Lodging - TEKS: §130.223. Hotel Management

Roles within the Hotel Industry

(7) The student understands roles within teams, work units, departments, organizations, and the larger environment of the hotel industry. The student is expected to:

(A) distinguish among the duties and responsibilities within each department;
(B) implement quality-control standards and practices;
(C) compare and contrast full service hotels and limited service properties; and
(D) compare and contrast chain and franchise hotels, including revenue and support centers.

Distinguish Among the Duties and Responsibilities within Each Department

The Rooms Division

The Rooms Division consists of three major areas, front office, housekeeping, and uniformed services. Of these, the front office is the revenue producer. The other areas are staff functions.

The principle guest representative of the front office is the Guest Service Agent (GSA). This is the position that welcomes guests, registers them, assigns guest rooms and rates, check's them out, and answers a myriad of questions about the hotel and the surround community. For many guests the front office IS the hotel. The GSA fulfills many responsibilities. We list among them cashier, reservations, pbx (telephone), and night audit.

The Night Audit is a GSA that works the "C" or graveyard shift, 11:00pm - 7:00am. The primary focus of this shift is to perform the audit but they are still a GSA. A cashier is a GSA that is performing the function of checking guests out of the hotel. A reservations agent may be a very specialized position at a major hotel property. However, at most hotels, the reservation function is handled by a GSA. Similarly, the pbx, at a major property may be a specialized position but at most hotels, the GSA handles this responsibility.

The Housekeeping department is the largest in virtually all hotel properties. Whether the hotel does its own laundry or sends the laundry out to be done, the housekeeping department will be in charge of that function. If they do their own, then they have laundry attendants who operate the washers, dryers, and ironers. The bulk of the employees in housekeeping are room attendants. These are the people who clean the guest rooms and, usually, the public spaces of the hotel. The housemen are usually males who perform cleaning activities but who also perform manual labor that the housekeepers may have difficulty with. Turning mattresses, stocking linens and other heavy labor. The inspectors are supervisors who actually inspect the work of the room attendants. Many hotels have eliminated the inspector position, choosing instead to have random inspection performed by a manager or manager on duty.

The uniformed services of a hotel consist of bell-staff, doorpersons, valet, and concierge. At many properties many of these positions have been eliminated because of cost. However, at major properties you will still encounter member of the bell-staff. These people will take your baggage to your hotel room, introduce you to the many services of the property and generally be able to answer virtually any question you may have about the property or surrounding area. Major properties may also have doorpersons, though they are getting harder to find. This staff will transfer your baggage from your vehicle to a bell cart. They actually hold the door for you to enter the property. Valet representatives park your vehicle. These employees are readily available in major downtown or resort properties where parking is scarce or remote to the property. A concierge employee can be several things. This person is a facilitator or expeditor. Most hotels incorporate the concierge into the GSA.

The Food and Beverage Division

Food and Beverage (F&B) may be the largest division in a hotel depending on the number of outlets that F&B operates.
We start with the restaurant. Generally this is the facility that operates for breakfast, lunch, and dinner. There may be only one at the hotel. There may be several, depending on the size of the facility. A large hotel may have several restaurants AND a specialty restaurant(s). The lounges and entertainment rooms tend to focus on alcohol sales however remember that each of the restaurants has alcoholic beverage service available, also.

Major hotel properties have a room service function that can be quite exceptional. It is generally quite expensive, also. The successful hotels that generate profits from room service provide a significant amount of service. Most hotels have let their "service" deteriorate. Most room service departments provide only room delivery.

One of the greatest profit potentials from hotels is created from the Catering department. Outside catering can generate a lot of revenue, however it is very labor and equipment intensive. Most hotels use their catering department to generate business in their hotel banquet rooms. Some use the words catering and banquets interchangeably. They are distinct. The catering department is the sales arm which takes the desires and wishes of the client and converts them into orders which the banquet department turns into reality. Catering has sales people and clerical staff. Banquets have servers, bartenders, and housemen.

Most F&B facilities have an employee feeding function. Small properties may just allow their staff to "have something". Major properties have facilities designed for their employees only. The employee feeding facility is operated just as a regular restaurant would be. They establish menus, have their own staff, have cash and credit procedures, and attempt to "market" themselves to the employee.

The Sales and Marketing Division

A hotel division that is relatively small but very important is the sales and marketing (S&M) area. The S&M division has as its first responsibility to put "heads in beds". They do this by focusing on the market groups that the hotel appeals to and by soliciting the groups in that market. In addition to the sales function, the division may have a convention service department. This department handles the details of sales groups coming to the hotel. Convention services would handle the reservation requirements, catering and meeting arrangements and any "outside" needs the group may have. The S&M division usually handles the advertising needs of the hotel and the market research information gathering. Any public relations or publicity needs initiate at the S&M division. Inquiries for information tend to be directed to the S&M division. Another small but important division is the accounting division. Major properties may have a controller, while smaller properties have a bookkeeper. The people who keep the numbers tend to be influential. Some of the functions, which may be quite specialized at large properties, are accounts payable, accounts receivable, payroll, taxes/fees, statements, internal banks, and external banking. Following is a quick reference to what each area handles:

1. accounts payable ---Who do we owe?
2. accounts receivable--- Who owes us?
3. payroll---Sort of an accounts payable but exclusively for employees.
4. taxes/fees---Lots of them! Property and income taxes, occupancy fee, health department fee, etc.
5. statements---Profit and Loss (P&L), Balance Sheet, Cash Flows, Owners equity, etc.
6. internal banks---The cash that each employee needs to start work. Can be over $100,000 at major properties.
7. external banks---deposits, CD's, armored car pick-up, etc.

The accounting function and the front office work very closely with one another. Usually they are physically adjacent. Many GSA's and accounting employees cross train in each other’s area. The front office is a revenue producer because it "sells" guest rooms. Therefore the front office takes in cash, checks, credit card processing, and occasionally some direct bill. In order to perform that function, the front office needs cash for change, data capture for credit card processing, accounting forms for guest folios and some sort of check approval procedure. Normally, the accounting office establishes banks for the front office and procedures for taking checks, credit cards, and direct billing.

The Maintenance Department

One of the key responsibilities of a general manager is the maintenance and upkeep of the hotel. Owners refer to this as preserving the asset. Many hotel properties suffer from owners who do not put back into the hotel. They take their money and let the property deteriorate along with a declining occupancy and average daily rate. The department that is generally charged with maintaining the asset is Engineering or Maintenance. 90% of the costs of a hotel are fixed. That is to say that once the hotel is built and operating, 90% of the cost of the property has already been spent. Obviously the building itself, heating and cooling systems, plumbing, and electrical are major expenses. Additionally, each guest room has furniture and fixtures that have been purchased. The entire property has computer systems and specialized equipment in each area. The kitchen has ovens, fryers, steamers, etc. The point here is that the major costs of a property are expended before they take in dollar one. Each of these areas needs upkeep. That task falls to the maintenance department. If that were not enough, they usually have the responsibility of external maintenance also: snow removal, landscaping, lighting, decorations, etc. A small department but with major responsibilities.

Major hotel properties have a separate department for security. Most hotels have this important area fall under the guidance of the general manager. Internal security demands should challenge suspicious people. Posting a sign that says "employees only" is not enough. External security necessitates procedures and policies that protect the outside of the property and the property of guests. Lighting, fencing, television, and active patrolling of external areas are all part of a comprehensive security package.

Human Resources

Depending on the size of the property, the Human Resources (HR) department can be large with many specialists to a small one with one person. Frequently, the general manager's secretary takes care of the "personnel" matters. There are many laws and regulations related to the hiring, employment, and termination of people that you can find yourself in a lot of trouble, quickly. Hire a professional to take care of these items and keep you and your hotel protected.

Human Resources is the new name for what we used to call "personnel". One of the areas that HR covers is employment. There are a number of areas in employment: advertising, interviewing, selecting, hiring, orientation, and discharge. Any of them can, if mis-handled, can put your operation into legal jeopardy. Training is part of the employment cycle but also is part of the benefits that existing employees should have. Employee relations is one of the HR responsibilities. The HR department hopes to keep morale of staff high through newsletters, social events, and award programs. They may have to intervene between a manager and an employee to keep peaces. Labor relations is the area that is considered to be part of the peace keeping effort. Occasionally, managers only have the needs of their departments in focus and may take a short term approach to employee relations. HR may need to intervene when a long term employee has a personal need that the manager cannot seem to accommodate. HR also deals with compensation programs. Not that they establish wage rates but they generally collect data from a number of sources that works towards keeping the compensation offered competitive with other hotels in the market area. Benefits are also a major part of compensation. Familiar items may be health, dental, vacation, sick days, etc. Don't forget that unemployment compensation, Medicare, and FICA are also benefits to the employee. Employee policies are usually initiated in the HR office. These are generally applicable to all employees of the hotel. When is payday? Where do employees enter the hotel? Meal policy? Sick leave? Jury duty? And finally, the concept of safety issues falls under the realm of HR. The HR director is usually the head of the safety committee and that committee attempts to keep the property as a safe work place through policy and procedure. We may have retail outlets that the hotel operates. We may have recreation operations like skiing, golf, swimming, and fitness areas that require specialized employees, policies, and procedures. Similarly, many hotels in gaming legal areas have casinos. This is a highly specialized operation that requires many personnel to operate efficiently.

General Management

The general manager of the property is a multi-talented individual who represents many interests. As a general statement, they are responsible for the standards and profit of a complex business. Additionally they are responsible for protecting their business asset for the owner(s). They represent the hotel to the community and frequently represent the community to the hotel. They wear many hats and at a full service property, they frequently command salaries in excess of $100,000. The general manager is the one responsible for the operation to the owner, management company, franchise company, chamber of commerce, mayor, police chief, keep going............

Implement Quality-control Standards and Practices

You won't have to worry about demand being too high if your organization isn't focused on a vision of service. Successful hospitality companies focus much attention on service standards for all aspects of their company. Providing quality customer service is key in the hospitality industry. Every organization has their own ideas about delivering good service. There are some standard keys, however, which can help in service delivery.

  1. Don't forget who you are. Companies that really succeed create a service strategy for each of their market segments, and then they stick to it. Don't try to be all things to all people. Motel 6 will never be the Ritz, but it can provide good service to its target market.
  2. Encourage every employee to act like a manager. One reason some hospitality organizations succeed while others fail is that successful operations empower their employees.
  3. Handle Moments of Truth correctly. In the service sector a Moment of Truth is when an employee interacts with a guest. Generally speaking, you have just 15 seconds to make an impression. You want to make that impression a positive one instead of a negative one.
  4. Hire good people and keep them happy. There is high turnover in the hospitality industry, because it can be difficult work. The key to keeping good employees is to hire those who fit within the corporate culture and keep them interested in the success of the organization.

Respond in a timely manner. No one likes to be put on hold, have to wait in line to check in at a hotel or wait for their check to come at a restaurant. Service organizations who make a point of responding in a timely manner are more likely to keep customers coming back for more.

Compare and Contrast Full Service Hotels and Limited Service Properties

At our entry level of economy / limited service we will find a basic room for the night. There will probably be some coffee in the lobby during your check-out and maybe some sweet rolls but not much more. There will be no room service or restaurant on property. Here we find the Motel 6 and Red Roof Inns. You could put Hampton, Holiday Inn Express, Sleep, and Hilton Garden Inns in this category also but they serve you a much more extensive breakfast in the am.

At the mid-range of service we generally find full service properties, i.e. those that have restaurants on site and meeting space for attendees. This is the area of the Holiday Inns, Hiltons, Marriott's, Doubletrees, etc. These are definitely nicer properties related to their furniture, fixtures, and equipment (FF&E). They tend to spend more money on the uniforms and amenities in their properties also.

The upscale range will have finer FF&E again, better informing, more staff, and better training related to the service attitude. Here we find Hyatt, Starwood Westin, Four Seasons and Ritz Carlton. The latter two properties tend to drift up to World class at many of their properties, but not all. The world class designation is for those properties that consistently deliver the highest quality of service to their guests. These properties are usually independents and tend to be smaller than 300 guest rooms.

Here are some of the world class properties: the Burj Al-Arab in Dubai; the Regent in Hong Kong; the Oriental in Bangkok; the Hotel Eden in Rome. There are others but they are few. An employee to guest ratio of 1:1 or greater is common among the world class facilities. However, service is not determined by the amount of bells and whistles a hotel may provide. Service is determined by human beings being of service to other human beings. Service is a human quality. At the world class facilities the employees are always available but never in the way. They seem to know when to appear and to assist.

Compare and Contrast Chain and Franchise Hotels, Including Revenue and Support Centers

How do we categorize hotels by ownership or affiliation? Hotels that are members of a chain are readily identifiable. Therefore we can categorize Holiday Inn, Sheraton, Hilton, etc. as being part of a chain name. As a for instance take the great brand of Holiday Inn. In the United States there are approximately 1800 Holiday Inns. Of that number only 200 are owned or operated by Holiday Inn Centrally Managed Inns, located in Atlanta, GA. The other 1600, while carrying the name of Holiday Inn are franchisees. It is possible that one property can have an owner who has the property as an investment. Insurance companies own many hotels. They don't wish to operate them (not their business). So they hire a management company to operate the property. They want to protect their investment so they purchase a franchise or perhaps join a referral group as opposed to running the property as an independent.

Independents are usually individual properties without any sister properties. They have a name that is not identifiable beyond the area of the hotel. They do not have any advertising to speak of and have to work hard on their local market to generate room sales. Don't think, however that independents are all local properties. The Del Coronado in San Diego comes to mind as a very successful hotel. While we're on the West coast you may have heard of the Lodge at Pebble Beach, another independent.
One of the least understood concepts is that of a referral group. This is an organization that a hotel may join. They pay franchise and advertising fees but not on the scale of a major chain. They have some standards but they are more flexible than and not as strict as one of the major chain operations. What they really provide is a unifying national identity AND a national reservation system. The best know of these referral groups is Best Western Hotels and Resorts. Most Best Western members are very nice properties with their own identity. However they have reasonable standards that a traveler can depend on and they have a central reservation system. I'm sure that you may have seen some advertising on their behalf. Another one is Preferred Hotels of the World. Similar benefits as the Best Western group however the hotels tend to be much more upscale.

Owners can be individuals, partnerships, or corporate entities. The owner is the one who is responsible for the property. The owner has to maintain the property and improve it if that means that the property will generate more sales and profit for the owner.
Management companies exist to provide management expertise to those who may need it. The management company will provide the owner with a management contract that spells out each party’s responsibilities and how any profits may be divided. The names of major management companies are not exactly household names: Davidson, Coakley and Williams, Benchmark Hospitality, HVS, and Select Hotel Management are some of the many organizations that exist to operate property. These companies run hotels. The brand is not important nor is the size of the property. Most management companies have their assets in personnel. Some will take on equity positions of their hotels if required. A large number of hotels in this country are run by management companies.

A franchise is a method of doing business usually under a certain name that is offered for sale. Let's look at the Holiday Inn franchise system. Assuming you have approximately $2.5 million in net worth, and a suitable site that the Holiday Inn organization wants to exploit, you will be asked to submit an extensive form requesting a franchise. Oh, don't forget to include the $50,000 non-refundable payment that accompanies the request. Once you and your site are approved, you then have to pay the Holiday Inn group $750,000 as a initial franchise fee. Once you are operating as a hotel facility, which is still a long way off, you will be required to pay an additional fee in the amount of 3% of your guest room sales as an ongoing franchise fee. An additional 1% fee of guest room sales is required as a fee for the reservation system. The marketing assessment is an additional 1% of guest room sales. So when a guest checks in, Holiday Inn corporate will get $.05 of every dollar you take in. Occasionally there are other fee assessments but these three are the big ones.

Now, for those fees you get quite a lot. You get the backing and assistance of Holiday Inn in your building and outfitting of your property. You get position descriptions and employment assistance along the way so you may staff your facility with individuals who can bring some successful backgrounds to your property. The most obvious benefit is the name Holiday Inn along with the identifying signage and logo's for use at your property. The reservation system generates, on average, 33% of each hotels guest rooms on any given day. That means that 1/3 of your guest room occupancy comes from the fact that you are a Holiday Inn available through the reservation system. You had to do nothing to get this business other than pay the franchise fees and maintain the standards.

Revenue Centers

Revenue Centers typically include the rooms division, food and beverage, telecommunications, fitness and recreation, and concessions, rentals and commissions. This makes sense if we reconsider the definition of a revenue center – as a division that generates income for the hotel through the sale of services or products.

The two main hotel revenue centers are the rooms division and the food and beverage division.  The rooms division usually has the largest amount of square footage devoted to guest rooms or support areas within a hotel, and usually makes the most money for a hotel. The exception to this would be a casino hotel where the majority of guests are staying at the hotel to gamble in the casino.

Support Centers

Cost centers are support centers in hotels that do not directly generate revenue.  These divisions include:

Next Page

© Stephen F. Austin State University | School of Human Sciences | 2010