Full FBLA Hospitality Management

aesthetic pollution

the spoiling or contamination of the natural beauty and features of an enviorment, due to poor planning and design of tourism projects

AIDA model

a framework for creating an advertising message that that gets Attention, holds Interest, stimulates Desire, and acheives Action

average daily rate (ADR)

a rate based on total sales for the day divided by the total number of sold rooms.

back of the house

the area in a hospitality establishment that guests usually do not view, including all areas responsible for food quality and production, such as the kitchen and recieving, office, and storage areas

certification

an authorization stating that one has fulfilled the requirements for practicing in a feild or career

channel of distribution

the path a travel product takes from producer to the consumer, or traveler

charter tour

a tour in which a tour operator buys all the seats on an airplane, train, or bus and resells them to travelers

consolidator

an agent who buys unsold products in bulk from suppliers and resells the products at a discount to intermediaries or to consumers.

convention and visitors bureau (CVB)

an organization that works with meeting planners to provide tourist information services to business and leisure travelers

cost-plus pricing

pricing products by calculating all costs and expenses and adding desired profit

cross-selling

the method of selling the customer additional related products tied to one name

dependables

travelers who prefer familiarity and creature comforts and seldom try anything new or different

destination marketing

the process of developing, promoting, and distributing specefic locations to satisfy travelers and maintain appeal as long as possible

direct channel

the path a product takes without the help of any intermediaries between the producer and consumer

economic multiplier

The process of how money filters through a local economy and is spent and re-spent, creating income for other businesses.

elasticity of demand

the variation of consumer demand due to a change in price

empowerment

The granting of authority or power to front-line personnel for handling and solving guests' problems

experimental method

A research method whereby a researcher observes the results of changing one or more marketing variables

facilitating products

goods or services that aid the use of the core product

full-service restaurant

a restaurant where a customer sits at a table, gives an order to a server, and is served food at the table

hallmark event

a local or regional event with national or possible international appeal that occurs once or annually

hub-and-spoke system

an effective network for an airline formed by a hub, or a large airport, connected to other smaller airports called spokes

indirect channel

the path a product takes using intermediaries between the producer and consumer

ARAMARK

provides food service operations to businesses, recreation centers, sports stadiums, college and university campuses, health care facilities, convention centers, and gourmet restaurants

Knowledge worker

Man or woman who applies to productive work ideas, concepts, and information (knowledge crucial to success)

Job benefit mix

money gained from job vs. knowledge/experience gained from job

Managerial Organization

Bosses and workers (organization chart)

Informal Organization

Social organization; influential workers/leaders

Physical Organization

Layout of workplace

Strategy of Job Placement

1. Income
2. Professional Status
3. Evaluating the Employer
4. Determining potential job satisfaction
4. Accepting skilled jobs

Off-premise sales

Food take-out, drive-through, and delivery

Distribution

marketing problem of gaining a presence in many markets

Points of Distributions (PODs)

located in any place where there is consumer traffic; venue

Profit Margin

Profit / Sales

Cost of Goods Sold

COGS / Sales

Sales Mix

Sales of Item A / Total Sales

Inventory Turnover

Cost of Inventory Sold / Average Inventory

Return on Member's Equity

Net Profit / Total Member's Equity

Total Current Liabilities

Current Liabilities / Current Assets

Debt Ratio

Liabilities / Member Equity

Budgeting Steps

-Establish financial objectives
-Forecast revenue
-Forecast expenses
-Forecast results of operations
-Present the budget

Two primary ways of maximizing profits

-maximize revenues
-control and minimize expenses

Revenue per Available Room (RevPAR) Formula

Total Room Revenue / Total Rooms Available

RevPAR Definition

-It combines room occupancy and room rate information to measure a hotel's ability to maximize total room revenue.

-It is the best measurement of maximizing total room revenue because it identifies the hotel's ability to manage both occupancy (rooms sold) and room average rate in maximizing room revenues.

Why is RevPAR Important?

-RevPAR measures both the ability to sell the most rooms (occupancy percentage) and the ability to achieve the highest average room rate.
-Therefore, RevPAR includes two financial measures and identifies how the hotel is combining the two strategies of maximizing rooms sold and maximizing the average room rate to maximize total room revenue.

Market Segments

Customer Groups defined by preferences, behaviors, buying patterns, and behavior patterns.

Rate Structures

The range of room rates that a hotel determines for different market segments

The Objective of Revenue Management

To sell the right product to the right customer at the right time for the right price, thereby maximizing revenue from a company's products and services.

Seven Core Concepts of Revenue Management

-Focus on price rather than costs when balancing supply and demand
-Replace cost-based pricing with market-based pricing
-Sell to segmented micromarkets, not mass markets
-Save your products for your most valuable customers
-Make decisions based on knowledge, not supposition
-Exploit each product's value cycle
-Continually reevaluate your revenue opportunities

Selling Strategy

The actions and decisions of the senior management of a hotel in opening and closing room rates, arrival dates, and length of stay to maximize total hotel room revenues

The process of maximizing total room revenues involves for important processes:

-Effectively managing RevPAR
-Developing a competitive yet profitable room rate structure for a hotel
-Revenue Management process that utilizes a yield system to collect historical data and provides current reservation information that will assist in maximizing total room revenue
-Developing and implementing successful selling strategies that will assist all reservation partners and hotel employees in effectively using the hotel room rate structure and current status of room reservations to maximize total room revenues.

Yield Systems

Computer programs that compare the current years booking pace of reservations for a specific day of arrival (DOA) to the historical average booking pace for the DOA.

Revenue Management

-The application of information systems and pricing strategies to allocate the right capacity to the right customer at the right place and right time.

-In practice - setting prices according to predicted demand levels so that price sensitive customers who are willing to purchase at off peak times can do so at favorable prices, while price insensitive customers who want to purchase at peak times still can.

What are the 4 Antecedents of Revenue Management?

1) Relatively fixed Capacity
2) Perishable Inventory
3)Appropriate Costing Structure
4)Demand that is variable or uncertain

Predictable Demand

-Past History
-Checking Customer travel patterns
-Desired playing times
-How many players make tee times in advance
-How far in advanced, what days
-Tournaments
-Pick-up

Perishable Inventory

Thought of as Time

Appropriate Cost

High Fixed Cost and Low Variable Costs
-Like Hotels
-Golf Courses
-Airlines

Time Variable Demand

-Highly Variable Demand
-Mornings
-Weekends
-Tournaments
-Holidays

Revenue Management Features

-Product Definition
-Competitive Benchmarking
-Strategic Pricing
-Demand Forecasting
-Business Mix Manipulation
-Distribution Channel Management

Industries Embracing Revenue Management

-Airlines
-Hotels
-Cruise Lines
-Car Rental Agencies
-Broadcasters
-Entertainment Industry

Criteria For Effective Revenue Management

-Fixed-Capacity Environment
-Perishable Products
-Varied, but Predictable Demand
-High Fixed Costs and Low Variable Costs

Room Revenue Formula

Room nights sold X Room rate charged

Occupancy Percentage Formula

(Room nights sold in a period / Room nights available in that same period) X 100

Contribution Margin Formula

Room Rate - Variable Cost

Market Average Occupancy Percentage

Total room nights sold / Total available room nights X 100

Market Average ADR

Total Room Revenue / Total Room Nights Sold

Market Average RevPAR

Average Market ADR X Average Market Occupancy Percentage

Differentiation Strategies

-Unique Features
-Level of Service
-Location
-Brand Affiliation

Elasticity Formula

Percent Change in Demand (Unit Occupancy) / Percent Change in Room Rate

Demand Forecasting

1) Calculate Forecasted RevPAR (Not including new business proposal)

2) Calculate Forecasted RevPAR (Including new business proposal)

3) Compare the two

Revenue Impact

Impact on total hotel revenue of the additional services like spa, golf, food, gifts.

Expense Impact

Additional costs that would be incurred with additional rooms sold like cleaning expenses, toiletries, variable labor.

Impact on Future Pricing

It is possible that the additional 50% of the rooms not in this block could be sold at a higher ADR because fewer available rooms may lead to less inventory, higher demand, and higher prices.

Percent Change from last year to this year

(Present year - Last year) / Last year

Occupancy Forecasts

- Forecasts 1,2,7,14,2, and 30 days out
- Produce daily and weekly occupancy estimates
- unlikely to exceed 100%
- Helps to improve scheduling
- Shows guest arrival and departure patterns

Demand Forecasts

- Identifies periods of 100% occupancy
- Identifies low occupancy periods
- Forecasts 30, 60, 90 days out
- Produce weekly occupancy rates
- Used to help establish room rates

Revenue Forecasts

- Forecast 30 days out
- Estimate RevPAR
- Compare forecasts to established budgets

External Factors Affecting Demand

- Economy
- Government Regulations
- Airlines (Delta)
- Weather
- Area Events

Overbooking is Ethical?

- "the ends justify the means" - The legitimacy of an act is judged by the ultimate outcome

- "let justice be done through the heaven fall" - The right thing to do is always the right thing to do

Overbooking is Legal?

- Non-performance of the contract

- Must only pay the travelers additional costs

Reputation Impact of Overbooking is different now?

- yes, because of social media and trip adviser

- "If you lose money for the firm, I will be understanding. If you lose reputation for the firm I will be ruthless"

Why does overbooking occur?

- Damaged Rooms

- Staff Errors

- Inventory Availability Errors

- Guest Overstays

Who should NOT walk when Overbooking occurs?

- Loyalty Members

- Group Meetings or Group Attendees

- Contracted Rooms Such as Airlines

- Couples Celebrating Special Events

- Families Arriving Late at Night

Walking Formula

In a 200 room hotel:
- Hotel is full with 200 arrivals
- .05% no show
- 10 rooms still available to sell

a.m. room status report

A report detailing the status of each room, created by a housekeeping supervisor from section housekeepers' reports, usually created by noon.

accessibility

The ease with which guests can enter, leave, and utilize a property, also applies to the ability of guests in wheelchairs or needing other assistance to utilize a facility.

adjoining rooms

Two hotel rooms that are located next to each other, but not connected by a door.

airport hotel

A hotel located near an airport, usually offering shuttle service to and from the airport, as well as meeting rooms, and early checkout.

à-la-carte menu

A menu on which each item carries its own price.

all-inclusive resort

A resort in which all amenities and services, including food and beverages, are included in the cost of the room. Example: Club Med.

all-suite hotel

A hotel in which every room is a suite, with a bedroom and living room, catering to business travelers.

amenities

Services or goods offered to hotel guests in addition to a basic room, such as soaps, robes, a game room, or a pool.

American plan

A hotel pricing plan that includes three meals with the cost of the room.

back of the house

The operational areas of a restaurant, especially the kitchen.

bed and breakfast (B&B)

A private residence that has been turned into an owner-operated commercial inn, usually with only four or five guest rooms, and in which breakfast is included with the cost of the room.

bed and breakfast inn

A small inn, similar to but larger than a B&B (with as many as 30 rooms), which may also host weddings or other special events, and in which breakfast is included with the cost of a room.

bell hop

The hotel employee responsible for carrying guests' bags to their rooms.

bell service

A service offered by luxury hotels in which a bell hop carries customers' bags to their rooms for them.

bus staff

The employees in a restaurant who assist the waiters and waitresses, especially in clearing tables and refilling water glasses and coffee cups.

campground

A lodging operation offering guests either a place to pitch a tent or a space to park a recreational vehicle.