Hospitality Management Test 2 Study Guide
Hospitality Management Test 2 Study Guide HOSP 1603
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This 10 page Study Guide was uploaded by Brandon Notetaker on Sunday October 2, 2016. The Study Guide belongs to HOSP 1603 at University of Arkansas taught by Kelly Way in Fall 2016. Since its upload, it has received 314 views. For similar materials see Intro to Hospitality Mgmt in Hospitality at University of Arkansas.
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Date Created: 10/02/16
Hospitality Management Week 5 (Week of 9/18/16) Chapter 6: Competitive Forces in Food Service COMPETITIVE CONDITIONS IN FOOD SERVICE 1. Managers must pay attention to competition now more than ever because of the following: There are more competitors than ever (the “pie” is only so big) The market is growing more slowly than in the past Markets are changing COMPETITIVE CONDITIONS 1. Slim profit margins at risk 2. Shortage of prime locations left 3. Entry of more domestic competitors 4. Entry of international competitors 5. Continued dominance of chains 6. New business environment—some companies have left food service COMPETITION = MARKETING 1. Marketing is not just advertising Marketing is “communicating to and giving…customers what they want, when they want it, where they want it, at a price they are willing to pay” (Lewis, 2000) PRODUCT LIFE CYCLE RESTAURANT CONCEPT LIFE CYCLE 1. First Generation Concept Development → Expansion → Maturity 2. Evolution Period Concept Redevelopment 3. Second Generation Expansion → Maturity COMPETITIVE CONDITIONS 1. The Marketing Mix consists of four main activities (the 4 Ps –sometimes the 6 Ps) Promotion, Product, Price, Place, and sometimes People and Process PROMOTION 1. Major forms of Promotion (paid communications): Advertising Sales promotion 2. Recent data show fullservice restaurants (check averages between $15 and $24.99) spent 1.8% of sales on marketing while QSRs spent 2% 3. In total, the food service industry spends over $5 billion each year on advertising (most is still radio and television) 4. Less is spent on the Internet (only about 10%) PROMOTION 1. Sales promotion consists of paid activities other than advertising and include: Coupons (Applebee’s, Chili’s) Games/Contests (“Buy this get that”, McDonald’s Monopoly) Promotional merchandise (QSR toys) The use of all three are increasing in restaurants ADVERTISING MEDIA – Marketing Mix Characteristics 1. Medium Broadcast Media: Television – Large audience, low cost per viewer but high total cost. Combines sight, motion, and sound. Radio – Highly targetable, lower cost than TV. Cable TV – Highly targetable, fragmented market. Webbased – Readily customized, interactive, can include couponing. 2. Print Media: Newspapers – Limited targeting possible. Many people regard printed word as credible. Magazines – Targetable, generally prestigious, highquality reproduction of photos. 3. Others: Roadside – Excellent for directions. Message limited to about eight words. Direct Media – Excellent targeting but costly per prospect reached. Good coupon distribution vehicle. PRODUCT 1. The “product’ in hospitality is actually the guest experience This represents some combination of the tangible and intangible aspects of that experience 2. Elements of this P may include: variety, creativity, quality, etc. Restaurants have added salads, wraps, and more international items recently. 3. The process of adding a new menu item to a restaurant menu can be quite extensive: Idea generation→ Screening → Development and testing → Test marketing 4. Taking a broader view, the “Product” can also be viewed as the overall concept 5. To capitalize on additional markets (and to combat maturity), some chains have developed or purchased new concepts PRICE 1. Price is the only P that produces revenue (others incur cost) 2. There is always pressure from internal and external forces to adjust price 3. Price is often determined based upon three factors: Cost Competition Demand PLACE 1. Place refers to the location – or where the product/service is sold/delivered 2. Place is also known as Distribution 3. As we have discussed, the notion of place is changing – from traditional locations to “alternative” locations 4. Essentially, restaurants are looking to bring their product to the customer COMPETITION WITH OTHER INDUSTRIES 1. There are more competitors than there have ever been: convenience stores ($13 B) Supermarkets (becoming a main source for takeout food) and home! Chapter 6 Vocab 1. Marketing – communicating to and giving customers what they want, when they want it, where they want it, at a price they are willing to pay. 2. Marketing Mix – Mix of the 4 p’s. Product, Price, Place, and promotion. 3. New products – key part of a campaign to revitalize sales in a wellestablished chain. Usually a product that has not been served before. 4. Concept Extension – Food service companies are changing the nature of their product by seeking to serve entirely new markets. This Method ultimately changes the way the public perceives them, and increases sales. 5. Branding – Considered a product characteristic because the brand is used to heighten awareness of the product in the consumer’s mind. 6. Points of distribution – Down sized units where traditional unit won’t work. Ex: Bank ATM or mobile cart. 7. Advertising – Longterm communication strategy that is intended to create an image. 8. Sales promotion – Consists of activities other than advertising that are directed at gaining immediate patronage. Chapter 7: OnSite Food Service ONSITE FOOD SERVICE 1. Definition: Examples food outlets in business and industry, schools, universities, hospitals, skillednursing centers, eldercare centers, correctional facilities, recreational facilities such as stadiums, and child care centers Can include locations where people are at work, play, recreation, school, etc. Originally known as “institutional” food service because it was associated with “institutions” such as universities and hospitals 2. General categories include: Business and industry; education; health care; corrections; and recreation. Onsite food service also known as: “noncommercial food service” because originally it was operated by the institutions themselves on a breakeven basis (without attempt to make a profit). it was long operated on the assumption that its customers represented a “captive market” Some terms that you will need to understand (that are unique to this segment) include the following: • participation rate (compare with measure used in commercial restaurants), selfop, contractor, managed services, client Areas that it has in common with other hospitality sectors Involvement of traditional hospitality companies in management Size and scope Professional opportunities available SELFOPERATED FACILITIES 1. Selfops are food service operations that institutions choose to manage themselves historically, before the advent of professional management companies, this was how most operations were managed MANAGED SERVICES COMPANIES 1. Managed services companies are those companies that specialize in managing food service operations for a third party 2. Such companies believe that they are able to offer operational advantages to the host company (client) including: cost savings, economies of scale, variety of offerings, and problemsolving abilities (troubleshooting) 3. Managed service companies have been able to develop a network of expertise from managing “accounts” all over the country and the world They develop managers who are experts in the area They have support systems, new product development and financial stability 4. The contract company’s name rarely appears in (or on) the facility itself so that the customer sometimes does not know which company operates the food service BUSINESS AND INDUSTRY 1. Business and industry (or business dining) provides food service to company employees 2. B&I food service is affected by the size of the work force and the health of the economy (or employment rate) 3. Has the highest rate of managed service of all four segments? 4. Companies have reduced subsidies in recent years 5. Competition is bigger than ever from commercial restaurant segment 6. Many companies specialize in business dining such as guckenheimer and others TRENDS IN BUSINESS AND INDUSTRY 1. Aggressive marketing, organic growth, more options for diners, more branded concepts, innovative menus, and grab n’ go COLLEGES AND UNIVERSITIES 1. food services must not only accommodate students but also faculty, staff, and visitors 2. where “board plans” were once the rule, now there are many options 3. college and university food service is affected by demographics, students living on campus, and food quality, among others 4. the introduction of brands has been the biggest factor in recent years (national and proprietary) 5. most college and university programs are managed by contractors TRENDS IN COLLEGES AND UNIVERSITIES 1. Healthy segment, new brands (Starbucks), more choice, comfortable/multipurpose dining areas HEALTH CARE FOOD SERVICE 1. This segment includes hospitals (large and small) and nursing homes 2. The presence of dietitians makes this segment different dieticians are professional qualified individuals who manage the nutritional aspects of food service 3. Hospitals are taking food more seriously as a result of: Competition; customer feedback and; becoming more “business like” 4. health care has sophisticated facilities and systems as well as unique challenges Only about 50 % of health care food service facilities are outsourced but this number is increasing TRENDS IN HEALTH CARE FOOD SERVICE 1. More emphasis on retail, introduction of brands, cost reductions – doing more with less, revenue enhancement (catering, cooking events), and growth! SCHOOL FOOD SERVICE 1. School foodservice serves two functions: proving food to school children and; and taking care of underprivileged children through federally assisted meals This is accomplished through subsidies and government food programs some systems feed 1 million children a day 2. lower profit margins, specialized market, large systems (650 schools in Chicago), challenges with restrictions and diet TRENDS IN SCHOOL FOOD SERVICE 1. Fighting child obesity, greater responsibility of food service programs, growing importance of education RECREATION 1. Onsite foodservice is found is many recreation venues including: Stadiums, arenas, museums, national parks 2. Trend is to offer a wider variety of food in these venues CORRECTIONS 1. The u.s. has 2.3 million people in prison 2. foodservice is cost driven in this sector 3. privatization is creating more opportunities for contractors 4. for foodservice managers, setting and challenges is often offset by competitive compensation VENDING 1. vending is in all segments of onsite foodservice 2. over 50% of all vending machines in the us are in b&i settings 3. the variety of products and machines is growing and constantly improving 4. technology will dramatically change vending of the future Chapter 7 Vocab 1. Managed Service Companies (or contract management companies) – feel that their method of operation offers advantages to institutions of all sizes. 2. Business and Industry (B&I) Food Service – Provides food for the convenience of both the guests (the company associates) and the client (employer). 3. Dietician – a person with a legally recognized qualification in nutrition and dietetics, who applies the science of nutrition to the feeding and education of groups of people and individuals in health and disease. 4. Clinical Dietician – Concerned principally with the problems of social diets and with educating patients who have health problems that require temporary or permanent diet changes. 5. Registered dietitians – complete a bachelor’s degree, a supervised practice program, and who pass the national registration examination. 6. Group purchasing organization – pooled purchasing volumes, often in the hundreds of millions of dollars, secure lower unit costs. 7. School food service model – meets clearly defined social needs that attract broad public support. Ex: Provide food to needy children in public schools. 8. Congregate meals – low cost meals provided for those in need. Payed by AOA and by state and local agencies. Supported by volunteers and private donations. 9. Inflight – airline food service. Most used type of food transportation. Hospitality Management Week 6 (Week of 9/25/16) Chapter 8: Issues Facing Food Service ISSUES FACING FOOD SERVICE 1. There are a variety of pressing issues that are facing the industry 2. Some of these are left to the individual operator to manage, some are legislated, and others are handled by trade associations 3. They range in scope from health concerns to waste management CONSUMER CONCERNS 1. Concerns/Issues include: Obesity, Nutritional Content of Foods, Genetically Modified Foods, Truth in Menu, Alcohol Consumption, Food Safety, Garbage, and Others (smoking, trans fats, etc.) OBESITY 1. Numerous lawsuits have been brought, primarily against QSRs, blaming them for obesity related health problems 2. Plaintiffs have sought menu labeling changes, advertising restrictions, nutritional labeling regulations and financial reimbursement 3. Many companies are responding with various changes in menus, items, or ingredients TRANS FATS 1. Trans fats are a type of unsaturated fat 2. Trans fats are not beneficial and may be harmful (heart disease) 3. Food manufacturers (but not restaurants) must list use on labels 4. Some municipalities have banned them from restaurant foods (NYC, 2006) and others are sure to follow NUTRITIONAL CONTENT OF FOOD 1. Consumers are becoming more concerned about what they eat and what is in their food 2. The NLAE was passed in 1990 but only covered packaged foods 3. In 1997, it was extended to cover restaurants under certain conditions (health claims) 4. Some states have passed similar legislation which does cover restaurants, and some companies have done it voluntarily ALCOHOL CONSUMPTION 1. Drunk driving is a problem as well as the potential for lawsuits –legislated in 50 states 2. Restaurants have generally been proactive but some states are legislating server training FOOD SAFETY 1. Food borne illness accounts for 76 million illnesses, 325,000 hospitalizations, and 5,000 deaths each year 2. Several states require that restaurant workers have food safety and sanitation certification GARBAGE 1. Restaurants are considered to be a “clean” industry but still contribute to the waste stream 2. Solid waste disposal is becoming harder to manage and more expensive for cities and towns 3. The average American generates 4 pounds of garbage per person per day 4. Recycling has been one response that restaurants have voluntarily adopted TECHNOLOGY 1. One of the advantages of food service technology is enhanced customer service 2. In the back of the house, technology lends itself to energy savings, efficiency, and food safety 3. Food service is also benefiting from Internet applications Chapter 8 Vocab 1. Nutritious food and consumer demand – do not always go hand and hand, but food service operations need to be ready to make both. 2. Consumerism Movement seeking to protect and inform consumers by reaching such practices as honest packaging and advertising, product guarantees, and improved safety standards. 3. Nutrient claims – make a statement about a specific nutrient of a menu item or meal. 4. Health claim – ties the food or meal with health status or disease prevention. 5. Hazard analysis and critical control points – Application of good common sense to the production of safe food. 6. Waste stream – replaced concept of dump, where things are dropped and forgotten. Hospitality Management Week 6 (Week of 9/25/16) Chapter 9: Lodging: Meeting Guest Needs Chapter 9 LODGING 1. The lodging industry has been in existence ever since the first traveler looked for a place to spend the night (thousands of years ago) 2. Over the years, these facilities have evolved and have been known as hotels, motels, inns, taverns, ordinaries, etc. 3. We use the term “lodging” to characterize the overall category of facilities LODGING TODAY 1. The lodging industry is a huge segment, by any measure Over 49,500 properties Over 4.6 million guest rooms Generates over $40.6 billion in revenues Supports more than 7.5 million jobs THE EVOLUTION OF LODGING 1. Structures built specifically for overnight accommodation have been around for thousands of years dating back to Mesopotamia which was a center for commerce 2. Hotels in the US date back to the late 1700s and the early 1800s including hotels in Boston, New York, Chicago, and Philadelphia 3. Important features of early hotels included location and accessibility to transportation 4. “Grand” hotels were later built in resort areas, city centers, and along transportation routes – Waldorf Astoria, Palmer House, 5. The Tremont (in Boston) was the first to offer guests their own room! 6. Other “Grand” hotels were built in the 1800s and early 1900s, each offering a new amenity or feature 7. First developed in California in 1925, motels (Motor Hotels) are a relatively recent development 8. Holiday Inn was the first well known chain of “motels” built in the US (1952) 9. Holiday Inn was started by Kemon’s Wilson after a family vacation 10. There have since developed many different types of lodging facilities focusing on different customer needs (example: guest suites) CRITERIA FOR CLASSIFYING HOTELS 1. Price (or service), Function, Location, Market segment, Distinctiveness of style or offerings HOTELS CLASSIFIED BY PRICE 1. Limitedservice hotels, Selectservice, Fullservice hotels, and Luxury hotels CLASSIFYING HOTELS BY PRICE 1. LimitedService Hotels Usually no public meeting space and limited food and beverage Typical ADR is between $80.00 and $90.00 and the average number of rooms is 122 Examples include Holiday Inn Express, Comfort Inn, and Fairfield Inn 2. SelectService Hotels Relatively new addition to lodging; akin to addition of fastcausal restaurants in the food service sector With 100 to 200 guest rooms, focus is on value and a cheaper alternative to fullservice properties Hot breakfast service and sometimes other food service is offered along with limited meeting space 3. FullService Hotels Have a wide range of facilities and services including public meeting space and choice of food and beverage Typical ADR is over $150.00 Business and leisure travelers represent 57.3 percent of room sales Average size is 272 rooms 4. Luxury Hotels Have a wide range of facilities and services offered in an upscale environment including concierge and multiple dining options Rooms number between 150 and 500 Higher ratio of employees to guest room Typical ADR is over $225.00 Industry leaders include RitzCarlton, Four Seasons, and Fairmont CLASSIFYING HOTELS BY FUNCTION 1. Convention hotels Typically, more than 500 rooms Often located near convention centers 2. Commercial hotels Smaller than convention hotels with 100 to 500 guest rooms Typically, in downtown locations CLASSIFYING HOTELS BY LOCATION 1. Downtown hotels 2. Suburban hotels Typically have 200 to 350 guest rooms and interior corridors 3. Highway/interstate hotels 100 to 250 guest rooms 4. Airport hotels 250 to 550 guest rooms HOTELS CLASSIFIED BY MARKET SEGMENT 1. Where different types of hotels have been built to respond to specific traveler needs Executive conference centers, Resorts, Casino hotels, Health spas, and Vacation ownership CLASSIFYING HOTELS BY OFFERINGS 1. Allsuite hotels 2. Extended stay hotels 3. Historic conversions 4. Bed and breakfast inns 5. Boutique hotels. PRINCIPAL CUSTOMER TYPES 1. Leisure or vacation travelers 2. Transient business travelers ─ individual traveling alone 3. Business travelers attending conferences 4. International travelers 5. SMERF – social, military, educational, religious, and fraternal WHAT’S CHANGING? 1. Increasing competition (subject of Chapter 12) 2. Inroom technology 3. Unique hotels 4. Increased service levels 5. Blurring of segments 6. Increased business travel 7. Increased occupancy in city hotels 8. Rising room rates 9. Condo/time share conversions Chapter 9 Vocab 1. Ordinaries – Inns of colonial America. Named because they provided respite for the ordinary person, typically provided a meal. 2. Limited Service Hotels – typically offer guest rooms only. 3. Fullservice hotels – offer a wide range of facilities and amenities. 4. Luxury Hotels – At the top of price category. Upscale decor and furniture. 5. Convention hotels – made for large amounts of groups. 6. Commercial Hotels – in comparison to convention hotels less public space, smaller meeting and function space, fewer food and beverage outlets, and limited recreational amenities. 7. Executive conference centers – welldesigned learning environments for meetings. Made with audiovisual and technical support. 8. Vacation Ownership – timeshares and vacation intervals 9. AllSuite Hotels – Guest rooms are much larger than average hotels 10. Boutique hotels – Range all price spans, and looks/feels like a more traditional lodging. 11. Corporate market segment – consists of forprofit companies and therefore may have more money than nonprofit or other business segments. 12. Association market segment – consists of individuals or companies that have banded together in sharing common purpose or goals. 13. SMERF – another market segment for most lodging properties. Called this because it originates from 5 sources: Social, Military, Educational, Religious, and Fraternal. 14. Employers of choice – obtain this from customers by providing better benefit packages, more career development opportunities, increased recognition, and mentoring. 15. Internal Customer – employees of the hotel industry Hospitality Management Week 6 (Week of 9/25/16) Chapter 10: Hotel and Lodging Operations LODGING OPERATIONS: Hotels are generally divided into three major functional areas 1. Rooms division includes front desk, reservations, uniform services (security, etc.), and housekeeping 2. Food and beverage department includes restaurants, bars, banquets and room service 3. staff and support departments includes accounting, engineering, marketing, human resources, and contracted areas ROOMS DIVISION 1. The heart of the house The main business of the hotel and the main source of revenue rooms can contribute 70 percent or more to overall revenue and even more to profit 2. The center of activity in the rooms division is the front office it is overseen by the resident manager, front desk manager (or assistant general manager) and various department heads responsibilities include: checking guests in, checking them out, securing payment, listening to complaints, communicating with other departments, determining room availability, and selling additional rooms RESERVATIONS DEPARTMENT 1. Reservations can be made by the guest via other methods (more and more online) but many requests are still made through the hotel’s reservation department 2. Reservations must maintain contact with other departments as well as other reservations channels to be able to forecast available rooms 3. The reservations department attempts to maximize: Room rate, and occupancy rate. this is known as yield management –maximizing these two at any given time. Reservations departments must consider city wide events, competition, minimum stays, etc. HOUSEKEEPING 1. The essential requirement that guests have is to be able to check into a clean room 2. Housekeeping department is responsible for: cleaning of guest rooms, stocking essential supplies and amenities, laundry (sometimes) and maintenance of public areas 3. housekeeping is one of the largest departments in the hotel (up to 50 % of all employees) 4. the executive housekeeper is the head of the department he or she must be adept at scheduling, coordinating, managing people, etc. 5. room attendants are responsible for cleaning of individual guestrooms 6. housekeepers work from a rooms report, which provides them with the status of all guest rooms from which they can prioritize their work 7. the housekeeping department must know at any given time: the occupancy of the hotel the number of guests checking in the number of guests checking out the number of guests staying over late checkouts, etc. 8. rooms can take as little as 15 minutes or as much as 1 hour to clean and prepare for the next guest 9. checkin and checkout times are based in large part on the time it takes to clean a room UNIFORMED SERVICES 1. The uniformed services department is another important department in the rooms division bell staff, valet, security and concierge the bell staff assists with luggage, acts as an escort, and answers questions the valet assists with parking 2. the concierge is the resident expert in activities, events, restaurants, and attractions the position of concierge is becoming more important as hotels try to offer a higher level of guest services there is an international association for concierges (les chefs d’or) sometimes this responsibility falls to the bell staff or the front desk clerks in smaller hotels SECURITY 1. Hotels are required to provide “reasonable care” of their guestswhich includes general security, locks and lighting and security of guest belongings 2. New security measures that have been introduced in recent years include: inroom safes, keyless locks (with magstrips), tighter security at the front desk, redesigned hotels where guests (and others) must pass through the lobby FOOD AND BEVERAGE 1. The food and beverage department can contribute 15 to 20 percent of overall revenue 2. it should be a profit center but does not always make money for the hotel 3. this department is headed up by a food and beverage manager who oversees both frontof thehouse and backofthehouse functions 4. banquets –are often profitable for hotels. Can support meetings and conferences or outside functions 5. some hotels are limiting what they offer and others are outsourcing 6. bars, room service, food production, and stewarding are other areas STAFF AND SUPPORT DEPARMENTS 1. Sales and marketing responsible for “creating customers” largely revolves around selling “blocks” of rooms can be a large department in convention hotels specialized by market 2. accounting role is moving beyond just bookkeeping includes overseeing the “house ledger” and the “city ledger” also, includes the night audit 3. Human resources labor intensive industry requires progressive hr. responsibilities include supporting line departments in all hr. related activities (hiring and recruiting, training, staffing, etc.) 4. Engineering oversees heating, cooling, water, lighting, telecommunications, energy management, electric, other FINANCIAL MANAGEMENT 1. Income and expenses 2. revenue and profit 3. changes in income and expenses over time 4. outsourcing as a strategy to cut costs 5. cost of maintaining a hotel KEY OPERATING RATIOS 1. Occupancy percentage = rooms sold ÷total rooms available example: 500 room hotel sells 300 rooms o 300/500=60% 2. average rate = dollar sales ÷number of rooms sold example: $18,000 in sales o $18000/300=$60 3. Number of guests per occupied room = number of guests ÷number of occupied rooms o 400/300=1.33 4. RevPAR–revenue per available room= rooms revenue ÷available rooms o 18000/200 =90 5. average rooms cleaned per room attendant day= number of rooms occupied ÷number of eighthour shifts o 300/30=10 CAREER ENTRY POINTS 1. Front office, Accounting, sales and marketing, food and beverage Chapter 10 Vocab 1. Rooms Department – Executive house keeper oversees this department 2. Night Auditor – Desk clerk with special accounting responsibilities. 3. Auditing process – Auditor compares the balanced owed to the hotel at the end of yesterday with today’s balance. 4. Property Management System (PMS) – improves operational efficiency by eliminating repetitive tasks and improves service by providing information more quickly and accurately. 5. Support Areas – Departments of a hotel that go into maintaining the different systems of the hotel operations. 6. House ledger – located at the front desk made to keep bills owed by guests. 7. City Ledgers – Charges by guests posted after they have checked out and any charges by others (Restaurants) 8. Capital Costs – Fixed Costs include expenses such as the management fee, property taxes, and other municipal charges and insurance and are a direct function of the cost of the building and its furnishings and fixtures. 9. Uniform System of accounts – Hotel accounting is generally guided by this. Identifies important profit centers as revenue departments. 10. RevPAR – Revenue per available room. Room Revenue divided by available rooms multiplied by AVG room rate. 11. Leverage – refers to the fact that a small amount of an investors capital often comes forth much larger amounts of money lent by banks or insurance companies on a mortgage.
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