensitive purchasing
Answer: c
25. What is an energy sensitive, but effective for cleaning, setting for hot water temperatures
to be used in a hotel’s OPL?
a. 90° Fahrenheit (32° Celsius)
b. 100° Fahrenheit (38° Celsius)
c. 110° Fahrenheit (43° Celsius)
d. 120° Fahrenheit (49° Celsius)
Answer: d
26
312
Chapter 13
Personal Safety and Property Security
CHAPTER 13 OUTLINE
Personal Safety Special Safety Issues

Legal Liability and Guest/Employee Swimming Pools
Safety Spas
Staffing for Security Parking Lots
Employee Safety Training Documenting Safety Efforts
Local Law Enforcement OSHA
Agencies Property Security
Safety Resources Threats to Asset Security
Recodable Locks Internal Threats
Alarm Systems External Threats
Surveillance Systems Department-Specific Threats to As-
Emergency Planning set Security
Disturbances Front Office
Medical Emergencies Housekeeping
Guest Notification F&B
Hotel Fires Sales and Marketing
Bomb Threats Property Operation and
Other Emergencies Maintenance
Threats to Data Security
Hotels and Terrorism Threats
Chapter Overview
This chapter introduces students to the concept of legal liability in hotels and stresses the im-
portance of a hotel’s ongoing safety and security efforts. Significant safety resources available
to all hotels are presented. Major topics addressed include emergency planning, OSHA and its
impact on worker safety, and the recognition of significant internal and external threats to a
hotel’s security.
Chapter Objectives
1. Explain the concept of legal liability as it relates to hotel guest and employee safety.
2. Identify significant safety resources available to all hotel GMs.
3. Describe the importance of effective emergency planning in a hotel.
4. Summarize the ways in which OSHA affects worker safety.
5. List significant internal and external threats to a hotel’s security.
313
Lecture Outline
PERSONAL SAFETY
Regardless of the hotel’s size, all GMs have concerns for:
 Safety: The protection of an individual’s physical well-being and health
 Security: The protection of an individual or business’s property or assets
Legal Liability and Guest/Employee Safety

The law requires those who operate hotels to provide the traveling public with an envi-
ronment that is safe and secure.
These laws do not hold hotels responsible for everything that could happen to guests
during their stay because guest safety cannot be ensured.
A hotel will not be held responsible for any resulting injuries if it is determined that the
hotel has exercised reasonable care, a legal concept identifying the amount of care a
reasonably prudent person would exercise in a specific situation.
The legal standard of reasonable care means GMs must operate their hotels with the
degree of care equal to that of other reasonable GMs.
If it is determined that a hotel did not exercise reasonable care in regards to that threat,
it is possible that the hotel will be held wholly or partially liable, or legally required to
compensate for loss or injury.
In such cases, hotels may be required to pay damages; the actual amount of losses or
costs incurred due to the wrongful act of a liable party:
o Compensatory (actual) damages or a monetary amount intended to
compensate injured parties for actual losses or damages they have in-
curred. This typically includes items such as medical bills and lost wages.
o Punitive Damages or a monetary amount assessed to punish liable parties
and to serve as an example to the liable party as well as others not to
commit the wrongful act in the future.
Staffing for Security

 Director of Safety and Security
 Department heads
 GM
 Safety and Security Committee
 Local law enforcement
314
Employee Safety Training
 Property specific training (all employees)
 Department specific training (selected employees)
Employee-directed safety-training programs typically used in many hotels address both

employee and guest safety include:
Fire safety Rodent control

Food safety Workplace violence
Pool safety Sexual harassment
Janitorial safety Guest safety/room key control
Lockout/Tagout (OSHA program) Cardiopulmonary resuscitation (CPR)
Respiratory protection Use of automated external defibrillator
Blood borne pathogens protection (AED)
Back injury prevention Food allergy protocols
Slips, trips, and falls Responsible alcoholic beverage service
Safety Resources
In addition to the training resources that can assist a hotel’s safety efforts, other hotel
resources are available from industry manufacturers and suppliers. These include:
Recodable Locks
 All hotels should use a recodable locking system.
 Each lock contains a device reader and electronic lock control module
connected to a motor-actuated lock mechanism.
 Standard alkaline batteries power the entire lock.
 A visible warning light warns staff when the batteries are within three months
of needing replacing.
Alarm Systems
Alarms of many types are used within the hotel industry. They can be either audible or
silent.
 Internal alarms is a warning system that notifies an area within the hotel if the
alarm is activated
 Contact alarms are a warning system that notifies (contacts) an external entity
such as the fire or police department if the alarm is activated.
315
Internal alarms are generally designed to serve as a deterrent to criminal or mischief
activity. Some important spaces that may be protected by internal alarms include:
 Storage locations
 Hotel facilities such as pools, spas, and exercise areas
 Hotel grounds and perimeter
Some important areas that are more likely to be protected by contact alarms include:
 Front desk
 F&B cashier stations
 Controller’s office
Hotel fire alarms are so important that federal law, as well as local building codes,
mandate them.
Surveillance Systems
Properly implemented, electronic surveillance can play a big role in a hotel’s safety and
security programs. In modern hotels, this surveillance generally is one of two types:
 CCTV/DVR
Closed-circuit television (CCTV) system is one in which video is recorded and
transmitted and all of the elements needed to do so (cameras, display monitors,
and recording devices) are directly connected.
DVR systems utilize cameras wired to a storage device to capture and record ac-
tivities taking place within a designated area of the hotel.
 IP/Wireless
IP/wireless surveillance system is one in which an Internet protocol (IP) camera
send data and recordings via a computer network or the Internet. These sys-
tems tend to deliver a superior image.
Emergency Planning
Despite a GM’s best efforts, safety and security emergencies will occur in your hotel.
To prepare the hotel for a crisis, the GM should develop and implement an effective
emergency plan, a document describing a hotel’s predetermined, intended response to
a safety/security threat that it may encounter.
316
Responses to events such as the following are included in most hotels’ emergency
plans:
 Fire
 Power outages
 Severely inclement weather
 Robbery
 Death of or injury to a guest or employee
 Bomb/terrorist threat
 Intense negative publicity by the media
Many crises share similar characteristics that can be controlled to some degree by pre-
planning. These characteristics include:
 Extreme importance
 Disruption of normal business
 Potential for human suffering or death
 Financial loss
 Potential scrutiny by the media
 Threat to the reputation or financial health of the business
An emergency plan should be kept simple because it will likely be implemented only in
a time of heightened stress.
For each crisis identified, a clearly developed emergency plan would include:
 What type of crisis has occurred
 Who should be contacted when the crisis occurs (include telephone or other
contact information)
 What should be done and who should do it in the event the crisis occurs
 Who should be informed of the results or impact of the crisis when it is over
Disturbances
Guests experiencing disturbance from another guest room, a front-office employee
typically calls the appropriate guest room to request that the disturbance be ended.
 A second call from the front desk may be made or someone from the security
department is sent to the room.
If disturbances occur in public areas, a security-department employee typically visits

the location.
317
Medical Emergencies
When notified about a medical emergency, hotel staff should obtain the following in-
formation:
 The person’s name
 The person’s location
 The nature of the emergency
Staff should then notify the proper emergency responder and provide the following in-
formation:
 The hotel’s name, address, and callback number
 The nearest cross street
 The nature of the emergency
 The person’s general condition and location
 The hotel entrance nearest the site of the person’s location
In a medical emergency, these are appropriate responses for hotel staff.

 Hotel staff should never, under any circumstances, make the decision that
someone does not need emergency assistance after the affected person has re-
quested it.
 When emergency personnel arrive, those individuals should be met by a hotel
staff member at the appropriate hotel entrance, given all relevant information,
and escorted to the affected person’s location.
 Hotel staff should cooperate fully with emergency personnel.
 In the event of a death, the hotel staff should secure the area around the body
until police arrive.
 During and after the emergency, hotel staff must not share information about a
guest’s medical condition with other individuals either inside or outside the ho-
tel unless those individuals have a legitimate need to know.
Guest Notification
To remain prepared for evacuation-related emergencies, the following supplies should
be readily available and inspected weekly to assure an adequate supply and/or proper
working condition:
 Well-stocked first-aid kit
 Flashlights and spare batteries
 Weather band radio and transistor radio with spare batteries
 Working and fully charged camera
 Chalk (to mark doors of evacuated rooms)
 Scissors and/or sharp knives
 Incident reports (A document prepared to record the details of an accident, in-
jury, or disturbance, and the hotel’s response to it.)
 Security log
318
Hotel Fires
Bomb Threats
When taking the call, staff should remain calm and keep the caller on the phone as long
as possible until the proper authorities arrive.
Ask the caller questions such as:

 When will the bomb explode?
 Where is the bomb located?
 What kind of bomb is it?
 Where are you calling from?
 What is the reason for the bomb threat?
Listen for unique background noises (traffic noise, music, or the sound of machinery
Listen for key characteristics of the caller (gender, approximate age, race, voice, accent,
or disguised voice)
Hotel employees throughout the property will need to follow instructions provided by
the proper authorities to help assure their safety.
Other Emergencies
 Severe Wind
 Floods
 Earthquakes
 Severe winter weather
319
Special Safety Issues
Hotels are unique businesses with unique guest safety concerns.
GMs wishing to reduce their legal liability would do well to monitor the staff’s efforts in
all areas where extra caution or efforts are required. These include:
 Swimming Pools
 Spas
 Parking Lots
Swimming Pools
1. Post the pool’s operational hours and open the pool only during those hours.
2. Clearly mark the depths of pools accurately, in both metric measure and
feet/inches.
3. Make sure the pool and pool area is properly illuminated and that any electrical
components are regularly inspected and maintained to meet local electrical codes.
4. Install self-closing and self-latching and/or locking gates to prevent unauthorized
access to the pool area. If possible, lock the entrance to the pool with a recodable
lock to prevent entry by unauthorized persons.
5. Have appropriate, easily accessible lifesaving equipment on hand, as well as at least
one CPR-certified employee on duty at all times the pool is opened.
6. Allow pool use only by registered guests and specifically authorized others.
7. Contact the hotel’s insurer to determine the number, placement, and content of
necessary pool-warning signs and life-support equipment.
8. Post all pool policies and information signs in the language(s) of guests. Enforce the
policies at all times.
9. Provide an emergency telephone in the pool area that rings directly either to the
front desk or to 911 depending on the preference of the hotel’s insurer.
10. Carefully document all activities related to pool maintenance, local ordinance com-
pliance, and operational policy enforcement.
Spas
1. Inspect and document the inspection of spa drain covers on a daily basis.
2. Post all spa policy signs in the language(s) of guests.
3. Install a thermometer and check the spa temperature frequently; record your read-
ings. (A range not to exceed 102°F – 105°F [39°C – 41°C] is recommended.)
4. Display spa temperatures in a manner that is easily readable by guests.
5. Clearly mark the depths of the spa in both metric measures and feet/inches.
6. Do not allow consumption of alcohol while using the spa.
7. Install nonslip flooring surfaces around the spa and provide stairs/ladders for entry.
8. Prohibit spa use by young children and nonguests.
9. Provide an emergency telephone in the spa area that rings directly either to the
front desk or to 911 depending on the preference of the hotel’s insurer.
10. Carefully document all activities related to spa maintenance, local ordinance com-
pliance, and operational policy enforcement.
8
320
Parking Lots
1. Inspect parking lot lighting on a daily basis. Arrange for replacement of burned-out
lights immediately.
2. Inspect parking lot surfaces daily and arrange for pavement patches immediately, if
they threaten guest safety. Keep surfaces free of ice and snow in inclement weath-
er.
3. Ensure parking lot stripes and handicap parking and directional signs are easily seen
to avoid pedestrian/vehicle accidents.
4. Post easily-readable signs in the parking lot reminding guests not to leave valuables
in their vehicles.
5. If valet parking is provided, document the training of all drivers.
6. Require guests to identify their vehicles by license number or make/model/color
upon check-in.
7. Keep landscaping around parking lots well-trimmed to avoid dangerous areas that
may provide hiding places for individuals that could threaten guest safety or prop-
erty security.
8. If possible, arrange for regular and frequent parking lot “drive-through” patrols by
local law enforcement officials.
9. Arrange for daily daytime and nighttime “walk-through” patrols by hotel staff.
10. Use a manager’s daily log to document your parking lot maintenance procedures.
Documenting Safety Efforts

All hotels should carefully document their efforts in safety and security.
MOD checklists demonstrate a consistent and vigilant effort to maintain safety and se-
curity standards and are excellent management tools.
Each hotel GM must determine the frequency, content, and number of checklists that
are appropriate.
Instructor Note: Review, as appropriate, Figure 13.5 here.
Any and all efforts of the hotel related to the safety and security needs of guests should
be well documented.
Reasonable care can sometimes be a difficult concept to prove, and any documentation
the hotel has that can help establish its presence will be useful in proving it was exhib-
ited.
321
OSHA
In 1970, the federal government passed the Occupational Safety and Health Act (OSH
ACT).
That act created, within the Department of Labor, the Occupational Safety and Health
Administration (OSHA), the agency responsible for developing and enforcing regula-
tions related to assuring safe and healthful working conditions.
OSHA helps ensure business:

 Provide a safe workplace for employees by complying with OSHA safety and
health standards.
 Provide workers only with tools and equipment to do their jobs that meet OSHA
specifications for health and safety.
 Establish training programs for employees who operate dangerous equipment
including a written plan that identifies specific equipment and activities that
would require lock out or tag out of the equipment when broken or under re-
pair.
 If over 10 people are employed, develop and implement a written Emergency
Action and Fire Prevention Plan.
 Maintain the “OSHA Form 300, Log of Work-Related Injuries and Illnesses”—an
on-site record of work-related injuries or illnesses.
 Display all required OSHA-issued notices regarding employee rights and safety
in prominent places within the hotel.
 Provide all employees access to the material safety data sheets (MSDSs); a writ-
ten statement from the manufacturer about the contents of the dangerous
chemicals and the best methods of handling them.
 Offer no-cost hepatitis B vaccinations for employees who may come into con-
tact with blood or body fluids.
PROPERTY SECURITY
A hotel’s safety-related programs are designed to keep people safe from harm, while
security-related efforts are directed toward protecting property from theft or damage.
Threats to Asset Security

Threats to the security of assets can come from individuals inside the hotel itself (inter-
nal threats) or from people outside the hotel (external threats).
10
322
Internal Threats
The best approaches to preventing the theft of company property include:
 Carefully screening employees before hiring them
 Reducing the chances for theft through the use of effective recodable locks, in-
ventory systems, and other security measures
 Ensuring that managers, as well as employees, are aware of the penalty for
theft
 Treating all proven cases of similar theft in a similar manner
External Threats
It is important to understand that a robbery is not an occasion to attempt to protect
the hotel’s cash assets.
A robbery is a time to protect staff!
Robbers steal from hotels, but so do guests. In fact, guests are generally much greater
threats to the noncash assets of hotels than are robbers.
Departmental-Specific Threats to Asset Security

Threats to a hotel’s assets can occur at any time and in any department.
Some departments, however, by the nature of their operation, are subject to specific
security threats of which the GM and the affected department heads should be aware.
 Front Office Threats (employee theft, robbery, guest charges)
 Housekeeping Threats (supply items, guest items)
 F&B Threats (theft for nearly all items and assets)
 Sales and Marketing (irregularities with expense accounts
 Property Operation and Maintenance (hand tools and supplies)
Threats to Data Security

There are a number of things GMs can do to minimize the chances of data theft.
 Combine the area of responsibility for hotel safety and security with that of
information technology (IT).
 Ensure the hotels’ information security defenses are as effective and up-to-date
as possible.
Although current law is somewhat unclear about whether or not a business whose sen-
sitive customer information is compromised must inform its customers about the
breach in security, most industry professionals agree that doing so makes good busi-
ness sense.
A failure to notify customers in the event of a data security breach can result in signifi-
cant negative publicity and imply a lack of concern for customer privacy.
11
323
Hotels and Terrorism Threats
GMs in strategic city, airport, and other locations along with those providing facilities
for a large number of guests and/or for large group meetings must be increasingly con-
cerned about terrorism.
The likelihood that a single hotel will be a target of terrorism is small but it increases
with the hotel’s size, location, ownership, and symbolic importance.
Hoteliers whose properties are at a high risk of terrorist attacks must exercise special
vigilance.
While it may not be possible to prevent all possible attacks, hoteliers can take positive
steps to minimize their risk. These include:
 The proper maintenance of existing security and safety equipment and proce-
dures
 Careful consideration of potential vulnerability
 Controlled access to nonpublic areas of the property
 The screening (background checks) of employee applicants
 Management training
 Regular participation in “best practices” discussions with hoteliers who face
similar threats and with local law enforcement officials who can provide guid-
ance
12
324
Instructor Note: Review Figure 13.6 Tactics to Address Terror Attack Threats
Risk of Attack Examples of Appropriate Tactics

Low  Normal procedures for fire, building evacuation, and bomb threats
must be in place and consistently followed.
 All front-office and other staff members require initial and ongoing
training in applicable emergency procedures.
 Front-office staff should be alert for suspicious persons or packages.
 All unattended packages and luggage must be identified or security
staff must be alerted.
 PMS reports of guest listings by name and room number must be
generated daily, and these must be available for emergency use.
 Parking attendants should not allow unattended vehicles at hotel en-
trances; all parking at the hotel should be limited to registered
guests. Special precautions (checking vehicle trunks and restricting
access, for example) may be needed for hotels with parking beneath
the building.
 Luggage and packages left by guests for storage should be inspected
in the guests’ presence.
 Hotel entrances should be restricted to hotel guests.
 • Guest luggage should be scanned; all unauthorized automobiles
including taxis should be kept away from the immediate vicinity of
the hotel; persons entering the hotel must pass through metal detec-
tors
Severe
When reviewing Figure 13.6, note that, as the risk of terror attack threats increase,
more stringent security-related actions are needed.
13
325

1. Student answers may vary, however, instructors should make it clear that hotels often
place reasonable limits on the actions of their guests, and they do so in a variety of set-
tings (for example, preventing smoking in guest rooms and limiting the amount of alco-
hol guests consume in hotel lounges and bars). In this scenario a guest has taken ad-
vantage of the hotel’s indecisive, or poorly communicated, pool policies to hold a “swim
party” for an extremely large number of unregistered guests. The potential liability-
related issues in this scenario should be clear to students. It is for liability-related issues
and situations such as this one that most hotels reserve the use of their various facilities
to “registered guests” only.
2. The safety of the children is clearly the responsibility of both the parent and the hotel. It
is important to note, however, that it is the hotel that will likely be sued if a drowning
occurs. This is so because the hotel will likely be perceived by legal counsel for the plain-
tiff (the injured party) as the one most likely to carry the liability insurance coverage that
would lead to a large financial settlement in the plaintiff’s favor.
3. The only “correct” answer in this case would be to explain to the guest the hotel’s
swimming pool policy. Students should easily be able to see that, if no such policy exists,
the hotel is at an extremely heightened risk of potential liability and increased guest dis-
satisfaction
4. The general manager, in conjunction with the hotel’s liability insurance carrier, must es-
tablish in writing, communicate to guests, and then strictly enforce, a swimming pool
usage policy that minimizes the hotel’s potential liability.
14
326
1. This question raises an issue that is often faced by hotel general managers. That issue is
one of suspected theft by one or more hotel employees. In this scenario, a guest has ac-
cused an employee of theft, and no evidence suggests the employee has ever faced such
accusations in the past. While the general manager must, of course, investigate the
guest’s claims, it is also important to recognize that the employee in this scenario, like all
individuals who are accused of a crime, “is innocent until proven guilty.”
2. If the employee has been accused of theft in the past, the general manager may (but
likely should not) react somewhat differently. This question is included to encourage
students to think about the issue of workers who have been accused of (but not convict-
ed of) past crimes. Instructors should point out current relevant labor-related legislation
regarding the manner in which employers must treat those who have been accused or
arrested (but not convicted) of criminal activity.
3. While employees are indeed “innocent until proven guilty “this question is included to
raise the issue of “reasonable care” as it relates to this (and other) employee-related sit-
uations.
The legal concept of “reasonable care” requires managers to take steps that would be
taken by a reasonably prudent manager. To make this point, instructors might ask stu-
dents to consider how they (the students) would likely respond if they were serving on a
jury seeking to establish liability on the part of the hotel in a guestroom-related theft,
and they were informed by the plaintiff’s attorney that the hotel worker accused of theft
had been accused of guestroom theft 15 times in one year, but the hotel took no action
because it could not “prove” the thefts were the actions of the suspected employee.
Clearly the concept of “foreseeability” would be important in this case and should be
addressed by instructors.
4. The guest in this scenario should be informed that an investigation will take place, and
general manager should ensure that it is properly undertaken. In addition, the hotel’s in-
surance carrier should be notified immediately and then steps must be taken to ensure
the hotel is in compliance with the insurance carrier’s stated procedures re: potential
theft by employees. These procedures should then be followed and communicated to
the guest.
15
327
Your Opinion Counts

1. This question asks students to consider whether they (if they were security managers)
would put their security force in "police-style" uniforms or, instead, would place these
workers in uniforms that "blend in" with their clientele. Instructors should point out that
this issue is the same whether the security staff consists of employees in an in-house se-
curity department, off-duty police officers, or an outside firm contracted to provide ho-
tel security.
Depending on the size and unique characteristics of the property, the staffing and outfit-
ting of security forces may vary. In some cases, even in-house security personnel wear
police-style uniforms rather than a more generic hotel uniform because those hotels
consider that guests may feel a sense of enhanced security when observing the security
force dressed in police-style uniforms. This may be especially true in a hotel located in a
more challenging city area where there are high crime rates. The presence of uniformed
(police-style) security personnel may give to some guests the image of a public law en-
forcement officer and those guests may tend to believe that necessary actions will be
taken by those security personnel if any security-related incident occurs at the property.
Alternatively, the presence of security personnel in a "police-style" uniform (including,
perhaps, visible weapons) may be undesirable in, for example, a resort area where most
guests are leisure (family) travelers. A uniform consisting of a blazer including a name
badge may be more appropriate in such settings. Factors such as the location of a hotel
and characteristics of its guests would influence a manager’s decision making in such
cases. In all cases, however, it is important to note that, if needed, a security presence
should be apparent to all guests and to employees in a hotel.
2. Ensuring guest safety and security is one of the most important aspects of the hotel
business. This question asks students to identify general and department-specific activi-
ties that can help ensure all hotel employees share a concern for guest safety. All em-
ployees should be aware that they have responsibility to help protect the welfare of
guests. If guests suffer from an employee’s or property’s negligence, the property may
be found partially or fully liable for any resulting losses and/or injury. Instructors can
point out the applicability of the legal standard of "reasonable care" in such cases.
To demonstrate reasonable care re: security training, a number of activities can be un-
dertaken. First, all new employees can and should be given a safety and security orienta-
tion when they are hired. The employee handbook should include specific information
about safety and security-related matters. All employees should be able to identify gen-
eral threats to guest safety and know what to do to respond properly to these threats. A
hotel may also elect to show educational videotapes addressing safety and security is-
sues that all hotel employees should be aware of.
16
328
Secondly, activities of a hotel’s safety and security committee should be apparent and
visible. Because the safety and security committee should comprise an interdepart-
mental task force (including hotel managers, supervisors, and hourly employees), the
operation of such a committee reinforces the idea that the protection of guest welfare is
the mutual responsibility of all levels of hotel staff.
Third, the hotel property could select a "safety day" once per quarter or year; and on
such a day all employees could participate in hotel-wide safety training so that all staff
members are reminded that they are integral to the hotels overall guest safety and secu-
rity program.
Regarding departmental-specific activities, it should be noted that each department will

have differing issues regarding specific threats to the safety and security of hotel guests.
As a result, different departments will require individualized staff training. For example,
the front-office staff should be well trained in controlling key access for registered
guests. Employees in the food and beverage department should understand responsibili-
ties and procedures related to serving alcohol to intoxicated guests. Housekeeping staff
must be made aware of factors such as wet floors or broken furniture that may cause
guest injuries. The responsibilities of workers in each department should be outlined for
any anticipated emergency (e.g., fire, floods, tornadoes, and hurricanes) during their ini-
tial emergency training. For example, the front-office staff should be informed that they
must maintain up-to-date guest lists if an outbreak of fire occurs so that the evacuation
of all occupied guests is as efficient as possible.
In large properties, the director of security is generally responsible for implementing ho-
tel security policies and activities. He or she should coordinate with the general manager
and all departmental heads regarding necessary security-related matters that are de-
partmental-specific. In smaller properties, it is the general manager who will most likely
to lead the implementation of department-specific security procedures and activities.
3. This question emphasizes that the general manager must be prepared to deal with a
variety of emergency situations. In this question the emergency to be addressed is a fire.
The chapter describes an emergency plan as "a document describing a hotel's prede-
termined, intended response to a safety and/or security threat encountered by the ho-
tel." In this question students outline a plan for creating a program that they would
implement to prepare their hotel for the potential outbreak of a serious fire. Four stag-
es of such a plan are needed: 1) planning, 2) organizing, 3) implementing, and 4) evalu-
ating.
In the planning stage, managers would gather necessary information about handling
an outbreak of fire from their insurance carrier, OSHA, EI (of the AH&LA), their local fire
officials, and others. From this combined information, managers can draft a proposed plan
including emergency escape procedures. It is important to remember that an emergen-
cy plan must be a written document.
17
329
In the organizing stage managers establish and delegate the specific duties and re-
sponsibilities of each department and/or key individuals. At the implementing stage
managers determine who will be involved and how often practicing the implementa-
tion of the plan will occur (such as, for example, the conducting of fire drills). In the
evaluating stage managers determine who will evaluate the emergency plan and who
will recommend changes to the plan if modifications are necessary.
All departments should be involved in developing a hotel’s emergency plan. The opera-
tion of the safety and security committee consisting of an interdepartmental task force
can make it possible for the participation and input of all departments. External entities
(such as local law enforcement officials, local safety and emergency groups, fire de-
partments and the like) may be enlisted to review and approve the fire emergency plan
developed by the hotel property. Thus, an effective general manager will recognize the
importance of maintaining an excellent relationship with these external entities.
This question also addresses “fire drills,” those activities that may involve clearing the
hotel of all guests as a way of practicing the final fire plan's implementation. The hotel
should practice the implementation of the actual emergency plan where practical. Fire
drills that involve guests actually being evacuated is obviously the most realistic, but it
is also most disruptive to guest comfort. Many (but not all) guests may be annoyed at
being forced to participate in such a drill, rather than appreciate the hotel's c o m -
m e n d a b l e safety and security efforts. Alternatively, fire drills that involve guests be-
ing relatively undisturbed may not provide the best training environment, yet this ap-
proach may still be preferred in some cases.
4. The main purpose of the Occupational Safety and Health Administration (OSHA) is to de-
velop and enforce regulations related to assuring safe and healthy working conditions.
OSHA mandates hotels to comply with a number of extensive safety practices, equip-
ment specifications, and employee communication procedures. Of these regulations,
OSHA mandates that businesses provide all employees with access to appropriate Mate-
rial Safety Data Sheets (MSDS).
The text identifies an MSDS as a written statement describing the potential hazards of,
and best ways to handle, a chemical or toxic substance. The MSDS is provided by the
manufacturer of the product or substance purchased by a hotel and it must be posted or
made readily available in a place where it will be easily accessible to those who will ac-
tually use the product. This question identifies a situation in which these documents
(MSDSs) are provided only in English and Spanish, despite the fact that a hotel has 25
employees who speak five different languages.
18
330
A hotel is not obliged to provide an MSDS in the language of every employee, yet the ho-
tel is required to communicate the necessary information relating to worker safety in a
manner all employees can understand. If the employees do not understand how to han-
dle dangerous products it can cause serious injuries to them or to guests. In this scenar-
io, the hotel has employees who are not fluent in English or Spanish. As a result, the ho-
tel’s managers must ensure that some of their own employees (or others retained for
that specific purpose) can assist in providing needed safety-related information to af-
fected employees. One creative way to do this would be to secure or create pictograms
(language-free images or videos) relating to the handling of dangerous products, and to
then have local OSHA personnel review the materials before they are utilized.
5. Data security is an increasingly important issue to hotel managers. Specific steps manag-
ers can undertake to help ensure the security of sensitive hotel and guest-related infor-
mation include addressing the following issues:
a. Are passwords difficult to crack?
b. Is access to sensitive data properly restricted?
c. Do records exist to document those in the organization who do, and do not, have
access to shared data?
d. Are the hotel’s data access records audited regularly?
e. Where, and how, are back-up records stored?
f. Have the security settings for operating systems been set up and kept up-to-date in
accordance with accepted industry security practices?
g. Is there a disaster recovery plan in case sensitive data is lost?
h. Is there a specific plan for ensuring the security of guest-related financial data and
information?
i. Is there a written plan to deal with the public relations impact of a significant data
breach?
It is important for students to recognize that a significant breach of a hotel’s own, or its
customer’s, sensitive information can be devastating in the court of public opinion. Be-
cause that is true, it is imperative that managers pay close attention to the preparation,
as well as the security and storage, of all their hotels’ sensitive data and information.
19
331
1. When used in relation to hotels, the term “safety” refers to protection of

a. a hotel’s ability to generate revenue.
b. a hotel’s ability to generate operating profits.
c. an individual or business’s property or assets.
d. an individual’s physical well-being and health.
Answer: d
Learning Objective: 13.1. Explain the concept of legal liability as it relates to hotel guest
and employee safety.
2. When a manager knows, or should have known, about a threat to safety, that threat is
considered to be
a. pending
b. imminent
c. foreseeable.
d. forthcoming.
Answer: c
3. What kind of manager, and manager action, is being considered when the legal concept of
reasonable care is assessed by a court?
a. A reasonably fair manager
b. A reasonably prudent manager
c. A reasonably educated manager
d. A reasonably experienced manager
Answer: b
20
332
4. What is always true about employee safety training?
a. It must be offered on a weekly basis
b. It must be offered by OSHA-trained officials
c. It must be offered by local law enforcement officials
d. It must be offered in a language or form all employees can understand
Answer: d
5. Which hotel employees must be trained in the handling of blood-stained items capable of
carrying the human immunodeficiency virus (HIV)?
a. All staff
b. F&B staff
c. Front office staff
d. Housekeeping staff
Answer: d
6. What activity would most prevent failure in a hotel’s recodable locking system?
a. Regular replacement of lock batteries
b. Regular inspection of the hotels electrical system
c. Regular maintenance of the hotel’s back-up generator
d. Regular training in the importance of key card issuing policies
Answer: a
Learning Objective: 13.2. Identify significant safety resources available to all hotel GMs.
7. Which area would most often be protected by a hotel’s internal, rather than external,
alarm system?
a. Front desk
b. Cashier stations
c. Linen storage area
d. Controller’s office
Answer: c
21
333
8. Which area in a hotel would most often be protected by a contact alarm?
a. Exercise room
b. Linen storage area
c. Controller’s office
d. General manager’s office
Answer: c
9. Which is NOT an advantage of a hotel utilizing an IP/Wireless security system rather than
using a CCTV/DVR security system?
a. The IP/Wireless system records in higher definition (HD)
b. The IP camera is wirelessly connected to the recording system
c. The IP/Wireless system allows viewers to zoom in on recorded footage
d. The IP/Wireless system’s cameras cost less to purchase than those used in a
CCTV/DVR system.
Answer: d
10. Who would be notified first if a hotel used contact alarms to monitor its front desk area?
a. Hotel Director of Security
b. Fire or police departments
c. Front Office Manager (FOM)
d. Company providing the alarm system
Answer: b
22
334
11. A jury awards a hotel guest $250,000 in damages for medical expenses directly related to
an injury the guest suffered due to a hotel’s carelessness. What type of damages has the
court awarded this guest?
a. Punitive damages
b. Penalizing damages
c. Retaliatory damages
d. Compensatory damages
Answer: d
12. Which threat to hotel guests’ safety and security would likely be considered foreseeable
by a court assessing reasonable care on the part of the hotel’s management?
a. A slippery floor caused when a guest spills a plate of food from a self-service buffet
line.
b. A broken water pipe that floods a guest room and damages a guest’s belongings.
c. A broken concrete step in the hotel’s entry way that causes a guest to stumble and
fall.
d. Damage to a guest’s vehicle occurring in a parking lot and caused by another guest.
Answer: c
13. An emergency plan identifies a threat to the safety and/or security of a hotel, as well as
a. the hotel’s planned response to it.
b. the legal defense the hotel will use if guests are injured.
c. an estimate of the costs to be incurred if the emergency occurs.
d. a draft of media news releases to be issued after the emergency is over.
Answer: a
Learning Objective: 13.3. Describe the importance of effective emergency planning in a
hotel.
23
335
14. Which event would NOT likely be included in a hotel’s emergency planning documents?
a. Power outage affecting the hotel’s OPL
b. Dryer fire in the hotel’s OPL
c. OPL dryer breakdown
d. Serious injury of an OPL worker
Answer: c
hotel.
15. A hotel’s emergency plan should be kept simple because

a. emergency plans are costly to produce.
b. it must be read and understood by all employees.
c. it will be implemented in a time of heightened stress.
d. a review of it by the courts will be undertaken if the hotel is charged with negligence.
Answer: c
hotel.
16. In the event of an approaching tornado, hotel guests should normally be instructed to go
to the
a. closet in their guest rooms.
b. bath area of their guest rooms.
c. sleeping area of their guest rooms.
d. hallway immediately outside their guest rooms.
Answer: b
hotel.
24
336
17. In which order should guests be notified if a fire breaks out in a guestroom?
a. In numerical order from smallest to largest
b. In numerical order from largest to smallest
c. Rooms on either side of the room on fire first, then the rooms immediately below
the room on fire.
d. Rooms immediately above the room on fire first, then the rooms on either side of the
room on fire.
Answer: c
hotel.
18. What is the highest temperature recommended for operating hotel hot tubs and whirl-
pools?
a. 100F (C-39)
b. 105F (C-41)
c. 110F (C-43)
d. 115F (C-46)
Answer: b
hotel.
19. OSHA does not require a hotel to develop a written Emergency Action and Fire Prevention
Plan if
a. the hotel employs fewer than 10 workers.
b. the hotel’s OSHA Form 300 submissions are up-to-date.
c. no serious accidents have been reported in the previous 12 months.
d. the hotel is part of a chain that has submitted a master Emergency Action and Fire
Prevention Plan.
Answer: a
Learning Objective: 13.4. Summarize the ways in which the OSHA affects worker safety.
25
337
20. Who must develop and distribute the information provided in Material Safety Data
Sheets?
a. The users of potentially hazardous products
b. The sellers of potentially hazardous products
c. The buyers of potentially hazardous products
d. The manufacturers of potentially hazardous products
Answer: d
Learning Objective: 13.4. Summarize the ways in which the OSHA affects worker safety.
21. The purchase of an insurance bond (bonding) is a good way for a hotel to protect itself
against the negative impact of
a. a fire.
b. a robbery.
c. embezzlement.
d. natural disasters.
Answer: c
Learning Objective: 13.5. List significant internal and external threats to a hotel’s security.
22. When a hotel employee falsifies his time card to indicate he worked more hours than he
actually worked, that employee is engaging in
a. fraud.
b. pilferage.
c. collusion.
d. embezzlement.
Answer: a
23. Which is the LEAST important item to protect if hotel staff is confronted by armed or unarmed
robbers?
a. Staff
b. Cash
c. MODs
d. Guests
Answer: b
26
338
24. Which is the best tool hotel managers can use for identifying the inappropriate selling of
hotel guest rooms?
a. Manager’s Daily
b. Discrepancy report
c. Rooms turnover report
d. MOD Room Inspection checklist
Answer: b
25. What is the most important thing hotel managers must consider if their hotels face the
threat of terrorist attacks?
a. Guest safety
b. Property damage
c. Business interruption
d. Damage to their hotels’ reputation
Answer: a
27
339
Chapter 14
Franchise Agreements and
Management Contracts
CHAPTER 14 OUTLINE
The Hotel Franchise Relationship The Hotel Management Company Rela-
Hotel Franchising tionship
Origin and Structure Management Companies
Governmental Regulations Origin and Purpose
Related to Franchises Hotel Management Company
The Franchise Agreement Structures
Major Elements The Management Operating Agree-
Advantages to the Franchisee ment
Advantages to the Franchisor Major Elements
Selecting a Franchisor Advantages to the Hotel
Basic Considerations Owner
The Franchisor Questionnaire Disadvantages to the Hotel
The Product Improvement Owner
Plan Issues Affecting the GM
Negotiating the Franchise Managing the Franchise Re-
Agreement lationship
Managing for a Manage-
ment Company
Chapter Overview
This chapter describes the major elements of hotel franchise agreements and identifies the fac-
tors used to select a franchise company. The chapter addresses management contracts and the
major elements found in management operating agreements. It concludes by addressing the
key issues general managers must consider when managing franchised hotels and/or hotels op-
erated under a management contract.
Chapter Objectives
1. Describe the major elements in a hotel franchise agreement.
2. Identify the major factors to be considered when choosing a hotel franchisor.
3. Explain the purpose of a management operating agreement.
4. Describe the major elements found in a management operating agreement.
5. List the issues GMs must address when operating a franchised hotel.
6. List the issues GMs must address when operating a hotel for a management company.
340
Lecture Outline
THE HOTEL FRANCHISE RELATIONSHIP
Franchising is a business model that allows one independent business entity to use the
logo, trademarks, and operating systems of another business entity for the benefit of
both.
Franchising is a network of interdependent business relationships that allows a number

of entities to share:
 A common brand identification
 A successful method of doing business
 An effective and strong marketing and distribution system
For the franchisee, franchising helps reduce risk.
Hotel Franchising
One of the biggest challenges faced by those who would buy or build a hotel is that of
which flag, if any, the property should “fly.”
Flag is the term used to refer to the specific brand with which a hotel may affili-
ate.
A franchise is an arrangement whereby one party (the brand) allows another (the hotel
owners) to use its logo, name, systems, and resources in exchange for a fee.
A franchise agreement is the legal contract between the hotel’s owners (the franchisee)
and the brand managers (the franchisor), which describes the duties and responsibilities
of each in the franchise relationship.
Origin and Structure

History of hotel franchising is relatively short.
First significant hotel franchising arrangement began in 1950s with Kemmons Wilson
and his Holiday Inn chain.
Today, each brand, depending on the parent company’s structure, will have a brand
manager or president responsible for increasing the number of hotels in the brand and
maintaining the quality standards that have been established for that brand.
In the overwhelming majority of cases, franchise companies do not actually own the ho-
tels operating under their brand names.
Companies, such as these, own the right to sell the brand name and determine
the standards that will be followed by those hotel owners who voluntarily elect
to affiliate with these company’s brands.
341
Governmental Regulations Related to Franchises
Federal Trade Commission is the government entity that enforces federal antitrust and
consumer protection laws in the United States.
It also seeks to ensure that the nation’s business markets function competitively and are
free of undue restrictions caused by acts or practices that are unfair or deceptive.
The FTC now regulates the actions of franchisors through the enforcement of its Fran-
chise Rule.
The Franchise Rule is actually a series of requirements designed to prevent unfair or de-
ceptive franchising practices. The Franchise Rule spells out the obligations of franchisors
when they attempt to sell their franchises to potential franchisees.
An essential part of the Franchise Rule is the requirement that all franchisors must pro-
vide prospective franchisees with a written Franchise Disclosure Document (FDD); the
detailed document the FTC requires franchisors provide to potential franchisees prior to
them signing a franchise agreement.
Franchisors must provide potential franchisees with a properly registered FDD or

equivalent document addressing 23 specific information categories:
1. The Franchisor, Its Predecessors, 14. Patents, Copyrights, and Proprietary

and Affiliates Information
2. Business Experience 15. Obligation to Participate in the Ac-
3. Litigation tual Operation of the Franchised
4. Bankruptcy Business
5. Initial Franchise Fee 16. Restrictions on What the Franchisee
6. Other Fees May Sell
7. Initial Investment 17. Renewal, Termination, Transfer, and
8. Restrictions on Sources of Products Dispute Resolution
9. Franchisee’s Obligations 18. Public Figures
10. Financing 19. Earnings Claims
11. Franchisor’s Obligations 20. List of Franchise Outlets
12. Territory 21. Financial Statements
13. Trademarks 22. Contracts
23. Receipt of Document
The potential franchisee should seek verification of any item in the FDD that is ques-
tionable prior to signing a franchise agreement.
342
FDDs are typically designed to comply with both the laws of the state in which they are
filed and the FTC’s Franchise Rule and they will generally include information about:
 The name of the franchisor and the type of franchise it offers for sale
 The business experience of the franchise company’s officers
 Fees and royalties that must be paid
 Initial investment requirements
 Rights and obligations of the franchisor and franchisee
 Territorial protection (The geographic area within which a franchisor will not
grant a new franchise because the new franchise would directly compete with
one of the franchisor’s currently existing franchisees. Also known as an area of
protection.
 Required operating policies
 Renewal, transfer, and termination procedures
 Earnings claims
 Contact information of current franchisees
 A sample franchise agreement
 Specific information required by each state in which the FOC is to be filed
 The name and address of the legal representative of the franchisor
The Franchise Agreement

When a hotel’s owners elect to affiliate their hotel with a brand, they will sign a fran-
chise agreement with the franchisor’s brand managers.
The franchise agreement will spell out, in great detail, the responsibilities of both the
brand managers (franchisor) and the hotel owners (franchisee).
Major Elements of Franchise Agreements

A franchise agreement is simply a written contract between a franchisor and a franchi-
see. Each brand will develop its own franchise agreement, but the following infor-
mation is typically included:
 Names of the Parties Signing the Agreement
 Detailed Definitions
 License Grant
 Term (Length of Agreement)
 Fees:
o Initial Affiliation Fees
o Royalty Fees
o Marketing Fees
o Reservation Fees
343
 Reports
 Responsibilities of the Franchisor
 Responsibilities of the Franchisee
 Assignment of Agreement
 Termination or Default
 Insurance Requirements
 Requirements for Alteration
 Arbitration and Legal Fees
 Signature Page
Advantages to the Franchisee

The primary advantages to a hotel of buying a franchise are that doing so allows the
hotel’s owners to acquire a brand name with regional or national recognition and to
connect the hotel to the franchisor’s reservation system.
Connectivity to the GDS and the online distribution system (ODD) is a necessity in to-
day’s hotel market.
Affiliation with a strong brand increases the hotel’s sales and, thus, its profitability.
The total fees paid by the hotel owner to the brand managers are related to the
strength of the brand name and the revenue that the name will bring to the hotel.
Fees related to a franchise agreement are sometimes negotiable, on average equal

from 3% to 15% of a hotel’s gross room revenue.
Additional advantages, depending on the franchisor selected, may include:

 Assistance with securing project funding
 The providing of on-site employee training
 Advice on purchasing furnishings and fixtures
 Reduced operating costs resulting from vendors who give brand operators pre-
ferred pricing
 Free or reduced cost interior design assistance
 Post-opening sales and marketing assistance
Advantages to the Franchisor

The greatest advantage to a franchisor of entering into a franchise agreement with a
hotel owner is the increase in fee payments to the brand that will result from the
agreement.
Each additional hotel that affiliates with a hotel brand helps to pay for the fixed over-
head of operating that brand.
344
Selecting a Franchisor
Perhaps one of the most useful services a hotel GM can provide to an owner is that of
assistance in the selection of a hotel brand or brand conversion
Brand Conversion is the process of changing a hotel’s flag from one franchisor to an-
other. Also known as reflagging or rebranding when such assistance is requested.
Conversions can be beneficial to a brand’s owners and those hotel owners who affiliate
with the brand because they allow the brand to grow more quickly.
They can be a detriment to the brand’s image, however, if the converted properties do
not have the features and quality levels of the hotels already in the brand.
Basic Considerations
Franchisors (and their brands) are typically selected based upon:
 The Quality and Experience of the Brand Managers
 Perceived Quality/Service Level of the Brand
 The Amount of Fees Paid to the Franchisor
o Liquidated Damage Fees
o Hardware and Software Fees
o Training, Meetings, and Conventions Fees
 Direction of the Brand
Clues to the future success of the brand can be detected by assessing:

 The number of hotels currently operating under the brand name
 The percentage of hotels, on an annual basis, that have elected to leave the
brand in the past five years
 The number of new properties currently being built under the brand’s name
 The number of existing hotels converting to the brand (if conversions are al-
lowed)
 The ADR trend for the last five years in comparison to the ADR trend for the in-
dustry segment in which the brand directly competes
 The occupancy rate trend for the last five years in comparison to the occupancy
rate trend for the industry segment in which the brand competes
 The percentage of total hotel room revenue contributed by the brand’s reserva-
tion system and the percentage of hotels within the brand that achieve that av-
erage rate of contribution
345
The Franchisor Questionnaire
One way for a potential franchisee to begin the process of narrowing down the number
of prospective franchisors to be evaluated is through the use of a structured series of
questions to which all franchisors under consideration must respond. Questions asked
should address:
 Area of Protection (AOP) is the geographic area, which is designated by a fran-
chisor and granted to a franchisee, in which no directly competing franchisees
will be sold. Also known as Territorial protection
 Brand Standard is a hotel service or feature that must be adopted by any prop-
erty entering a specific hotel brand’s system
 Product Improvement Plan (PIP) is a document detailing the property upgrades

and replacements required if a hotel is to be accepted as one of a specific
brand’s franchised properties
Negotiating the Franchise Agreement

 The stronger the position of each side, the more power each will bring to the nego-
tiating process.
 It is always in the best interest of the hotel’s owners, as well as the GM advising
them, to be represented by an attorney during the franchise agreement finalization
period because these agreements are detailed and complex.
 Franchise agreements, which are drafted by the franchisor, tend to be written in fa-
vor of the franchisor.
 Owners should carefully read every line of the franchise agreement to determine
exactly what the hotel must do to stay in compliance with the agreement, as well as
the penalties incurred if the hotel does not stay in compliance.
THE HOTEL MANAGEMENT COMPANY RELATIONSHIP

If you are a GM in the hotel industry for very long, you will likely work for a hotel man-
agement company that manages a hotel property under a Management Contract.
A management contract is an agreement between a hotel’s owners and a hotel man-

agement company under which the management company operates the hotel for a
fee. Also known as a management agreement or operating agreement.
When a management company secures a contract to operate a hotel, it must provide a

GM. In such a situation, the management company itself, rather than the hotel’s own-
ers, typically employs the GM.
346
Management Companies
Management companies that specialize in helping lenders maintain repossessed prop-
erties until they can be resold will:
 Secure, and if it has already been closed, reopen the hotel.
 Implement sales and marketing plans to maximize the hotel’s short- and long-
term profitability.
 Generate timely and reliable financial operating statements.
 Establish suitable staffing to maximize customer and employee satisfaction.
 Show the hotel to prospective buyers.
 Report regularly to the owners about the hotel’s financial and physical condi-
tions.
Origin and Purpose

Today, with the advent of large and small management companies, owners often find
that, because a hotel management company employs many managers, one or more of
those managers has the exact experience that the owner is looking for.
In many cases, owners face special circumstances in the operation of their hotels. Some
of these special situations can include:
 Reflagging a hotel from a brand perceived as lower in quality to a more highly
regarded brand
 Reflagging a hotel from a brand perceived as higher in quality to less highly re-
garded brand
 Managing/directing a major (complete) renovation of a hotel
 Operating a hotel in a severely depressed market
 Bankruptcy/repossession of the hotel
 Managing a hotel prior to and during its sale to another owner
 Temporarily managing a hotel slated for permanent closing
 Managing a hotel as a result of the unexpected GM vacancy
 Managing a hotel for an extended period of time for owners who elect not to
become directly involved in the day-to-day operation of the property
Unlike the restaurant business, in most cases hotel owners find they cannot lease their
properties to management companies. Rather it is the management company that re-
ceives a predetermined monthly fee (based on a pecentage of revenue) paid to them
by a hotel’s owners in exchange for operating the property.
347
Hotel Management Company Structures
Hotel management companies can be examined from a variety of different viewpoints.
Ways to view management companies is to consider:
 Tiers
First Tier (Management Company): Management companies that operate hotels
for owners using the management company’s trade name as the hotel brand.
Examples of first tier include Hyatt, Hilton, and Sheraton.
Second Tier (Management Company): Management companies that operate ho-

tels for owners who have entered into an agreement to use one of a franchi-
sor’s flags as the hotel brand. Examples of second tier management companies
include White Lodging, Interstate Hotels and Resorts, and Pyramid Hotel Group.
 Number of hotels operated

It is often useful to segment hotel management companies by the extent, if any,
in which they participate in the actual risk and ownership of the hotels they
manage.
As a result, management companies can be examined based upon their participation in

one (or more than one) of the following arrangements:
 The management company is neither a partner in, nor an owner of, the ho-
tels it manages
 The management company is a partner in the ownership of the hotels it
manages
 The management company manages only hotels it owns
 The management company owns, by itself, some of the hotels it manages,
and owns a part, or none at all, of others it manages
A single management company may:

 Own all of a specific hotel as well as manage it
 Manage and be an owning partner in another hotel
 Manage, but not own any part of, yet another hotel property
The Management Operating Agreement

There are as many different contracts between those who own hotels and the man-
agement companies they employ as there are hotels under management contract
348
Major Elements of Management Agreements
Management agreements may quite detailed, or somewhat general in their content,
however, should include:
 The length of the agreement
 Base fees to be charged
 Procedures for extending the contract
 Procedures for early contract termination by either party
 Contract terms in the event of the hotel’s sale
 Incentive fees earned or penalties assessed related to operating perfor-
mance
 Management company investment required or ownership attained
 Exclusivity conditions
o Is the management contract company allowed to operate other ho-
tels that may directly compete with the hotel under contract?
 Reporting relationships and requirements
o How much detail is required and how frequently will these reports be
produced?
 Insurance requirements of the management company
o Who must carry insurance and how much?
 Status of employees
o Are the hotel’s staff members employed by the hotel owner or the
management company?
 The control, if any, that the owner has in the selection or removal of the GM
and other managers employed by the management company and working
at the owner’s hotel
Advantages to the Hotel Owner

A variety of benefits can accrue to hotel owners who select a qualified management
company to operate their hotels. Among these are:
 Improved management quality
 Targeted expertise can be obtained
 Documented managerial effectiveness is available
 Payment for services can be tied to performance
 Long-term partnership opportunities are enhanced
10
349
Disadvantages to the Hotel Owner
Despite many advantages, hotel owners face some disadvantages inherent in the em-
ployment of a management company. These include:
 The owner generally cannot control selection of the on-site GM and other
high-level managers
 Talented managers frequently leave
 The costs of management company errors are borne by the owner
 Transfer of property ownership may be complicated
A buyout is an arrangement in which both contractual parties agree to end the contract
early as a result of one party paying the other an agreed-upon financial compensation.
Issues Affecting the GM

As a professional GM, you are likely to find yourself, at one time or another during your
career, managing a hotel in one of the following situations related to franchisors and
management companies:
 The hotel is operating as a franchise
 The hotel is operating under a management contract
 The hotel is a franchised property operating under a management contract
Managing the Franchise Relationship

Most hotels are affiliated with a franchise.
This is especially true of hotels with more than 75 rooms. As a result, it is likely that you
will manage a hotel where the owners and a brand’s managers have signed a franchise
agreement.
As the GM, this agreement will affect your relationship with:
 The Hotel’s Owners

 The Hotel’s Franchise Service Director (FSD): The representative of a fran-
chise hotel brand who interacts directly with the franchised hotel’s GM and
ownership.
 The Brand
 Hotel Staff
 Hotel Guests
11
350
Managing for a Management Company
Sometimes a management company owns the hotel it operates.
In most cases, the management company does not own the hotel it operates. When
that is so, the GM may be faced with special challenges. These can include:
 Career Management Challenges

 Dual Loyalty Issues (Owners Versus Management Company)
 Strained EOC Relationships
 Affected and Concerned Employees
 Conflicts with Brand Managers
.
12
351

1. The re-branding (re-flagging) of a hotel can be a challenging time for a hotel’s managers.
Systems and standards that were well known to current staff are likely to change to
some degree in virtually every area of a hotel that chooses to affiliate with a new brand.
In the housekeeping department, for example, required in-room amenities may be

changed and this will likely result in modifications to purchasing systems and room at-
tendant training programs. Similarly, at the front desk, systems of taking and recording
room reservations will likely be modified as each franchisor will require the use of its
own PMS system.
Re-branding can be a challenge for a hotel’s existing managers, but it is a challenge that
can usually be met if managers show a willingness to embrace change.
2. Non-management staff is always affected when a hotel is re-branded. From the uniform
colors and styles they will wear, to some specific tasks to be undertaken, the re-branding
of hotel will bring change to all hotel employees. Again, these changes can typically be
implemented without excessive difficulty if employees are open to new ideas and work
methods.
3. A hotel’s guests are impacted in a variety of ways when a hotel is re-branded. First, new
guests who “look to book”, because they are loyal to the new brand will become cus-
tomers. Customers who were loyal to the old brand may leave the hotel (if nearby “old-
brand” alternatives are available to them.) As well, systems and standards of the new
brand may attract different customers to the hotel. Finally, customer’s expectations may
change (to a high or lower point) based on the quality level of the changed brand stand-
ards imposed on the hotel by the new franchisor.
4. The name change can be a positive if the new brand is perceived by potential guests to
be of greater quality than the old brand. When that is the case, the hotel’s sales and
marketing staff can emphasize the improved room and service quality that will result
due to the re-flagging. If the new brand is perceived by most hotel guest to be lower in
quality, sales and marketing staff can emphasize greater value or lower per-night-stay
costs to encourage new business.
13
352
1. Hotel managers employ management companies simply because it is not easy to oper-
ate a hotel, and operational expertise has become more vital to bottom lines than ever
before. With all the technology requirements and systems, the human resources de-
mands, and the strategic capabilities necessary to remain competitive, professional
management companies have become more popular than ever to hotel owners who do
not manage their own hotels.
2. Ownership groups with no experience operating hotels are those most likely to employ
management companies. As indicated in the chapter, the utilization of professional
management companies may make most sense when:
 Reflagging a hotel from a brand perceived as lower in quality to a more highly re-
garded brand
 Reflagging a hotel from a brand perceived as higher in quality to less highly regard-
ed brand
 Managing/directing a major (complete) renovation of a hotel
 Operating a hotel in a severely depressed market
 Bankruptcy/repossession of the hotel
 Managing a hotel prior to and during its sale to another owner
 Temporarily managing a hotel slated for permanent closing
 Managing a hotel as a result of the unexpected GM vacancy
 Managing a hotel for an extended period of time for owners who elect not to be-
come directly involved in the day-to-day operation of the property
3. Students’ answers to this question will likely vary. Those in favor of informing the other
managers will likely cite loyalty, honesty and transparency in defending their positions.
Those opposed to informing the other managers will likely cite the need to minimize fear
and to ensure the short-term successful operation of the property as they defend their
positions. Instructors should point out that both positions do have validity.
4. Factors that would influence this individual’s decision to remain as the hotel’s general
manager under a management company’s operating agreement would include pay and
benefits, (these many not be the same), the reputation of the management company,
and the potential for future advancement. Those managers with excellent credentials
will be better able to determine if they want to stay with the current property or seek
employment elsewhere. Instructors should point out that the occurrence identified in
this case is a common one that may be faced by many managers as their careers pro-
gress.
14
353
Your Opinion Counts
1. This question asks students to consider the types of general managers that are most
marketable. That is, are those managers who choose to manage only hotels affiliated
with a specific brand (i.e. Hyatt only) or are those experienced in managing several dif-
ferent brands more valuable? In most cases, a general manager with diversified experi-
ences will be more valuable in the job market than those who are experienced in only
one brand. Of course, this depends on the situation. If a potential new general manag-
er’s specific experience happens to be exactly the brand an owner is operating, the
chances for employment by that owner are likely very good.
A further question for students is whether the brand with which a manager is affiliated
would affect an owner’s hiring decision. The answer, of course, is yes! However, if as an
owner you are seeking a general manager with a completely different experience from
the brand in which a potential manager has a background (for example a high-end luxury
hotel chain, in contrast to an economy lodge operation), there might be little compatibil-
ity. It is also important for instructors to point that, if the flag of an owner’s hotel is likely
to change in the future, a more flexible general manager who is experienced with two or
more brands is likely to be a better suited candidate.
2. Independent hotels face several critical operating challenges. This is an important con-
cept to communicate to students, however, it should first be made very clear to stu-
dents that even opening an independent hotel is much more difficult than opening a ho-
tel that will be brand affiliated because lenders are less willing to provide funding to ho-
tel investors proposing to develop and operate independent hotels. Second, there are
significant marketing issues that must be addressed by independent hotels. It is typically
more difficult for an independent hotel's owners to build a broadly recognizable name
and image (compared to national and international brand names and images). Thirdly,
although independent hotels can purchase connectivity to the GDS and the ODD, doing
so can be very costly when compared to branded-hotel connectivity costs.
Instructors utilizing this question should also address the issue of a hotel’s “image.”
Guests easily recognize franchised hotel names and images, and have certain expecta-
tions when they see the relevant signs and logos of franchised hotels. For independent
hotels, however, unless customers have heard from their friends, family or colleagues, a
first-time stay at such a venue can be considered as entering somewhat unknown terri-
tory. To illustrate this concept, ask students the images that come to mind, and their re-
actions, if you told them you had booked them a reservation at the “Brookshire Inn” ra-
ther than at the “Holiday Inn.” Finally, most independent hotels do not offer wide access
to the more traditional frequent guest programs. Some guests intentionally stay in
branded hotels to earn points (although this issue may be less critical to potential guests
coming from within a hotel’s local community.)
15
354
To overcome these diverse obstacles, an effective management team can take specific
actions. For example, rather than advertising their hotels in a very wide geographic area
(where the hotel’s name will be less known) they can seek to attract local clientele by
focusing on marketing efforts inside their own communities. Some potential customers
may be tired of regularity and standards offered by branded hotels, so they may look for
fresher and different experiences. Most importantly, the existence of a strong web pres-
ence should readily evident to students and should be addressed in detail by instructors.
The final portion of this question asks whether the trend toward an increased number of
hotels affiliated with brands will continue, and the answer is undoubtedly Yes! As a re-
sult, independent hotels may encounter even greater difficulty competing in the mar-
ketplace in the coming years.
3. This question raises the point that in today’s hotel industry, fewer and fewer franchise
companies own increasingly larger numbers of brands. It then asks students how this
likely affects guests. Using current industry examples, instructors can point out that in
many cases excessive product segmentation can unfairly pit hotel owners against other
owners operating virtually identical hotel products within the same franchise group. In-
structors should remind students that the Franchise Disclosure Document (the detailed
document the FTC requires franchisors provide to potential franchisees prior to them
signing a franchise agreement) should include information about territorial protection
offered by the franchisor (areas of protection). In spite of this, hotel owners often find
that excessive product segmentation can cause two owners within the same brand
company, and in the same close geographic area, to directly compete against each
other.
From their own perspective, guests can become confused with too much proliferation
of brands within a single company. Excessive brand proliferation can damage a hotel
owner’s profit margins, which can lead to a lower level of services and amenities pro-
vided at his or her branded hotel, and thus reduced guest satisfaction. Franchi-
sor/franchisee relationship can also become strained in such situations.
While the positive aspects of brand proliferation do have the potential to increase
product segmentation and thus offer guests increased numbers of choices, it is the
opinion of many industry observers that, in the long-term, excessive brand prolifera-
tion will diminish, rather than enhance, the hotel guest experience. This opinion is cer-
tainly shared by most hotel owners, but is just as often rejected (of course) by fran-
chise brand managers seeking to expand the number of hotels affiliated with their new
brands.
16
355
4. Traditionally hotel management companies receive a predetermined monthly fee (usu-
ally a percentage of gross rooms revenue) from the hotel's owners in exchange for op-
erating a property, regardless of the hotel's operating performance. More recently, this
traditional arrangement has been changing to a fee structure tied to the hotel’s profit-
ability. Hotel owners increasingly negotiate management contracts that tie, at least to
some degree, management company compensation to the hotel’s actual operating
performance.
Calculation of management fees based on a hotel’s operating performance places

pressure on a management company to operator the hotel in the most profitable
manner possible if their fees are to be maximized. In such cases, the greater a hotel’s
profit performance, the higher will be the management company’s fee. Not surprising-
ly, management companies hesitant to adopt a fee arrangement tied solely to operat-
ing profits. To better understand why, instructors can point to hotels located in dis-
tressed markets due to historical events (for example, New York City area hotels oper-
ating immediately after the 9/11 attacks on the world trade center) that can create a
situation in which operating profits are severely depressed regardless of a manage-
ment cop[any’s best efforts. In such cases, a method of calculating fees based on both
total revenue and total operating profits (and perhaps a set base fee) would likely be
most fair to hotel owners and their management companies.
In regard to management fees being tied to actual hotel performance as measured by

Rev PAR indexes generated by the STAR Report, most management companies would
prefer to manage hotels for a percentage of the gross room revenue rather than a fee
determined by STAR report results, because the management company would not typ-
ically exercise complete control over hotel profitability. From a general manager’s per-
spective, however, most would likely indicate that he or she would prefer to manage in
a system where his or her own efforts dictate their income as measured by STAR or
other equally objective metrics.
17
356
5. In most cases a general manager will find that, at some point in his or her career, he or
she will manage a hotel in one or more of the following situations: 1) the hotel is oper-
ating as a franchise; 2) the hotel is operating under a management contract 3) the ho-
tel is a franchise operating under a management contract. This question addresses sit-
uation #3 above; the challenges of the general manager who is employed by a man-
agement company and who operates a branded hotel.
Brand affiliation and management contracts affect the day-to-day responsibilities of a

general manager and the chapter addresses issues that must be considered by those
who will navigate both the franchise relationship and the management company
agreement. The franchise agreement directly affects the general manager’s relation-
ship with the hotel's owners, the hotel's franchise services director, the hotel’s staff,
and its guests. As well, there are special challenges when a hotel is operated by a man-
agement company (and where the hotel owner is not the management company). In
addition, such situations can create career management challenges, dual loyalty issues,
and even conflicts with brand managers.
The diverse interests of staff, guests, the brand, the management company, and the
hotel's owners can at times complicate a general manager’s position. The important is-
sue addressed in this question is: "In which entity’s best interests should the general
manager operate a hotel, if two (or more) of these groups encounter conflicts?" In-
structors may wish to cite specific examples from their own industry experience. For
purposes of discussion, instructors may wish to ask students how they would react if
the management company employing them has three hotel contracts in the immediate
area, and it wants to "bulk" purchase long-distance telephone service from a single car-
rier. Students can be asked to assume that, in this example, the costs of long distance
charges in the hotel they manage would go up slightly, but in the other two properties
operated by the management company, long-distance costs would decrease dramati-
cally. In this scenario, the best interest of the management company is to achieve the
lowest price, in total, from the long-distance service. On the other hand, the best in-
terest of the single property managed by the student would be maintaining its current
lower costs (because the owners of the property managed by the student would likely
have no interest in the cost savings achieved by other properties). As a result, these
hotel owners would not likely wish to participate in the management company’s pro-
posed bulk purchase arrangement.
Professional general managers are aware of various potential conflicts that arise with
complex hotel operating structures, and they should always be prepared to do what is
right for their hotel’s owners, while at the same time satisfying the long-term interests
of their management company employers.
18
357
1. What is the name of the legal contract describing the relationship between a hotel owner
and the hotel brand with which the owner seeks to affiliate?
a. Franchise agreement
b. Franchise offering circular
c. Product improvement plan
d. Franchise disclosure document
Answer: a
Learning Objective: 14.1. Describe the major elements in a hotel franchise agreement.
2. Which governmental agency in the U.S. regulates the actions of franchisors?

a. Department of the Treasury
b. Federal Trade Commission (FTC)
c. Small Business Administration (SBA)
d. Consumer Financial Protection Bureau
Answer: b
3. The hotel occupancy tax is also know in the hotel industry as the
a. inn tax.
b. bed tax.
c. sleep tax.
d. pillow tax.
Answer: b
19
358
4. The purpose of a “window” in a franchise agreement is to give franchisors and franchisees
the right to
a. early extension of their agreements.
b. early termination of their agreements.
c. renegotiate the area of protection called for in the agreements.
d. renegotiate the franchise fees that must be paid during the life of the agreements.
Answer: b
5. Who is responsible for verifying the accuracy of information presented in a Franchise

Disclosure Document (FDD)?
a. A Federal governmental agency
b. The person or company reading the FDD
c. The person or company preparing the FDD
d. A governmental agency operating in the state in which the FDD was filed
Answer: b
6. Two primary advantages a hotel gains by affiliating with a franchised brand are name
recognition and
a. reduced per occupied room labor costs.
b. lower levels of commissions paid to OTAs.
c. connection to the brand’s reservation system.
d. the ability to employ temporary workers when volume fluctuations greatly.
Answer: c
20
359
7. A franchised hotel generates $2,000,000 per year in gross rooms revenue. What amount
of franchise fees is this hotel likely to be required to pay its franchisor on this level of
rooms revenue?
a. Less than $60,000
b. $60,000 to $300,000
c. $300,001 to $500,000
d. Over $500,000
Answer: b
8. In an effort to rapidly expand the growth of an aging hotel brand, its brand managers may
allow a significant number of brand
a. swaps.
b. alterations.
c. conversions.
d. foreclosures.
Answer: c
Learning Objective: 14.2. Identify the major factors to be considered when choosing a ho-
tel franchisor.
9. Who absorbs a hotel’s operating losses when it is affiliated with a national brand?
a. The hotel’s managers
b. The brand’s managers
c. The owners of the hotel
d. The owners of the brand
Answer: c
tel franchisor.
21
360
10. The purpose of liquidation fees identified in a franchise agreement is to compensate the
a. franchisor for early exit by the franchisee.
b. franchisee for early exit by the franchisor.
c. franchisor for an agreement extension requested by the franchisee.
d. franchisee for an agreement extension requested by the franchisor.
Answer: a
tel franchisor.
11. The purpose of an area of protection clause in a franchise agreement is to

a. limit the total number of hotels sold in a defined geographic area.
b. expand the total number of hotels sold in a defined geographic area.
c. limit the number of a specific brand of hotels in a defined geographic area.
d. expand the number of a specific brand of hotels in a defined geographic area.
Answer: c
tel franchisor.
12. A management company has secured a contract to operate a branded hotel. Who will typ-
ically employ the hotel’s GM in this situation?
a. The hotel owner
b. The brand managers
c. The hotel’s franchisor
d. The management company
Answer: d
Learning Objective: 14.3. Explain the purpose of a management operating agreement.
22
361
13. A depressed hotel market is one in which
a. hotels find it very difficult to find and retain qualified workers.
b. there are too few hotels operating in the market.
c. there are large numbers of franchised hotels in the market.
d. hotels in the market are operating at occupancy levels or ADRs that are well below
their historic averages.
Answer: d
14. From the list of alternatives below, the hotel management company that would be ranked
as largest would be the company
a. managing the largest number of hotels.
b. responsible for the management of the most sleeping rooms.
c. managing the largest number of different hotel brands.
d. responsible for managing the most hotels within the same brand.
Answer: b
15. In most cases the fees charged by a management company to operate a hotel are based
upon the
a. length of the management agreement.
b. brand affiliation of the hotel being managed.
c. revenue generated by the hotel being managed.
d. number of rooms contained in the hotel being managed.
Answer: c
Learning Objective: 14.4. Describe the major elements found in a management operating
agreement.
23
362
16. Who is most often responsible for any costs resulting from errors made by a management
company in its operation of a branded hotel?
a. The hotel’s GM
b. The hotel’s owners
c. The brand managers
d. The management company
Answer: b
agreement.
17. A hotel lender is considering making a loan to a hotel owner. If the hotel owner is utilizing
a management company in the hotel’s operation, the lender will most often
a. be less likely to make the loan because the hotel’s profits will be reduced because it
must pay the management company’s fees.
b. be more likely to make the loan because the hotel’s profits will be increased because
of the professional management of the property.
c. be less likely to make the loan because the hotel’s profits will likely be increased after
paying the management companies fees.
d. be more likely to make the loan because the hotel’s profits will be reduced because of
the professional management of the property.
Answer: b
agreement.
18. What would be the impact on an owner’s ability to sell a hotel if the management contract
currently in place on the property included a very high cost buyout clause?
a. The clause would prevent the sale of the property
b. The hotel would be easier to sell because of the clause
c. The hotel would be harder to sell because of the clause
d. The clause would have no impact on the potential sale of the property
Answer: c
agreement.
24
363
19. What is the primary role of a franchise service director (FSD)?
a. Sell franchises
b. Draft franchise agreements
c. Monitor franchise agreement compliance
d. Develop franchise disclosure documents (FDDs)
Answer: c
Learning Objective: 14.5. List the issues GMs must address when operating a franchised
hotel.
20. Who is the GM’s employer when his or her hotel is operated as part of a branded chain?
a. The franchisee
b. The franchisor
c. The brand’s managers
d. The franchise services director (FSD)
Answer: a
hotel.
21. Which is most likely to be a source of hotel guests’ displeasure when a property is operat-
ed as part of franchised brand?
a. Unrealistic FSD expectations
b. Unrealistic owner expectations
c. Dissatisfaction with brand consistency
d. Dissatisfaction with brand pricing policies
Answer: c
hotel.
25
364
22. A manger works for a management company as the GM of a large full-service franchised
hotel. Who will most affect the advancement opportunities given to this GM?
a. The hotel’s owner
b. The management company
c. The hotel’s brand managers
d. The hotel’s franchise services director (FSD)
Answer: b
Learning Objective: 14.6. List the issues GMs must address when operating a hotel for a
management company.
23. The entity that most benefits when the term length of a management contract to operate
a branded hotel is shorter, rather than longer, is the
a. hotel’s GM.
b. hotel’s owner.
c. hotel’s franchisor.
d. management company
Answer: b
management company.
24. Who is most often the direct employer of a hotel’s line level staff when a management
company operates a branded hotel?
a. The franchisor
b. The hotel’s owner
c. The management company
d. The hotel’s brand managers
Answer: c
management company.
26
365
25. A hotel owner of a 1,000-room resort has signed a new tier-two management agreement
replacing the current management company and its agreement. When the new agree-
ment takes effect, which member(s) of the hotel’s current staff will most likely be re-
placed?
a. GM
b. Night auditor
c. Front desk agents
d. Front desk supervisor
Answer: a
management company.
27
366
Chapter 15
Managing in the Global Hotel Industry
CHAPTER 15 OUTLINE
Managing in the Global Hotel Industry Transitional Training Programs
The Hotel Industry Is Global Before-Arrival Training
Managing and Living in Another After-Arrival Training
Country The Expatriate in the New Culture
Governmental Concerns Hotel Employment Concerns
Financial Factors Non-work Concerns
Cultural Issues And Now the International Assignment Be-
Personal Factors in Expatriate Manager’s gins!
Success Managing on the Job
Other Factors in Expatriate Manager’s Suc- Details Make a Difference!
cess Communication Is Critical
Candidate Selection Process
Chapter Overview
This chapter explains the professional challenges confronting those who manage hotels in the
international marketplace. It reviews the personal factors that impact the success of expatriate
managers and also describes other factors integral to the success of these managers. It con-
cludes by presenting practical suggestions designed to ensure success in international hotel
management assignment.
Chapter Objectives
1. Prepare an overview of the professional challenges that confront those who manage ho-
tels in the international marketplace.
2. Review personal factors that impact the success of an expatriate hotel manager.
3. Describe other factors that are integral to the success of an international hotel man-
agement assignment.
4. Explain practical suggestions to best ensure a successful international hotel manage-
ment assignment.
367
Lecture Outline
MANAGING IN THE GLOBAL HOTEL INDUSTRY
The Hotel Industry is Global
Hospitality organizations are needed wherever people travel to provide them with the
lodging services and products these travelers require.
Working at a hotel and living in a location outside of one’s own country can be espe-
cially rewarding and personally enjoyable.
A decision to seek an assignment in the global hotel marketplace is important and must
be carefully considered before it is made.
Expatriate is a citizen of one country who is employed in another country.
Three options for selecting expatriates:

1. Select and relocate a hotel manager who is a citizen of and resides in their
home country and who currently manages a hotel manager in their home coun-
try.
2. Select a manager who is a citizen of the country in which the hotel is located.
3. Select a person who neither a citizen of their home country nor a citizen of the
country in which the hotel to be managed is located.
Reasons for choosing an expatriate manager:

 No local staff is currently qualified for the position to be filled.
 Local staff requires extensive and time-consuming training.
 Local persons are being trained for positions that will replace the need for an in-
ternational manager, but they are not yet qualified for these positions.
 Technical expertise may need to be transferred to the foreign location.
 The employer desires to instill global perspectives in selected management em-
ployees.
 There is interest in improving the cultural understanding between persons in a
company’s international divisions.
 An international assignment is considered an integral part of a staff member’s
professional development process.
 There is an interest in obtaining tighter administrative control over a foreign di-
vision.
 There are property start-up, operating, or other issues that require long-term
(more than a year) on-site management direction to properly resolve the con-
cerns.
368
A developing country is a low- or middle-income country in which most people have a
low standard of living and access to fewer goods and services than do persons in coun-
tries with higher income levels.
A developed country is a country whose income per person is high by world standards
and whose citizens enjoy the higher standard of living that the wealth makes possible.
Multiplier effect is the resulting financial ripple that occurs within a local economy
when money is spent and re-spent and creates income for additional persons who, in
turn, spend the money in the local economy.
Multi-national hotel groups may prefer placing local citizens in top-level management
positions because:
 A local citizen is more likely to be familiar with the country’s and local business
environments and cultures and, therefore, can be more effective in managing
the operation.
 There will be lower payroll and related relocation costs involved in the position
because, at the least, transportation and subsistence costs will not likely be
necessary.
 There may be improved relationships between the hotel group and the host
country because the former is helping the foreign government to improve its
labor force.
 There may be longer management continuity and greater employee morale be-
cause local citizens recognize that they have opportunities for promotion to the
highest levels of management within the hotel.
Managing and Living in Another Country

Factors to be considered before accepting a hotel management position in another
country include:
 Governmental Concerns
 Financial Factors
 Cultural Issues
Governmental Concerns
Some countries have unstable government structures.
Property and asset ownership, employee and personal safety concerns, and the con-
sistent availability of food and other necessities can create on-going challenges.
369
Financial Factors
Different tax laws, changing (sometimes quickly!) exchange rates, and inflation con-
cerns will influence business and personal decisions.
Exchange Rate is the rate at which money of one country is traded (exchanged) for the
money of another country.
Cultural Issues
Persons living in a country often share a national culture of values and attitudes that
impacts their behavior and influences their beliefs about many topics.
National Culture is the values and attitudes shared by citizens of a specific country that
impact behavior and shape beliefs about what is important.
The local culture can significantly affect the extent to which one enjoys (or tolerates!)
activities in his or her personal life when away from the workplace.
PERSONAL FACTORS IN EXPATRIATE MANAGER’S SUCCESS

Figure 15.1 provides a checklist that can help you determine whether an international
hotel management assignment might be appropriate for you.
370
In Most Cases:
 A person who does not adapt well to change is more likely to have greater diffi-
culty adjusting to work and living in another culture.
 Those with a genuine personal interest in an international experience will be
happier than their counterparts who take the position for other reasons.
 Expatriates with an understanding of the host country’s national culture and
language will know what they might expect.
 Persons with the knowledge and skills required for successful job performance
will have less stress on the job.
 Interactions with people on and off the job are likely to be significant factors
that influence whether an expatriate position is successful.
 Managers with previous experience living in or visiting another country are like-
ly to better know what to expect.
 The interest that family members have in relocating is a significant concern that
will dramatically affect the success of the global assignment.
 Expectations about a global assignment must be reasonable.
 The ability to listen and attempt to understand the beliefs of others is im-
portant.
OTHER FACTORS IN EXPATRIATE MANAGER’S SUCCESS

Figure 15.2 (Factors Influencing Success of Global Assignments) notes that the selection
process is an important event in the success of a global assignment.
371
Candidate Selection Process
The success of an international hotel operation will be influenced by the selection and
placement decisions made by the hotel group’s executives about the professionals who
will manage it.
The personal success of an expatriate assignment is more likely to be influenced by the

ability of the hotel manager and his/her family to make cultural adjustments than by
the expatriate’s lack of hotel management or technical knowledge and skills.
The extent to which one can adapt to a new culture can be evaluated by:
 Administering cross-cultural assessment tools to the employee, spouse, and
family
 Interviewing and counseling sessions with the employee and partner
 Considering specialized ways that the employee should plan and implement
personal cross-cultural development tools
 Providing detailed information to help the staff member understand the new in-
ternational assignment and to adapt to daily life within the host country
Cross-Cultural Adaptability is the extent to which one can adjust (adapt to) another cul-
ture.
Transitional Training Programs

Transitional training includes:
Before-Arrival Training topics includes

 Cultural awareness
 Language skills
 Business practices
 Business and social protocols
 Basic background information
After-Arrival Training
After-arrival transitional training is very useful and is typically provided several weeks
after the expatriate managers and their families arrive in the host country. This in-
cludes:
 Answering questions about new cultures
 Overcoming the emotion of being “homesick”
 Exchanging old methods/ideas for new ones that may be more valuable and ef-
fective in a new culture
372
The Expatriate in the New Culture
Two groups of factors influence success after arrival:
 Hotel employment concerns
 Non-work concerns
Hotel Employment Concerns

 The extent to which their organizations provide job-related training after arrival
 Social support on- and off-the-job
 Logistical advice (e.g., Where are the best schools? The best medical facilities?)
 Details regarding the position itself (responsibilities and work tasks)
 Compensation
 Benefits
 Costs of moving household belongings from and to the manager’s home coun-
try, and insurance or reimbursement for emergency travel costs are often in-
cluded
Non-work Concerns
 Lifestyle and living arrangements
 Transportation to and from work
 Nonwork social interactions
Written job offers for international placements should include detailed information
about:
 Working conditions including job description
 Compensation including cash and noncash benefits (be sure you understand
tax implications)
 Accommodations including transportation to and from work
 English language schools for children, if applicable
 Work authorizations and visa and other legal requirements
 Healthcare and emergency travel concerns
 Employment considerations after return to the United States
373
AND NOW THE INTERNATIONAL ASSIGNMENT BEGINS!
Managing on the Job
Different approaches should be used to manage different types of employees. These
include:
 Generation Y (millenniums)
 Generation X
 Baby boomers
Generation Y (Millenniums) is a term used to refer to individuals born between 1981

and 2000.
Generation X is a term used to refer to individuals born between 1965 and 1980.
Baby Boomers is a term used to refer to individuals born between 1946 and 1964.
Many factors such as language, culture, legal concerns, and business practices impact
what expatriate managers can and should not do.
Once known, these factors influence:

 The way that work-related instructions are given and received
 The way that new employees are selected, orientated, and trained
 The process by which change is introduced into the hotel organization
 The role of and relationship between general managers and their staff
Direct Reports are those staff members for whom one has immediate supervisory re-
sponsibility; also called subordinates.
Communication Is Critical
To help minimize communications-related difficulties managers should:
 Manage within a work environment that anticipates and tolerates errors
 Use written communication
 Use the simplest language whenever possible (avoid jargon)
Jargon is used to describe special terms or phrases used by persons working in a specif-
ic profession.
 Use pictures/graphics whenever possible

 Be aware of information sent from the company’s headquarters if it is also
intended to be circulated to employees in their hotel
 Be respectful of one’s culture and the impact that it has on business customs
and the language of business that is used
 Be aware of potential cultural “hot spots”
 Go out of the way to ensure that employees understand
374
Successful expatriate hotel managers consistently display:
 Empathy
 Respect
 Interest
 Flexibility
 Tolerance
 Initiative
 Self-Esteem
.
375

1. If the executive is from the United States, he or she will likely be frustrated with the situa-
tion that exists and will want to promote the very best employees to high-level positions
regardless of their gender. The executive will be well aware of the applicable employment
laws that prohibit discrimination in the US. However, he or she will also have some under-
standing of the cultural issues, perhaps among other factors, that create this situation.
While change is desired, it cannot occur immediately for numerous reasons. Examples:
male employees may be angered if women are promoted, there may be social interaction
issues between the employees, and some customers are likely to be offended. Careful
consideration is required to manage this situation,
2. This question addresses the need for careful consideration noted in question 1. The execu-
tive must interact closely with the GM of the South Korean property who may be an expat-
riate from the US. The executive and the GM should interact with their own professional
networks to learn about potentially useful tactics to promote gender equality. They should
understand that cultural factors that impact employment may differ within the same coun-
try. For example, there may be more or different problems in big city hotels compared to
resorts in rural areas.
There are likely to be many sources of information about ways to manage this situation.
For example, the hotel GM should contact expatriate peers in the area or region to seek
advice. The executive may have access to international business experts in colleges and
universities and to other international hotel executives through professional association re-
lationships.
3. Promote from within programs can focus on existing employees and the career progres-
sion of Jae Min in the case study should suggest a minimum scale of efforts to address the
gender equality challenge. Based on the information learned (see question 2), additional
tactics may increase the opportunities to be made available for female internal and exter-
nal candidates.
It may also be possible to develop “fast-track” supervisory development activities for en-
try-level employees who show promotional promise.
10
376
1. The expatriate GM might initially think that the supervisor (Bula Ben) was simply working
within the type of “hands off” leadership approach used by the previous management
team. In other words, maybe he was not aware that new policies would be implemented
about incurring expenses and scheduling task and employee work assignments.
A meeting with the supervisor should be an important priority and, since the GM will al-
most certainly be meeting with all supervisors and managers, the generic concerns noted
in the above paragraph could be part of the meeting agenda.
The GM should be especially concerned about the pesticide problem, and this will require
a personal meeting with Bula Ben. They should discuss all procedures involving pesticide
usage, and a representative of the vendor for these products might be present to assist.
Written pesticide handling procedures should be developed, and all affected staff should
be re-trained.
2. As noted in the response to question 1, Bula Ben might not be aware that the leadership
approach will be different under the new ownership. The expatriate manager will know if
there have been formal meetings and informal conversations about the case study con-
cern. If there have been, the manager will need to begin a more directed coaching and
progressive discipline process. If these issues have not been previously addressed, the
manager will need more time to learn if the supervisor requires discipline.
3. The case study does not indicate the extent to which the supervisor knows what he should
do. He may assume that he should continuing with past practices thinking that he will be
told about process changes by the new management team. The new GM may develop a
management approach that emphasizes changes are necessary because past practices re-
sulted in an unsuccessful business, and process revisions are being made to reduce costs
while improving the guests’ experiences.
11
377
Your Opinion Counts

1. While the expectations of guests are not likely to change based upon a hotel's ownership,
the GM of the hotel will certainly encounter differences in the expectations of the owners.
Caution students against making broad assumptions such as “all European managers be-
lieve….” or “all Asian hotel owners are ...” Just as there are different expectations of GMs
among American hotel companies, there will be differences among those companies
whose owners are not U.S. based.
The wider use of technology has helped to minimize significant differences in management
approaches. With that observation in mind, some observers believe that, historically, Eu-
ropeans tended to focus on the guest experience, Asian managers have a significant inter-
est in long range planning, and American hoteliers have significant concerns about cost
management. Ideally, of course, these concerns would be of significant priority to all hotel
managers.
2. The “Real World of Hotel Management 15.1 provides an example of the impact of culture
on hotel management practices. Other examples can be cited and, to stimulate student
discussion, it can be helpful to compare the U.S. culture and those of other countries. Do-
ing so may illustrate differences in:
 gender equity
 The manner in which hotels accommodate (or do not address) the religious prefer-
ences of their guests
 The value of individual expression vs. membership in a group
 Definitions and expectations of what constitutes good service
 The concept of a "fair day's pay for a fair day's work"
 Issues of worker punctuality and the manner in which workers' dedication to the
hotel organization is exhibited and rewarded
 Various concerns addressed in employment laws
3. The role of government in the operation of hotels is significant regardless of the country in
which the hotel is located. In the United States the role of government affects human re-
source decisions (for example the laws regarding equal employment opportunity, wrongful
termination legislation, and unemployment compensation plans). In addition, guest safety
regulations, building codes and standards, and even the hotel's own operational policies
may be heavily influenced by what is "legal."
Internationally, GMs must understand the role of the local government in issues such as
environmental concerns, ownership regulations, and regional customs such as regulations
regarding the service of alcohol. As well, the local government will be involved in setting
taxation levels and other factors that are routinely addressed by national or regional gov-
ernmental entities.
12
378
4. Students' responses are likely to include comments on such items as greater comfort level
if they are working in a country where they know the language. Many expatriate managers
report feelings of increased isolation and separation if they do not know the language. This
is not surprising when you recognize that, in many cases, many or most of the hotel's em-
ployees, including members of management, may be fluent only in their own native lan-
guage.
Students' answers will vary but are likely to be influenced by the students' own interna-
tional travel experience, command of multiple languages, and their own personal goals. It
may be helpful to lead a conversation about the students’ reaction to international work as
a promotion factor (concern) in some hotel companies.
13
379
1. Working at a hotel and living in a location outside of one’s own country can create signifi-
cant professional
a. and personal challenges.
b. stagnation.
c. out-sourcing.
d. limits to growth.
Answer: a
Learning Objective: 15.1. Prepare an overview of the professional challenges that confront
those who manage hotels in the international marketplace.
2. A citizen of one country who is employed in another country is called

a. a visitor.
b. an expatriate.
c. a tourist.
d. an emigrant.
Answer: b
3. A low- or middle-income country in which most people have a low standard of living and
access to fewer goods and services than do persons in countries with higher income levels
is referred to as
a. an emerging country.
b. a developing country.
c. a developed country.
d. an unmerging country.
Answer: b
14
380
4. A country whose income per person is high by world standards is referred to as
a. an undeveloped country.
b. a developed country.
c. an emerging country.
d. an unmerged country.
Answer: b
Learning Objective: 15.1. Prepare an overview of the professional challenges that con-
front those who manage hotels in the international marketplace.
5. The financial ripple that occurs within a local economy when money is spent and then re-
spent is referred to as
a. taxable income.
b. the multiplier effect.
c. capital accumulation.
d. a capital expenditure.
Answer: b
6. Why do multi-national hotel groups often prefer local citizens to serve in top-level man-
agement positions?
a. The salaries paid to local managers will be lower.
b. It is easier to find well-trained and high-quality managers locally.
c. Employee morale will improve as workers recognize they can be promoted to the
highest levels of management.
d. Local citizens will be less likely to resign their positions during difficult economic times.
Answer: c
15
381
7. A country’s exchange rate refers to the trading of
a. staff members.
b. profits.
c. currency.
d. managers.
Answer: c
8. When compared to others, a person who does not adapt well to change will
a. have less difficulty adjusting to work and living in another culture.
b. always be chosen for an international assignment.
c. have greater difficulty adjusting to work and living in another culture.
d. never be chosen for an international assignment.
Answer: c
Learning Objective: 15.2. Review personal factors that impact the success of an expatriate
hotel manager.
9. Managers with previous experience living in or visiting another country are

a. always chosen for international assignments.
b. never chosen for international assignments.
c. better prepared to succeed in international assignments.
d. less well-prepared to succeed in international assignments.
Answer: c
hotel manager.
10. Which would be most important to the potential success of an expatriate manager?
a. The ability to listen and understand the beliefs of others.
b. The ability to adopt the beliefs of others.
c. Fluency in speaking the local language.
d. The ability to write in the local language.
Answer: a
hotel manager.
16
382
11. Which manager would likely have the most success in an international assignment?
a. A manager who is ridged and inflexible in her belief systems
b. A manager who has never traveled outside his own country
c. A manager who volunteered for the assignment
d. A manager who accepted the assignment only for a pay raise
Answer: c
hotel manager.
12. Whose support would be MOST important for a manager considering accepting an inter-
national assignment?
a. The manager’s current boss
b. The manager’s future guests
c. The manager’s future employees
d. The manager’s family
Answer: d
hotel manager.
13. Which as an example of the culture of another country?

a. The ratio of women to men in the country
b. The number of women in the country
c. The number of men in the country
d. How men and women interact in public
Answer: d
hotel manager.
14. Cross-cultural adaptability refers to the extend one can adapt to another country’s
a. eating habits.
b. culture.
c. art.
d. religion.
Answer: b
Learning Objective: 15.3. Describe other factors that are integral to the success of an in-
ternational hotel management assignment.
17
383
15. When would it be best for transitional training for an international work assignment to
occur?
a. Before arrival in the host country
b. Immediately after arrival in the host country
c. Before and after arrival in the host country
d. One year after arrival in the country
Answer: c
16. Specific “Do’s and Don’ts” of business social practices must be learned and are referred to
as
a. codes.
b. protocols.
c. decorum.
d. etiquette.
Answer: b
17. Which is an example of an additional benefit that may be granted to an expatriate manag-
er?
a. Overtime pay
b. Extended annual leave
c. Shorter working hours
d. Two or more personal assistants
Answer: b
18
384
18. To be successful in a new culture it may be necessary to
a. defend current ideas and habits to those who do not now hold them.
b. avoid learning new ideas and habits.
c. unlearn old habits and ideas.
d. teach their current habits and ideas to those whom the managers will now be manag-
ing.
Answer: c
19. What is NOT an example of the type of country-specific background facts expatriate man-
agers must learn about their new host countries?
a. What are the most important holidays?
b. What are the accepted standards for punctuality?
c. What is the prevailing hotel ADRs in the country?
d. What is the size and population of the country?
Answer: c
20. What is true about the English language as it relates to the international hotel business?
a. English is spoken by many, but not all, international hotel managers.
b. English is spoken by all international managers.
c. English is spoken by most hourly employee who work in international hotels
d. All international hotel guests know how to speak English.
Answer: a
Learning Objective: 15.4. Explain practical suggestions to best ensure a successful interna-
tional hotel management assignment.
19
385
21. In which employee group are those who are in it the oldest?
a. Generation Y
b. Millenniums
c. Baby boomers
d. Generation X
Answer: c
22. In which employee group are those who are in it the youngest?
a. Generation Z
b. Generation Y
c. Generation X
d. Generation B
Answer: b
23. Who would be considered a direct report of a hotel’s Front Office Manager?
a. Room attendant
b. Desk agents
c. Sous chef
d. Controller
Answer: b
24. Managers can sometimes perceive they are dealing with “problem” employees when, in
fact,
a. cultural similarities are too great to notice any real differences.
b. the employees do not speak English.
c. cultural differences are influencing the work situation.
d. the employees are underpaid.
Answer: c
20
386
25. Which is an example of jargon that might be used in the hotel industry by a native English
speaker?
a. An F&B Director says “We need to 86 that menu item.”
b. A GM says “We need to increase our ADR.”
c. A hotel controller says “We need to file these invoices properly.”
d. An Executive Housekeeper says, “Our guestroom cleaning supply usage is too high.”
Answer: a
21
387

Book-Hotel Operation Management

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Book-Hotel Operation Management

Uploaded by

Copyright:

Available Formats

Online Instructor’s Manual

Hotel Operations Management

CHAPTER 1. Overview of the Hotel Industry 1

Lodging Is Part of the Tourism Industry Hotel Departments

It is one of the top 10 largest industries in 49 of the 50 states.

Figure 1.1: Segments in the Tourism Industry

The Lodging (Hotel) Sector

Lodging properties include:

Other types of lodging properties offering sleeping accommodations to the traveling

CLOSE LOOK AT LODGING ORGANIZATIONS

41% of the typical lodging guests are business travelers

59% of the typical lodging guests are leisure travelers

Lodging Industry Characteristics

Inseparability of Manufacture and Sales

HOTEL OWNERSHIP, MANAGEMENT, AND ORGANIZATIONAL ALTERNATIVES

Hotel Organizational Structures

Instructor Note: Please refer to text for a complete list of departments.

Instructor Note: Please refer to text for a complete list of departments.

Revenue and Cost Centers

A revenue center is a hotel department that generates revenue. Examples are:

CURRENT INDUSTRY CHALLENGES

An excessive emphasis on cutting service or product quality will ultimately result in

Legal Aspects of the Labor Force

Marketing and Sales Challenges

Increased Sophistication of Guests

Increased Guests’ Demands for Value

Data Mining Technology

PROFESSIONAL LODGING CAREER OPPORTUNITIES

Regardless of your vocational/professional preferences, there are likely to be rewarding

Get Started with Career Planning

Many secondary and postsecondary schools offer hospitality-related educational and

Work in a variety of lodging positions (including educational internships)

Develop a career ladder for professional development

Real World Hotel Challenges: 1.1

1. Numerous issues can be of concern when a high-level manager in an independently-owned

Your Opinion Counts

2. Question 2 reinforces the importance of consistently delivering guest service. Guest

While personal preferences may be affected by numerous concerns including family,

1. Which segment of the tourism industry includes lodging operations?

12. Which is a staff department in a lodging operation?

13. Which is a revenue center in a hotel?

15. How is “market share” typically determined in the lodging industry?

21. A career ladder is

23. Enrollment in a formal two-year or four-year hospitality management training program is

Importance of Guest Service

Emphasis on Service Culture

MANAGERS’ ROLE IN QUALITY SERVICE

SERVICE: THE GUESTS’ PERSPECTIVES

FIGURE 2.1: Six Components of Quality in the Hospitality Industry

Consider the Guests Being Served

Determine What the Guests Desire

Develop Procedures to Deliver What the Guests Desire

Cross-Functional Teams: A group of employees from each department within the

Train and Empower Staff

Implement Revised Systems

Evaluate and Modify Service Delivery Systems

Prompt attention dramatically increases the likelihood of repeat business

SERVICE AND MOMENTS OF TRUTH

Hotel managers plan many aspects of a guest’s experience at their properties

Figure 2.3 illustrates how a decline in defects can be measured

Managers Cannot Delegate Responsibility for Superior Service

Accountability: An obligation created to complete an assignment that has been

Service is an essential ingredient in the success of managers

Managers Must Recruit and Select Service-Minded Staff