Chapter 5 Summary: A. Identify and discuss five or six standards that could be established; include how variance from such standards could be measured. C. From the perspective of a hotel's general manager, evaluate techniques that can be used to control the cost of purchasing. F. Identify a selection of hotels in your area, and categorize at what stage they are in as it relates to the hotel life cycle, and the impact this has on refurbishment. Chapter 5 Resource Management \"Time and tide wait for no man\" - Proverb Chapter Objectives On completion of this chapter the reader will understand: The importance of physical resource management. The management of assets in the hotel industry. The use of standards in understanding operations issues. The application of variance analysis and the resulting management decisions. The purchase of goods and services in a competitive environment. The requirements for a secure operational environment. The impact that hotel ownership has on operational decisions. The life expectation of a hotel and the question of refurbishment in changing environments. The planning of maintenance. The influence housekeeping has on guest satisfaction and interconnectivity. The use of outsourcing in asset management. Key Word Definitions Assets: Items which hold commercial or exchange value. Interconnectivity: The ability of two or more to interact in a meaningful way. Functional obsolescence: Defects in a building or structure that detract from its value or marketability Environmental scanning: Maintaining awareness of the environment the business is operating in to use in future and current planning. Competitive advantage: The strategies, skills, knowledge, resources or competencies that differentiate a business from its competitors Core competencies: Relating to a company's particular areas of skill and competence that best contribute to its ability to compete Variance analysis: The analysis of variation from a determined standard. SARS: Severe Acute Respiratory Syndrome Chapter Review Hotels are complex environments in which many different resources come together to satisfy the various stakeholders including the guest, the owners/investors, staff, management and the local environment in which the hotel operates. Physical and human resources influence each of these and therefore need constant monitoring and management attention. The purpose of this chapter is to investigate the resources of a hotel and to highlight areas that need particular attention. Within the hotel industry many of the assets used in the production process are difficult to control; they are subject to such issues as theft, spoilage, deterioration as well as forms of misuse. The ability of managers to monitor the use of such assets has a direct impact on the success of a 1 hotel. In many instances this requires the setting of standards and the correct measurement of variation from the standard. The global environment in which a hotel operates is influenced by many factors outside the control of the hotel. Issues such as security, health, economic and social issues change the operational environment. Senior management in a hotel need to work with the owners of the property in an appropriate way to maximise outcomes for all parties. The ownership of hotels may come about in various ways, from institutional owners who are simply interested in the financial return to hands-on owners who become involved on a daily basis. In many respects the life expectation of a hotel and the refurbishment plan are directly related to the ownership of the property, but are also linked to issues such as guest satisfaction, guest expectations and the financial long term return. Steve Pagano, Hotel manager, MARRIOTT HOTEL, San Diego, California, USA What is your objective as manager of the hotel? There is no question that we are here to make a profit for our owners, but on a day-to-day basis we are here to look after our guests, which in turn makes a profit for our owners. Within a hotel, the various departments have to work together to ensure a quality product. One of the most important of these is housekeeping. This chapter discusses the interconnectivity of this department with others, along with the growing trend of outsourcing. Introduction The types of assets involved within the hotel industry, both human and non-human, makes management more difficult than many other industries. For example within a bar there is a bottle containing a liquid that has a cost, often a certain amount needing to be measured with the resulting measured quantity being delivered to a guest. This is often mixed with other ingredients so that revenue is generated with a desired level of profit. Within the kitchen a mixture of different ingredients need to come together in the correct combination to deliver some finished product to a restaurant guest, again to obtain a desired return to the business. Along with this, hygiene and health and safety issues need careful consideration. In housekeeping there are cleaning materials which have a high cost and influence profitability; therefore they need to be controlled, and there are hazards associated with their use that need to be managed. Throughout the hotel there are staff being paid, the guests have access to facilities and there is an investment in the hotel building (Jones, 2002). All of these assets need to be used so that an appropriate return for the business is achieved (Feldman, 1995). Vigilant managers constantly monitor each of these factors to accomplish this objective. Bruce Fery, General Manager, GRAND AMERICA, Salt Lake City, Utah, USA Maintaining costs must be a real challenge, how do you do that? A couple of months ago I gave a manager a challenge. He happened to have a high cost of goods in his area, and I said the reason why we haven't done so well in the area is that you haven't focused enough. I know this person well enough to say, \"I know that if you make this your top priority, we can fix our cost of sales\". Over a couple of months we have made a dramatic change. The only reason is that person has made it a focus for himself. If you make it a priority you can be very successful. 2 The challenge to all hotel managers is how to control the assets of the business, but at the same time not restrict the assets to the point that quality service is inhibited. It would be possible to lock every asset up, and when required have security deliver the item, but the delays and inconvenience would outweigh any possible savings. Throughout the interviews with senior management in hotels there were issues that impacted directly on the day-to-day operations and in particular the control and profit from assets which required planning and direct management action. Management are also influenced by the local conditions in which they operate. Vijay Wanchoo, General Manager Corporate Planning, FORTUNE PARK HOTELS, New Delhi, India What issues impact on your control of profits? India is a country where there is a lot of liquor imported, particularly from England, but you also get a lot that is smuggled which makes the management of liquor complicated. It is important to also know the legal requirements of selling alcohol. For example, there are three days in India where you don't sell liquor at all: 26 January, 15 August and 2 October. You need to make decisions accordingly. No F & B manager will break it or he goes behind bars. The rule is that in the rooms you can have it. There is an L3 license for rooms, L5 for restaurants, L20 for banqueting. On those three days L20 and L5 you cannot sell but it can be in the rooms. The understanding and knowledge is all important to plan and manage this type of restriction. As discussed in the chapter on empowerment, members of staff need to feel they have the ability to make decisions in relation to the hotel's assets, but these decisions need to be appropriate at the time. The key to controlling assets in the hotel industry is the setting of standards, measuring against those standards and then taking corrective action. Standards In 1978 an interesting book was published by Kreck (1978) which defined the process of understanding, setting and measuring standards under ten clear steps: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Define outcomes Describe the symptoms Verify the symptoms Discover any trends Identify critical areas Ascertain critical principles Make comparisons Develop solutions Carry out testing Compare results This approach, although not new to decision-making, emphasizes the importance of being able to correctly understand what the problem is; this ensures that you are actually trying to resolve the cause of the problem. This is followed by taking corrective action, and carefully measuring the outcomes to ensure that the desired results are being achieved. Once the standard is set in many 3 cases it is simply the comparison of a standard to an actual result and evaluating the variance to formulate management decisions. The standards can be defined in many different ways: Abid Butt, Managing Director, TURTLE BAY RESORT, Hawaii, USA How can you define standards? In some of our training sessions I use an example about the person who cleans the windshield on the car. If that person's job was to clean the windshield, then your standard of cleanliness might be different to mine, as opposed to if you defined that person's job \"to provide clear vision for the driver\". Then all of a sudden it is a different definition. As long as the driver says it is clean, then I am done; if the driver says it is not clean, then I have to keep cleaning. That's about the only way to standardise it. Is the personal occupying the room going to see the room as clean or to look at it that the room has not been cleaned properly. Variance Analysis There are numerous examples, but for this text reference will be made to Jagels and Coltman (2004, 219-222) which specifically deals with food and beverage management, but has many other applications. The first step involves the establishment of a standard, which is in this case identifying the cost of the ingredients of each menu item. This is done with the assistance of a standard recipe which lists all the ingredients, production process and portion sizes. Once a standard is established, it is straightforward to calculate what the total standard is by multiplying the cost of an individual menu item by the number sold. The result is the standard cost, or what total cost should be for the items sold. At the same time because each item has a different selling price the quantity of each item sold is multiplied by the number sold. This results in the standard revenue figure. Two additional pieces of information are required - first, the actual amount of ingredients used. This is produced by taking the opening inventory, adding to it purchases and subtracting the closing inventory. The second is the actual amount of cash received. This provides four pieces of information: 1). Standard Cost, 2).Standard Revenue, 3). Actual Cost and 4) Actual Revenue, resulting in four alternatives: 1. Total Standard Cost is > than Total Actual Cost 2. Total Standard Cost is < than Total Actual Cost 3. Total Standard Revenue is > than Total Actual Revenue 4. Total Standard Revenue is < than Total Actual Revenue A modified example from Jagels and Coltman (2004, p219 -222) is in Figure 5-1. Figure 5-1 Standard Actual Cost analysis. Standard Cost Percentage = Total Standard Cost = 10,260.20 100 = 39% Total Standard Revenue 26,487.00 Actual Cost Percent = Total Actual Cost = 10,881.40 100 = 42% Total Actual Revenue 26,087.00 As illustrated above, there is a difference in relation to cost: the actual cost is higher than the standard cost; this can result from wastage, spoilage, theft etc. If actual revenue is less than standard revenue, this can be the result of not charging the guest the correct amount, giving discounts, theft etc. The important issue is to be able to accurately analyze the data, and to determine what action needs to be taken. Simply looking into what is being thrown away can tell management a lot about what is happening. 4 The principle of comparison between standard and actual has wider application. For example, the standard use of cleaning materials by housekeeping compared to actual; the number of guest rooms cleaned in an eight hour shift in a hotel; the number of guests that are served in a restaurant by one person, etc. In any situation where a standard can be established management can measure that standard against actual performance. Purchasing The purchasing of goods and services in a hotel is an important part of the day-to-day operations. Although a hotel may have a purchasing department that takes care of the routine operations, management need to keep a constant watch on the decisions that are being made. There are two main reasons for this, the first is that the purchases of goods and services account for a large amount of the hotel's expenditure and second, the items purchased by a hotel are subject to various issues including theft and fraud. An important question when considering purchasing goods and services is to correctly understand the need for the purchase. The need and the person responsible for that need must be clearly identified. In many instances it may be nice to have certain ingredients in a kitchen, certain cleaning materials and equipment in the housekeeping department and certain computerised facilities in the accounts department, but they should only be purchased if they are absolutely necessary to fulfil specific requirements. The Purchasing Department needs to ask the question, is it necessary? If so, what quality is required? Can a similar item be used giving the same quality outcome, but at a lower cost? As the items purchased tie up money and storage space, each of these has an impact on the profitability of a hotel, and should be minimised. There is a requirement that the goods and services meet the expectations of the guests and also are cost effective. As illustrated from the following, there are specific and changing guest expectations: Octavia Gamarra, General Manager RITZ-CARLTON MILLENIA, How are the changing expectations of the guests influencing hotel purchases? The product has to be the finest, it is as simple as that. From a bedding point of view, from a technology point of view - technology has become this huge issue now. DVD players and CD players we have in our suites, customers are happy with that but now we are looking at having MP3 hookups, because people come with MP3s and they can be connected with the speakers. Constantly you have to be looking at what is out there, what is the technology. We are looking at MP3 TVs. It is an expensive proposition. It is very difficult for me to convince the owners about this. The guests have 42\" tv's in their home, they experience this, it is their norm. It is always a balance that you seek. The purchase of goods and services requires accurate record keeping and monitoring. Many of the items purchased by a hotel are small, expensive and easily misappropriated. An important way of increasing control is to divide the responsibility for assets among several persons. It is bad practice to have the same person order goods, receive the goods, and account for the goods. Also job rotation helps to reduce the possibility of one particular employee defrauding the hotel and being able to cover it up. Often fraud is a long term operation on the part of an employee; the possibility that they may at any time be moved to another position in the hotel may reduce opportunities to undertake fraudulent activity. In addition limiting access to assets is essential. 5 Steve Pagano Hotel Manager, MARRIOTT HOTEL & MARINA San Diego, USA How do you balance guest expectations and hotel profit requirements? We try and always focus on topline sales and after that the next priority is maximising house profit and flow through by controlling our expenses so you are continually doing a balancing act between guest experience, associates and the profitability. I don't know that we do anything different to any other hotel company. We look at that every single day - lots of reports every day, wage cost per occupied room, beverage cost, food cost, productivity. A sound management technique is to be unpredictable; to unexpectedly participate in stock taking; conduct surprise checks; they need to be aware what is going out in the garbage; they need to be observant of all the operations occurring within the hotel. Heath and Safety Issues The world in which hotels operate has changed over the past few years; terrorism and international health issues have impacted on the hotel business in all parts of the world. Nash Nasihin Ali, General Manager, MUTIARA HOTEL, Johor, Malaysia How are world events impacting on hotel operations? The world is a complex place: terrorism, the Iraq war, then SARS and the resulting economic downturn. A lot of travellers are very cautious: they are thinking very carefully about what they are doing; they are including these issues into their decision-making processes. Although events such as SARS and terrorist attacks have had very significant impacts on hotels, it is also useful for management to take these events and look at the long term situation, as suggested in the following: William Chu, Director Revenue Strategy, RITZ-CARLTON MILLENIA, Singapore How do you see world events changing your property? We diagnose our hotel by segmentation. Of course over 9/11 we saw a drop. The trend itself would be irregular anyway because first of all there was 9/11, the bombings and SARS. You really need to monitor what your trends are like. We look over the last eight years and that helps us forecast accurately. In addition, as a manager looks at the long term operations of a hotel, in periods where events such as SARS have an almost immediate impact on occupancy there needs to be consideration of the human resources employed by the hotel. In this situation cooperative management is essential. Management need to be open with their employees and work to find ways to overcome what is hoped to be a short term event. This is important as at some time in the future occupancy levels will return and the guests will have expectations of quality service. Belinda Goh, Director Sales & Marketing, SHANGRI-LA KOWLOON, Hong Kong What action did you take when SARS had such an adverse effect on your occupancy? At that time we sent some staff out to other properties so they can grow from the exposure. Also we were doing renovation at that time. Some took vacation. We sent a number of staff to Japan to learn and freshen up their knowledge of Japanese hospitality (chefs, waiting staff, waitresses and assistant managers). It was really good for the staff At that time we had quite a few hotels that were opening. Two groups of staff went to Sydney and Dubai. Staff were encouraged to clear their outstanding annual leave and then we had a voluntary unpaid leave scheme. We used the rest of the staff to keep the hotel running. 6 A particularly interesting situation was revealed during the interviews in the English Lake District. A year or so previously there had been an outbreak of foot and mouth disease, a devastating sickness of livestock. All species of cloven-hoofed animals are susceptible and the disease is extremely contagious. The outbreak almost completely destroyed any tourism activities within large areas of England. Christine Collier, CEO, CUMBRIA TOURIST BOARD, Cumbria, England How did the Foot and Mouth outbreak affect accommodation providers? Foot and Mouth - a devastating year for us. Some businesses did well, others didn't do well, in fact they did drastically. Those that did well were hotels which accommodated vets, scientists, the media and politicians and everybody who came to just look and do things relating to the problem. One of the things that we learned, with tourism there are winners and losers. It doesn't matter what the situation, barring all-out nuclear war, you have winners and losers. So, tourism in a perverse way has a bit of a stabilising influence on an economy, even during the worst of events. That was quite a useful lesson to learn. As a result of the large numbers of people who are employed in a hotel, health and safety is of concern in relation to the employees. The employees could be associated with terrorist groups or be carriers of contagious disease. The screening of staff to be employed is an important issue. Abid Butt, Managing Director, TURTLE BAY RESORT, Hawaii, USA Have security issues changed your employment processes? Not in material terms we have not. In certain positions we definitely go for the security checks into backgrounds etc, police reports etc the same as you would for someone who was going to handle cash, you would want to look at their credit reports. So no major changes. S M Azmat, Snr Vice President (Ops), JAYPEE PALACE HOTEL, Agra, India Have security issues changed the employment processes? We do a background check of all employees. That has been a policy also in the past. We determine the family background, the education of the people. Regarding security, it was of particular note during interviews with senior management how issues such as access have changed. It was not too many years ago that a hotel was considered to be a very public area; it was not difficult to obtain access to many areas of the hotel, in particular there has been a lot of effort placed on training of staff and raising their awareness of security issues. In one of the general manager's offices that was visited there was almost a full wall of security TV monitors that were constantly changing to a variety of cameras throughout the hotel, including staff areas. During the interview there was the feeling that the general manager was constantly aware of what was on the monitors. The following illustrate a variety of approaches: Abid Butt, Managing Director, TURTLE BAY RESORT, Hawaii, USA How have security concerns changed how you operate? No real specific changes other than possibly more closed circuit security cameras installed, more awareness-type training to encourage staff what to watch out for. Hopefully the industry would not get to the point of having yet another metal detector to go through to get into the hotel. 7 Luis C Barrios, General Manager, HACIENDA HOTEL OLD TOWN, San Diego, USA In what ways have security issues changed the things you do? We are much more inclined to have security people walking the parking lots. We do not search cars, but there is a presence there and guests are aware of it. We have seminars every year where we bring security people in to train with ideas of what to do when things happen, how to find suspicious people, etc. A lot of awareness. Hotels are very easy to attack - we are aware. Bruce Fery, General Manager, GRAND AMERICA, Salt Lake City, USA Have security concerns changed what you do as a hotel? If it was before 9/11 I don't think people were that security conscious, but now we are more aware that there could be a potential problem. We take more precautions in making sure our guests are safe both from a life safety point of view and just in general. It is on our mind more and we are more aware of it. We did not add any staff, we are just more alert. Linda Wan, General Manager, HOTEL CRESCENT COURT, Dallas, USA How do you deal with the question of security? We certainly have a much greater awareness as to what is going on around us. We have always had the guests' best interests in mind in that we designate guest stations and public areas and we have a very good team who are trained in customer service and can certainly recognise any people who should not be on the property. In that sense we all are affected by the fact that we should always be aware of security everywhere we go. We always promote safety everywhere we go, in rooms, in public places and in our offices and so from that perspective it is much more in the forefront of everyone's minds. An interesting recent innovation has been the ability of guests to view security cameras from their in-room televisions. For example a guest can look at the corridor outside their room, at the carpark and other public areas. This is designed to give guests a greater feeling of security, however, it could simply make guests overly concerned with security issues. Hotel Ownership In most cases, hotel ownership is entered into for financial return. The owner's perspective of a hotel may be different from that of the senior management, but for there to be satisfaction on both sides, parties need to be able to work together to the advantage of all. Abid Butt, Managing Director, TURTLE BAY RESORT, Hawaii, USA How has hotel ownership changed over the past few years? The industry has changed a great deal, at least in the US in the last 10 years. Prior to that it was all institutional ownership, equitable insurance would have owned and the hotel was an asset would have just been kept there. It wasn't their core business. But now a lot of the owners are very actively involved with what is being done with their assets. The involvement of the owners in the day-to-day operations can be very different from one hotel to another, as illustrated in the following, but what is also apparent is the amount of effort that management need to put into working with the property owners: 8 Vijay Wanchoo, General Manager Corporate Planning, FORTUNE PARK HOTELS, New Delhi, India What about ownership of the hotel? All our properties are privately owned by individuals. People from all over India. One of the difficulties is that they are not hoteliers. One may be building bodies for buses, another in the steel industry, another the shipping industry. This makes their understanding of the hotel industry very limited. Octavia Gamarra, General Manager RITZ-CARLTON MILLENIA, Singapore How much of your time is spent with the owners of the hotel? The owners' office is just across the street. They are great people but they are very, very involved. Sometimes they phone and say .... This is going on in the hotel. Something that is very different in Asia then is the involvement of the owners. 30% of my time is managing the owners. It is part of the duties of the General Manager, not only to run the hotel but much of my time is with the owners. Often owners are families, not companies. Again great balance is required - you have to be very political when you are dealing with the owners. You have standards and you are constantly balancing. As well as what may be considered as the negatives of owner involvement, it is clear that good working relations with the hotel owners also results in further investment and development of the property: Peter Pollmeier, General Manager, CROWNE PLAZE, Shen Zhen, China What impact do the owners have upon your hotel? I always say that it starts with the relationship between the partners, the owners and management company. In this case we are very lucky to work with an owner who gave us a great product. They spent a lot of money on this place and they have the same vision that we have. They want this hotel successful and are looking at it long term. Many owners have their own ideas. Here we have a strong partnership between two companies wanting the same thing. Hotel Life-cycle As we look at hotels internationally we see that there are a number of well-established properties which have been in existence for many years. In the first five to ten years, the hotel goes through a period of rapid growth in both occupancy and net income. After this period of growth the occupancy stabilizes and the income remains fairly constant up until the hotel is about 15 years old (Rushmore, 1992). As indicated through research by Rushmore (1992) the total life expectancy of a hotel is approximately 40 years, but this figure has a standard deviation of 20 years. The life cycle of a hotel is also influenced by its location. Abid Butt, Managing Director, TURTLE BAY RESORT, Hawaii, USA How do facilities relate to your location? For any hotels in a tropical environment, especially those that are close to the ocean, the physical plant goes through enormous amounts of challenge. This coastal environment was possibly not meant for concrete, it was meant for thatched roofs. This building takes a massive beating from the elements. Despite the advances in modern paints, mother nature still takes its toll. Humidity in the air can even rust out the telephone jacks in the guest rooms so we are applying gel to that. 9 It is a totally different operating environment compared to New York or Los Angeles. As illustrated in the case of Hawaii there are a large number of factors that influence the facilities and the useful life expectation of a hotel (Jones & Joewtt, 1998). These include loss in income and value resulting from outside factors such as declining neighbourhoods and as discussed in the chapter on yield management, poor management of the room rack rate resulting in short term income but in the long term, insufficient reserves to maintain the quality and appearance of the property. Revenue loss stemming from out-of-date appearance and inferior facilities is functional obsolescence, and this can be key to hotel value decline (Rushmore, 1992) . Nash Nasihin Ali, General Manager, MUTIARA HOTEL, Johor, Malaysia How do you maintain high occupancy in relation to the quality of facilities? A lot of the hotels particularly in Malaysia are experiencing cash flow problems and when you have a cash flow problem, you would rather sell a little bit lower so you would have enough cash turn around. The room rate is reduced to increase occupancy percentages, but the high level of occupancy causes greater deterioration of the facilities. Because the facilities are deteriorating a lower room rate is charged and so forth. The problem is that as the property declines there is insufficient revenue to maintain the facilities because of the low room rates being charged. Many older hotels in the declining phase of their life cycles have good locations and sound structures. They are prime candidates for massive overhauls that will add years to their lives. In other situations where the neighbourhood of the property has deteriorated, management is faced with a more difficult decision on the possible future of the property considering whether it would be better changed into something else or simply demolished and completely redeveloped. Hotel Refurbishment With a life expectation of about 20-60 years a property goes through many changes, but at some point there is a growing need to refurbish. This can be characterized as either major or minor refurbishment which arises when: A hotel has become uncompetitive due to outdated standards and lack of life-cycle refurbishment. The benefits of the site, building character and known market offer the prospect of increased business. (Lawson, 1995) The sales value of a hotel is strongly influenced by the market the hotel is operating in, the life stage that it is in and reflects the market demand and yield. The level, cost and extent of the refurbishment carried out can vary a great deal. There is, today, a higher level of expectation by guests for the facilities within a hotel. 10 Steve Pagano, Hotel Manager, MARRIOTT HOTEL & MARINA San Diego, USA How do expectations change the facilities you provide? The bed is most important - comfortable quilted top mattress, great linens and pillows. It has got to be at least as good as what they have at home, and the expectation is that it is better. At our room rates, our clientele have great things at home. Therefore, when a property is in the process of being refurbished, guest expectations in the target market must be considered. A hotel needs to maintain a competitive range of facilities which takes into consideration the future technological development during refurbishment of the hotels rooms and other facilities (Loether, 2005). This includes updating the audiovisual and telecommunications conduit, cabling, connectivity and controls, although recent advancements in wireless technology has significantly improved the ability to add internet and audio visual and communication facilities without having to install cables. Terry Holmes, Executive Director, THE STAFFORD, London, England Is it a challenge offering the modern technology in this older, well-established type of hotel? Yes, suddenly you are putting in the WIFI and we have had all sorts of technical problems. It is very hard to get a mobile phone signal in the Stafford - a lot of people think I do it on purpose so they have to use our phones. I had no problem with people not being able to use their mobiles but there becomes a demand for it and last year we had a very big piece of business and the chairman and the co-chairman said we will never stay here again if you don't get the phone system so we can use our mobile phones and so we have spent quite a lot of money putting in boosters. In some hotels you go into a room and you almost need a PhD in science to turn on the lights. You can make a room far too complicated and far too technical. You have to keep up with things that come along. Just putting in air conditioning in a hotel like this was an enormous task. The first thing I did years ago when I knew we couldn't afford air conditioning, I put in big ceiling fans and that was quite a step forward and then when we put in air conditioning we kept the ceiling fans because not everyone likes air conditioning. It is important to keep up-to-date with what's going on, but ensuring that the 'feel' continues, and that you don't turn it into something that people aren't expecting. As previously mentioned, the surroundings of the hotel, its location, surrounding businesses and other developments in the vicinity influence the success of the hotel. This requires managers to be involved in environmental scanning, proactively involved in local affairs and in particular with local government committees. Patsy Chan, Director Communications, SHANGRI-LA KOWLOON , Hong Kong How do you work with changes that occur in your surrounding area? We wrote to the government regarding the street sleepers especially around our area. So they are putting in some very big pot plants there to deter them. As a next topic I will talk with them about the Porn shop which has opened up close by. All of these things influence people's views of the area and as a quality hotel we need quality facilities, quality area. The govt has tried to make Tsim Tsa Choi more beautiful. Here the gardens and plants are beautiful and then it stops. We wrote to them several times already and now they are making improvements. The government have plans to beautify the promenade. The train will be in service later this year. These changes are all important to us. 11 As part of refurbishment it is also beneficial to consider if the hotel can be given a competitive advantage. The core elements of a hotel are: 1). The building and its interior and environment in which it resides, 2). The guest rooms and the facilities available and appearance, 3). The reception and public areas of the hotel. Competitive advantage can be accomplished through many measures, it could be simply the room rate charged or the quality of service, as well as the facilities offered. Understanding guest needs and wants would guide management to be able to provide the level of facilities that would be appropriate. As illustrated, what was once considered to be a competitive advantage, may not necessarily remain so: Nash Nasihin Ali, General Manager, MUTIARA HOTEL, Johor, Malaysia . What facility demands are changing your property? Now every business traveller wants in-room internet facility. We don't have that at the moment but soon we are signing an agreement with a supplier. We have no choice. We have to convince the owner to come up with the money because now it is expected. Maintenance Planning The process of maintenance management in a hotel is often a shared responsibility, although it may be allocated directly to the maintenance department. There are many hotel general managers who spend a great deal of their time walking around the hotel noticing things that need attention. It has been said that the very inevitability of maintenance is the factor which tends to obscure its importance. Lack of maintenance can very quickly impact on the appearance, efficiency and guest satisfaction in a hotel. The ability of management to maintain a property is often closely related to the profitability of the hotel (for further discussion see the chapter on yield management). There are two types of maintenance: Planned maintenance - the three basic requirements of a planned maintenance system are: 1. A programme of maintenance activity for the hotel, its plant and equipment. 2. A means of ensuring that the hotel's programme of maintenance is fulfilled. 3. A method of recording and assessing the hotel's maintenance. As the above list shows, there is a need for management to identify, plan for and record the maintenance requirements of the hotel. This process involves all parts of the hotel not only those areas visible to the guest, illustrated as follows: Steve Pagano, Hotel Manager, MARRIOTT HOTEL & MARINA do you take to maintain constant quality in your property? San Diego, USA What actions Housekeeping do inspections every day, and then I do inspections every day and meet with Engineering and Housekeeping every Friday. They don't know what rooms we are going to, so they can't prep them. If I see a lot of problems then I step up the inspections. The next programme that is really big is our Perfect Room Teams, they go into four rooms every day and they do the deep cleaning. They have a different check list from the housekeepers. There is a 12 team of 3 and they go into the room with their tasks - tub tile, floor tile, shampooing the carpet, painting, furniture touch up, wallpaper vinyl repair. When the perfect room team leaves at the end of the day that room is in as perfect a shape as it can be without being completely refurbished. Understanding the life expectancy of items in the hotels help with good maintenance. For example a light bulb has an expectation of life - this can vary depending on the number of times it is switched on and off. If there is not a proper scheme of maintenance, it can cause guest dissatisfaction, for example a blown light bulb. Some establishments choose a system of preventative maintenance - the replacement of one light bulb can be more expensive than replacing all in a room or area at once at a planned time before the expected failure. Unplanned Maintenance - Because of the public nature of a hotel many things can happen that influence maintenance. When this occurs it creates costs which may not scheduled. The objective is to convert unplanned maintenance into planned maintenance. But this is not always possible. This is particularly true in situations of a dangerous nature, or situations where quickly dealing with a maintenance issue will reduce long term costs, or where the lack of a quick response will impact on guest satisfaction. For example although electric lights have an average life expectancy, this does not guarantee that they will not fail much earlier. This could impact upon the safety of employees and guests. As a result unplanned maintenance is not merely desirable, it is a factor that must be taken into account as part of operations planning. Housekeeping The management of facilities is not simply deciding what facilities will be made available to the guest, although having the right facility available does influence the guest's selection of accommodation. The way the facilities of the hotel are maintained is of vital importance. Research by Lockyer (2003), discusses facilities and cleanliness, and in particular draws the reader's attention to the impact that such factors as smell, toilets, windows and even curtains have on guests. The constant day-to-day effort to ensure that the facilities of the hotel are maintained in a condition appropriate for the establishment is an essential part of the work of housekeeping. \"These essential services are often not given the importance they deserve in management texts, and are considered to be somewhat unglamorous\" (Powers, 1995, p.255). The housekeeping department is the only one which keeps regular liaison with every other department and department head in the property. \"They are the 'eyes and ears' of management; they will see and hear things that often the manager will miss\" (Schneider & Tucker, 1989, p.37, which makes their interactions with other departments very important as illustrated in Table 5.1. Table 5.1 Basic Interaction of Housekeeping with other Departments RECEPTION - Prepare daily report on state of rooms; inform of rooms taken off for redecoration; inform of rooms ready for guests; receives details of arrivals and departures; special requirements of guests, VIPs MAINTENANCE - Checking and reporting of requirements RESTAURANT - Stocking of linen required; exchange of linen at agreed frequencies SECURITY - Care of keys; lost property; fire prevention BUYER - Ordering of materials and equipment ACCOUNTS - Inform hours worked by staff, absentees and overtime (Adapted from Allen, 1983, p18) 13 The housekeeping department is often seen as the one that takes care of cleaning the bedrooms, making the beds, emptying the bins and putting out clean towels, but it is a lot more extensive than that. This department is often responsible for everything from the selection of fabrics to the selection and purchase of all the furniture. The reason for this is that if housekeeping need to maintain standards in the property, they need to ensure that the items purchased are able to be cleaned and preserved in their best possible condition. There are many stories in the hotel industry about the 'disasters' that have occurred when a new hotel has been designed by professional architects who have specified furniture and other fittings which look wonderful but are very difficult to clean and maintain. Some years ago a major first class international hotel in Hong Kong was refurbished. All the bedroom furniture had a thin decorative copper strip inserted into the wood. This looked wonderful at first but consideration was not given to how it could be kept clean. Using normal brass cleaner damaged the wood and discoloured it. Using normal wood polish did not clean the brass. Housekeeping spent many hours trying to clean the brass without damaging the wood using a small tooth brush. The hotel's housekeeper is, as a result of the broad responsibilities, a very important person amongst the staff. Terry Holmes, Executive Director, THE STAFFORD, London, England How valuable is the housekeeper to maintaining the standards in the hotel? I employ a very good housekeeper who terrifies me. I think housekeepers were meant to scare management. They have always had a myth about them. When I came here we had two head housekeepers, both Scottish and they were very fastidious in their demands and standards. I think you can get away with a lot of things in a hotel but one of the things you can't get away with is a lack of cleanliness. Consequently you employ the people who can do that job - one of the hard jobs to fill these days is chamber maids - not everyone wants to clean someone's toilet or change soiled sheets. Despite the importance of housekeeping to the satisfaction of the guests and repeat business, the housekeeping staff are often low paid, temporary employees. An industry measure is that in a quality property approximately 10 to 15 guest bedrooms can be cleaned per shift (Branson & Lennox, 1989). Productivity is greatly impacted by the fluctuation in occupancy and discussed in the chapter on yield management. In a property with 1,000 rooms, the occupancy could easily change by 4 or 5 percent from one night to the next, which represents a variance of 40 or 50 rooms and a related fluctuation in housekeeping staff needs. As well as maintaining the cleanliness and maintenance of the hotel property, management in the housekeeping department have responsibilities to operate within legal requirements. Although these change significantly from country to country, they can include areas such as: Fire precaution regulations Health and safety at work regulations Food hygiene regulations 14 Employment legislation Accident reporting and prevention Not only do these requirements affect guest satisfaction, not fulfilling the requirements according to regulations can result in legal action being taken from external bodies. Outsourcing In the competitive and in many respects difficult environment in which hotels operate there are a number of areas in which the use of outsourcing can assist with the operation of a hotel, from food and beverage provision to guests, security, cleaning and maintenance, down to much less significant aspects such as vending machine provision (Hemmington, 2000). The reasons for undertaking outsourcing are varied and include seasonal fluctuations, staff skill shortages, manpower shortages, space and facility shortages, lack of speciality knowledge, changes in trends and fashions and cost consideration. Ralph Wong, Rooms Division, CROWNE PLAZA HOTEL, Shen Zhen, China Outsourcing - is this new? In the ShenZhen market it is just developing. In other countries you have a very mature market but in China it just started. Manpower is expensive but we need high occupancy to cover the costs. We take the outsourcing company's staff, we train them but we pay them per day per hour. We pay higher than we would pay our own people but we have no need to pay dormitory, insurance etc. This gives us greater flexibility. An example of ways and reasons that outsourcing is used in the housekeeping department include: Linen and laundry services - because of the need for a large investment in equipment and space. Periodic cleaning - due to specific additional work required such as carpet shampooing or sanding of wood floors which requires specialized equipment. Pest control - because of use of specialised chemicals and specific knowledge. Window cleaning - difficulty with accessibility making hazardous tasks requiring specialised knowledge and equipment. However, while the reduction of cost is often cited as the most pressing need for the use of outsourcing, the true impact on the financial cost and a robust evaluation of the comparison of costs is often not undertaken. P S Ramdas, Managing Director, TOURIST HOME (Pvt) LTD, Egmore, Chennai' India Is your outsourcing a cost saving to you? It is easier and has a cost saving also. I don't have to have employees, or give them a bonus, or whatever. The scale of operations works better for me. 15 Before considering outsourcing a full investigation of what is currently being done needs to be undertaken. The purpose of this investigation is to measure the level of current satisfaction and to determine if a change would be beneficial. Such a review may include the following questions: Is the current provision of the product or service efficient and cost effective? How could the provision of goods and services from an outsource supplier compare with the current offering? Are the customers currently satisfied, and would a change ensure on-going satisfaction? How do competitive establishments handle outsourcing? Is the provision of quality from an outsource supply guaranteed in the medium and long term? The impact of any change must be looked at very carefully; management need to be assured that any change in the way in which goods or services are provided will not harm the quality of the overall product and that it will be financially beneficial. There needs to be an on-going evaluation of the positives and negatives of outsourcing. Part of this involves the evaluation of the hotel's core business and where the expertise lies. It is therefore necessary to identify the core competencies on which the organization's ongoing success and survival is based, and then to determine what impact outsourcing may have on the core business. There are a number of situations where outsourcing may not be the most appropriate action. These include: Where the cost of outsourcing is higher than providing in-house. Where it is strategically important to maintain in-house provision. Where changing to outsourcing may have a major impact on current employees. Where the ability to monitor and measure outsourcing performance is difficult. There are two parts to an outsourcing agreement: the service specification and the service level. The service specification must be complete and unambiguous. It is important that all parties clearly understand and can put into writing exactly what service is required. If this is not done it becomes impossible to measure the level of service provided and variance from the required standard. On the other hand, there is a danger of being overly specific and as a result, making the agreement too complex and doomed to failure. Therefore, a balance needs to be obtained. Summary This chapter is somewhat diverse in its nature, bringing together a number of important management issues for emphasis. As in other chapters, the intention is not to be exhaustive in the discussion, rather to raise the issue and allow the reader to develop their own thoughts, ideas and analysis. The underlying importance is the value of the setting and measurement of standards. These standards and the variation of them flows throughout the operations in a hotel. Management must understand the standards and the environment in which they are operating so 16 that they can maximise effectiveness and return. These include issues such as the age of the property, its condition, purchasing of goods, etc. This chapter has also discussed the importance of maintaining the assets within the hotel. Purchasing - because of the high cost of many of the items purchased by a hotel, systems need to be developed so they can be appropriately managed. This is particularly true because of the changing needs and wants of the hotel guest. Health and safety is a constant issue which can make a hotel legally liable if not adhered to. Health and safety also relates to employees to ensure they work in a safe environment. Appropriate training and guidance must be given. The manager of the hotel is often required to work with the owners in the hotel, which can require a great deal of time and effort as owners may play a very active role in the management of the establishment - good relationships with management can make purchases of facilities and equipment and expenditure a lot easier. The question of hotel life cycles, as well as being directly related to yield management, needs to be understood with appropriate plans implemented so that refurbishment is done in a timely and well planned way. Housekeeping has an important role in the day-to-day maintenance of the standards of the hotel, as well as an important communication relationship with many parts of the hotel. As such they play a very important (and sometimes not sufficiently recognised) part in the profitability of the establishment. Discussion of the Issues Identify and discuss five or six standards that could be established; include how variance from such standards could be measured. Evaluate in what areas of a hotel variance analysis can be applied and the way in which that analysis may be used. From the perspective of a hotel's general manager, evaluate techniques that can be used to control the cost of purchasing. Visit a hotel in your vicinity and evaluate what actions the housekeeping department take in relation to maintaining guest health and safety issues? What major issues do you see in relation to the management of hotel property owners; what ways could you better manage these issues? Identify a selection of hotels in your area, and categorize at what stage they are in as it relates to the hotel life cycle, and the impact this has on refurbishment. What advantages and/or disadvantages do you see to maintenance planning? The housekeeping department is key to the quality of a hotel; evaluate this statement. Identify to what extent hotels use outsourcing in your region, discussing advantages and disadvantages. 17 Case Studies: 18 Case Study 5.1: The Cresswell Hotel Aggie Mackie has recently been appointed Executive Head Housekeeper at the Cresswell Hotel, in Dumfries, Scotland. She thought when she was appointed that that the hotel was very neat and clean and so was looking forward to her new post. On the second day of her employment she got in just as the cleaning staff were arriving and soon realised there were major problems with the department. On walking along the corridors at 8.00am she encountered two of her staff (who she later discovered were called Dawn and Jen) pulling their trolley along the corridor, shouting 'Housekeeping, Housekeeping' very loudly as they went. Dawn was dressed in the hotel regulation overall, but was wearing a cardigan over the top and a pair of slippers. Jen's hair was loose and hung down past her shoulders. She watched Dawn approach a 'Do Not Disturb' sign on a bedroom door, read it and then knock on the door and enter the room using her master key. She also watched her retreat back to the corridor quickly when a woman's scream rent the air. The pair carried on in much the same way, trying to find a room they could get into. Intrigued, Aggie continued to follow their actions, as she was new, they clearly did not know who she was. They eventually found an occupied room that the guests had recently left to spend some time sight seeing. They parked their trolley outside the door and started their cleaning routine. First of all they switched on the television, pulled the bedcovers up so that the bed looked made and Jen went into the bathroom to start work there. Using the guest hand towel, first of all she wiped the toilet bowl and then, with the same cloth, the bath, the wash hand basin, the shelf, the glasses and lastly the coffee cups, She then folded the towel, so the coffee marks did not show and replaced it on the heated towel rail. Before leaving the room she had a squirt from the perfume bottle which clearly belonged to the guest, gave a her teeth a quick brush with the guest's toothbrush and applied some lipstick, also belonging to the guest. Meanwhile Dawn was concentrating her efforts in the bedroom. She pulled the vacuum cleaner in and proceeded to vacuum the floor. It did not appear to be working very well as the whole vacuuming process made very little difference to the carpet. She then found a rather grubby duster on the trolley and flicked it around the furniture, before sitting down on the bed to watch an interesting part of morning television. After about 10 minutes of TV, they were finished in the room and left slamming the door behind them, leaving the duster on the bedside table. Aggie went to find the Assistant Housekeeper (Kim) responsible for the area and after a bit of searching, she found her on another floor cleaning the bedrooms there. Aggie was aware that they were a little short staffed but not to the extent where the supervisory staff had to do the cleaner's work so her first question was to enquire why Kim was cleaning. Kim replied rather vaguely that there was too much work to cover, so she liked to lend a hand. . Aggie than quizzed her about Dawn and Jen's behaviour. Her reply was that they were rather troublesome and she had attempted to train them but all they did was giggle and say they had their own way of working and no one ever complained about their work. She also added that they were great fun in the canteen and on nights out they were the 'life and soul of the party'. Aggie then continued her way around the hotel and found that although one or two of the other cleaners had a similar working technique to Dawn and Jen, others worked quite 19 differently and in a more organised manner. They followed a routine where they paired up to make beds, but after that worked on their own, cleaning bedrooms and corridors in an effective way, following all the rules of good hygiene, and the (economical) use of cleaning agents, equipment and materials. They dressed neatly in their overalls and wore sensible shoes and had their hair styled neatly and tied back where necessary. Judith E Brown BA,MA,ILTM,FRSA School of Sport and Leisure Gloucester University,Cheltenham, England Questions 1. The problems that occur in the Cresswell hotel are quite obvious from the case study, but what are the reasons for the occurrence of these problems? 2. What would you recommend Aggie does to try to sort out the problems? 3. What other issues are evident for the overall operation of the hotel? Case Study 5.2: Impact of Seasons The following came from an interview with the General Manager of the Grand America Hotel in Salt Lake City, Utah. Salt Lake City is situated in the rocky mountains (4330 feet above sea level) and is subject to very cold winter temperatures (a low of 19F in January and a high of 93F in July). In this hotel we have wide variety of temperatures. We are prepared for four main seasons, we need snow blowers for the winter time and de-icers to take care of the building. We have a very sophisticated energy system. We are a newer building, finished right before the Olympics in 2002. The owner built it for the Olympics and he wanted it to have a real European feel - most of the fixtures are from Europe, the art work from all throughout Europe, carpets from England, chandeliers from Milan. There is an immense cost of building something like this. Bruce Fery, General Manager GRAND AMERICA HOTEL, Salt Lake City, Utah, USA Questions 1. Evaluate what impact a rapidly changing four seasons has on a hotel's housekeeping department. 2. Identify a hotel locally, consider what impacts the climate has on the hotels maintenance. 20 3. What specific differences do you believe age would have on the maintenance in a hotel. Case Study 5.3: Maintenance of Standards Crowne Plaza Shenzhen is the first 5-star business-leisure theme hotel of Venice cultural style in China. It is a global business hotel. Advertising material states the hotel is located in the southwest of Shenzhen city, right next to the famous Window of the World, Splendid China, China Folk Culture Villages theme parks and Happy Kingdom, the hotel is minutes away from Futian Center and the Hi-Tech Zone, 20 minutes away from Shekou Harbour Passenger Terminal and 25 minutes away from Lo Wu Port and Shenzhen International Airport. The following information came from an interview with the General Manager: At the moment we are the number one hotel in China out of 40 hotels. As far as guest feedback is concerned we are number one, our housekeeping is rated number one by the guests and we set a very high standard. We are preparing for some new competitors coming into the market, within the next year-and-a-half so we are trying to improve further on where we are. Our housekeeper - she has done a great job in regard to our cleanliness, we are in regarded as number one in cleanliness - she requested a transfer to another hotel which we will arrange for her and we are going to replace her with an expatriate, not because we feel we have a problem - we don't - but because we feel we are number one but let's move to another level. The new properties opening try to attract our staff but the salary range is lower than ours, so they try to get our supervisors and make them assistant managers, our assistant managers to become managers. That is how we lose some staff, but fortunately not too many. Peter Pollmeier, General Manager, CROWNE PLAZE, ShenZhen, China Questions: 1. Evaluate the relationship between the employees of the hotel and the management of resources. 2. Investigate a hotel locally and consider the impact that the housekeeping department has on the overall hotel. 3. Discuss how variance analysis could be used in this case. References Allen, D.M. (1983). Accommodation and cleaning services Volume 2: Management. London: Hutchinson. Branson, J.C., & Lennox, M. (1989). Hotel, hostel and hospital housekeeping. Fifth Edition. London: Hodder & Stoughton. Feldman, D.S. (1995). Asset management: Here to stay. Cornell Hotel and Restaurant Administration Quarterly, 36(5), 36-52. Hemmington, N., & King, C. (2000). Key dimensions of outsourcing hotel food and beverage services. International Journal of Contemporary Hospitality Management, 12(4), 256 Jones, C. (2002). Facilities management in medium-sized UK hotels. 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The professional housekeeper. New York: Van Nostrand Reinhold. 22